Balancing Access To Justice And Ethical Integrity: Third-Party Funding In Commercial Litigation

In the world of commercial litigation, financial barriers often prevent parties, particularly small businesses and individuals, from pursuing claims due to the prohibitive costs associated with legal battles. In response, third-party funding (TPF) has emerged as a significant tool, providing financial support to litigants in exchange for a share of any eventual recovery or damages. 

TPF, also known as litigation financing, involves a financially capable entity—such as a bank, hedge fund, or insurance company—providing monetary support to a litigant. This support covers litigation expenses, including lawyer’s fees, court costs, and expert witness charges. In return, the funder receives a pre-agreed share of the monetary award if the case succeeds. If the case fails, the funder typically absorbs the loss, mitigating financial risk for the litigant. TPF improves access to justice but brings ethical considerations, particularly when the funder seeks significant influence over litigation