A Reasonable Return

A Range of Returns

Funders expect a wide range of returns from investments to balance the material risk of loss.

"Funders provide a central role in practice in enabling collective proceedings to be brought forward. This has been recognised in various judgments both by the Tribunal and the Court of Appeal. Unless funders feel that they can make an adequate rate of return across their portfolio, they will withdraw from the market. Of course, funders are not the only stakeholders: legal teams and ATE insurers all need to be funded and paid." (HODGE MALEK K.C., speech to LF Dealmakers Europe: 24 June 2025)

It's a relatively obscure area of the world, but the Competition Appeal Tribunal is close to the heart of consumer activists in the UK. It is the court where large organisations can be brought to account for breaches of competition law. It is important because its not just consumers that are harmed: the business ecosystem suffers: if businesses are illegally forced out of a market and they cannot compete, we have a much less dynamic economy that concentrates rents in larger organisations.

An area of constant concern is how the proceeds of a case should be allocated amongst the various stakeholders that brought the case - lawyers, funders, and the ultimate beneficiaries - the people that were harmed. We were asked to help a Class Representatives Network network member analyse the returns available and report on what we considered to be a fair and reasonable return. We worked from first principles - trying to understand the quantum of returns the investment market would require to allocate funding to the litigation market, given the risk of loss and the complexities of supporting litigation. We benchmarked our analysis against Burford Capital's excellent portfolio reporting. We also commented on a mechanism to create a sensible allocation of funds amongst parties, given the investment of all stakeholders in the case - lawyers, funders, and insurers.

For us there are two important takeaways:

The first point we wanted to get across is that litigation funding is a risky business and, although the returns look eye-watering when taken on their own, when you factor in the considerable risk of investment and loss, they are broadly consistent with overall market returns.

The second point is that funders expect a range of returns - that along with the below-average returns, above average returns are a significant contributor to overall performance.

Download the report here.