The legal funding industry

Understanding the legal funding landscape

The legal funding industry as a whole is an incredibly varied landscape. The most important distinction is between commercial and consumer litigation finance.

Commercial litigation finance, ("litigation finance" or "litigation funding") involves investing in legal costs and attorneys fees brought by businesses and individuals. Commercial litigation finance is similar to a third party taking a contingency stake in a given court case. Prominent players include public companies like Burford Capital, and the premier trade organization is CLFA, the Commercial Litigation Finance Association.

Consumer litigation finance ("legal finance" or "lawsuit funding") usually involves personal injury funders making lawsuit loans for living expenses. Top legal funding industry trends include emerging legislation brought by the Consumer Financial Protection Bureau. Industry-wide organizations include ALFA, the American Legal Finance Association, and ARC, the Alliance for Responsible Consumer Financing.