12 Nov Litigation funding in 2025: Challenges and opportunities
The litigation funding market continues to evolve at pace. With a growing number of players on both sides of the Atlantic and new types of capital flowing into the space, it has firmly established itself as a standalone asset class and a major force in the legal industry.
As a trusted and active recruiter of in-house legal professionals, Marsden is helping to shape this transformation. By connecting litigation funders with the specialist counsel they need, we’re playing a key role in laying the foundations for the sector’s rapid growth and commercial success. Our own Megan Williams is fast developing a reputation as one of the leading recruiters of in-house lawyers for litigation funders. Here’s her take on the key themes and takeaways from Brown Rudnick’s European Litigation Funding Conference (October 2025) – and what they mean for the year ahead.
A landmark first: the EU’s first sports class action
One of the biggest talking points was news of a significant first. In August 2025, Dolf Segaar launched the first sports class action in the EU, taking aim at FIFA. It’s a case that could have far-reaching implications for how collective actions in sport are structured and funded in the future – and the funding community will be watching closely as it develops.
Challenges for funders: cost, complexity and time
Despite the sector’s growth, litigation funders continue to grapple with familiar hurdles. Rising interest rates, the fallout from PACCAR, regulatory uncertainty and persistent questions around enforceability are shaping funding strategies and influencing risk appetite.
The ongoing review of the CAT (Competition Appeal Tribunal) regime is another key factor, signalling that the legal and procedural landscape remains fluid. Yet perhaps the most significant—and frustrating—challenge is time. Cases that once seemed like two-year investments are stretching to seven or more, locking up capital and testing investor patience.
What funders want: wider opt-outs and cost recovery
A clear wishlist is emerging. Funders are pushing for the ability to bring opt-out claims outside of the CAT, widening the scope of collective actions. There’s also increasing appetite for mechanisms to enforce funder costs against defendants, rather than solely against claimants, which would rebalance the risk and reward dynamics of funding.
Private capital steps in – but liquidity questions remain
Another headline trend is the surge of private credit into litigation funding, as private markets take note of the strong returns on offer. Yet the sector’s illiquidity remains a sticking point. Funders have “nothing to sell” until a case resolves, making litigation finance less of a natural fit for hedge funds.
Still, investors are drawn by the complexity premium and liquidity premium – the extra return that comes from navigating intricate legal risks over extended timeframes. The challenge is managing the mismatch between investor expectations and litigation timelines.
Cost protection insurance: hedging the downside
A notable development this year is the emergence of Cost Protection Insurance (CPI) – a bespoke product that protects funders against losses (though not against lost profits). CPI can be extremely expensive, raising questions about whether it always delivers value.
Nevertheless, it’s proving useful for those with diversified portfolios, particularly where some cases carry significantly higher risk. The key is ensuring that claims are unrelated, so the insurance meaningfully spreads the downside exposure.
Digital asset claims: a more predictable risk
The once-opaque world of digital asset litigation is also becoming easier to navigate. As the sector matures and more reputable exchanges emerge, tracing assets has become simpler and risk profiles more familiar. Funders are no longer underwriting digital asset claims in the dark – and that’s broadening the appeal of this fast-growing area.
France on the radar
Funders are also increasingly turning their attention to France, buoyed by favourable judgments such as the Trucks case and a judicial environment that’s more sympathetic to victims. The development of collective redress in France is opening up new opportunities for funders seeking to diversify geographically.
Secondary markets: flexibility vs. too many slices
Finally, the rise of the secondary market remains a defining feature of the sector’s evolution. The ability to trade interests in funded cases adds liquidity and flexibility – but it also raises concerns about how many times the proceeds are sliced and shared. As more intermediaries enter the chain, the question becomes whether there’s too little pie left on the table.
The litigation funding industry in 2025 is defined by rapid change, rising complexity and significant opportunity. The next phase will be shaped by several key trends: a surge in private credit investment, growing demand for bespoke insurance solutions, and an emphasis on diversified claim portfolios. Most importantly, a handful of pivotal judgments due over the next 12 months are likely to set the tone for next year’s conference – and could decisively influence strategy, capital flows and the future direction of the market.