News
Litigation funding is when a third party provides the financial support needed to pursue a legal claim, in exchange for a share of the return when that claim succeeds.
For law firms, it removes the financial pressure of running cases on a no-win, no-fee basis. For investors, it offers access to a structured, returns-focused asset class that sits entirely outside traditional financial markets.
This guide explains how litigation funding works, the different models available, and why it is attracting growing interest from sophisticated investors in the UK.
When a law firm takes on cases on a no-win, no-fee basis, it carries all the costs of running those cases until they settle. That means staff wages, marketing, court fees, expert reports, and general overheads. All of it is paid out before a single penny comes back in.
Litigation funding steps in to bridge that gap. A funder advances capital to cover those costs, allowing the firm to take on more cases and grow its practice without taking on unsustainable debt.
When a case settles, the settlement proceeds flow into an escrow account. The funder recovers its capital plus an agreed return, and the law firm keeps the remainder.
This is known as non-recourse funding. It means that if a case is lost, the funder does not recover its investment from the law firm. The risk sits with the funder, not the firm.
Third-party litigation funding simply means that the party providing the finance is independent, being neither the claimant nor the law firm. A specialist funder, such as Halcyon Litigation Funding, provides the capital and takes on the financial risk in exchange for a defined return.
This structure allows law firms to take on more cases than their own balance sheet would allow, and gives claimants access to justice they might otherwise be unable to afford.
Not all litigation funding works the same way. There are two broad approaches:
This is the traditional model. A funder backs one large, high-value claim, often worth hundreds of millions of pounds. The potential return is significant, but so is the risk. Typically, funders operating this way win only around one in four cases. If the case fails, the entire investment is lost.
Portfolio funding takes a different approach. Rather than placing a large bet on a single case, capital is spread across hundreds or thousands of lower-value cases. Each individual case requires a relatively small capital outlay, typically between £500 and £2,000. Because risk is distributed across the whole portfolio, the success or failure of any single case has a limited impact on the overall return.
This is the model Halcyon Litigation Funding is built on. We fund portfolios of low-value, high-frequency UK consumer and personal injury claims: case types with well-established success rates and predictable settlement timelines.
Litigation finance is increasingly recognised as a distinct asset class, and for good reason. Here is what tends to appeal to sophisticated investors:
In the UK, litigation funding investment opportunities are available to:
These are high-risk, illiquid investments. Capital is at risk, returns are not guaranteed, and investments of this nature are not covered by the Financial Services Compensation Scheme (FSCS) or the Financial Ombudsman Service (FOS). Independent financial advice should always be sought before making any investment decision.
Halcyon was founded by qualified UK solicitors with decades of direct experience running high-volume no-win, no-fee practices. We understand the case types we fund, the firms we partner with, and the risks involved. We have lived them.
Our model is built on strict due diligence, transparent pricing, and genuine alignment with the firms we support. We only succeed when our partners succeed.
If you are a sophisticated investor, high net worth individual, or institutional investor and would like to find out more about how Halcyon Litigation Funding works, please visit halcyonlitigationfunding.com and complete the enquiry form. A member of our team will be in touch.
Halcyon Legal Limited (trading as Halcyon Litigation Funding) is not authorised or regulated by the Financial Conduct Authority. Investment opportunities are strictly limited to institutional investors, high-net-worth individuals, and sophisticated investors. Capital is at risk. Returns are not guaranteed. These are high-risk, illiquid investments and are not covered by the FSCS or the FOS. Independent financial advice should be sought before investing.