The litigation-funding industry sells a compelling proposition – private capital enables ordinary people to challenge powerful opponents. But who protects those people when the financial model falters—or investors want a different outcome?

An ICLG report examines three businesses that have failed or stopped taking new investments within six months: Fenchurch Legal, Woodville Consultants and Litigation Capital Management (LCM). Their models differ significantly. Fenchurch and Woodville lent to claims businesses; LCM funded litigation directly and is managing its existing portfolio to completion rather than entering administration.

Those distinctions matter. So does the wider question: whether turning compensation claims into investment opportunities serves claimants as reliably as it serves the industry’s ambitions.

Financial backing does not remove uncertainty

LCM reported a £87.3 million annual post-tax loss, with seven of eight concluded investments producing losses. Its experience demonstrates that professional assessment and substantial capital cannot make litigation predictable.

A funded claim still depends on evidence, witnesses and judicial decisions. Consumers should never mistake an investor’s willingness to finance proceedings for a guarantee of compensation.

Investors and claimants can want different things

The tension extends beyond losing cases. ICLG highlights Innsworth’s objection to the £200 million Merricks settlement with Mastercard after investing more than £45 million in the proceedings.

A claimant may favour a settlement that delivers compensation promptly. An investor may consider the return inadequate. Commercial funding introduces an additional interest that must be managed, rather than assumed to align automatically with those seeking redress.

The test should be what claimants receive, when they receive it and how much is deducted—not whether a lawsuit generates an attractive investment return.

Protection before expansion

The industry’s response includes calls for legal certainty and light-touch regulation. Yet certainty for investors is only part of the equation.

Claimants need understandable funding terms, secure commitments, independent advice and effective control over settlement decisions. Policymakers should demand evidence that these protections work before making commercially financed litigation easier to expand.

Funding can enable legitimate cases. That does not justify treating its growth as an achievement in itself, particularly where direct compensation schemes or other remedies could deliver redress more efficiently.

Access to justice should not become a slogan that shields the business of litigation from scrutiny.