HLC
MMXXVI
Insights
Introduction to litigation finance.
What third-party litigation capital is, who uses it, how it is priced, and the discipline Hudson applies before any commitment is made.
The note
- § 01
- First principles
- § 02
- Who uses it
- § 03
- How a matter is assessed
- § 04
- Pricing, and selected references
Litigation finance is the provision of capital against the value of a legal claim. A funder advances money to a claimant, or to the counsel prosecuting the claim, and is repaid from the proceeds of a judgment, award or settlement. If the claim fails, the funder is not repaid. That single feature, the absence of recourse against the claimant, is what distinguishes litigation finance from lending and what dictates everything else about how it is underwritten and priced.
The discipline exists because the timing of legal outcomes rarely matches the timing of a claimant’s obligations. A meritorious claim can take three to five years to resolve. Fees fall due long before recovery. Capital lets the claimant prosecute the claim on its merits rather than on its cash position, and lets counsel resource the matter properly rather than sparingly.
The shape of a Hudson commitment
- Committed capital
- USD 2m–15m
- Claim quantum, ordinarily
- USD 15m+
- Counterclaim capital
- USD 5m–15m
Indicative investment-decision timeline
Typically 8 to 18 weeks after a sufficiently complete record, depending on complexity, diligence, documentation and jurisdiction. A preliminary view may be reached earlier, ordinarily within roughly 2 to 4 weeks of a complete preliminary record. These are indications of ordinary practice and not a service-level commitment.
First principles
Four features that define third-party capital.
These are not commercial preferences. They are the conditions on which counsel can lawfully accept funding at all.
- I
Non-recourse
Repayment comes from proceeds and from nothing else. The claimant does not guarantee the capital, and no personal or corporate covenant supports it. The funder carries the risk of loss.
- II
No control of the case
The claimant remains the client of the firm and the firm remains the strategist. Hudson does not direct the litigation, does not select counsel after deployment, and does not approve or veto settlement.
- III
Priced on risk, not on interest
A return is not an interest rate, because the timing and quantum of recovery are both uncertain. Pricing is set out in writing for the specific transaction before any obligation arises.
- IV
Underwritten, not lent
A commitment follows an independent legal and commercial analysis of liability, quantum, duration and enforcement. Diligence is the product; capital is the consequence.
Who uses it
Claimants, counsel and corporate holders of claims.
Litigation finance is not a last resort for the impecunious. Well-capitalised companies use it to move the cost of a dispute off the operating budget.
- 01
Corporate claimants
A company with a meritorious claim it does not wish to fund from working capital. The dispute is prosecuted without charging years of legal fees against operating results.
- 02
Counsel and firms
Firms that wish to take a matter on a contingent or partly contingent basis but cannot carry the full working-capital exposure across a multi-year timetable.
- 03
Holders of judgments and awards
A claimant that has won but not yet collected, and requires liquidity while enforcement proceeds across jurisdictions.
- 04
Defendants with affirmative counterclaims
Funded through a separate affiliate, Hudson Litigation Defense Capital, under a strict information barrier.
How a matter is assessed
Diligence before deployment.
A commitment is the end of a process, not the beginning of one. The stages below are the ordinary sequence.
01
Submission and acknowledgement
Ordinarily 1 to 2 business days
A matter is lodged in writing. Business development makes the first written contact and acknowledges the submission.
02
Preliminary review
Ordinarily 2 to 4 weeks of a complete record
Legal clearance, including conflicts and permissibility in the governing jurisdiction, followed by a commercial assessment that fixes the applicable solution and the capital position. No external diligence spend is incurred before that clearance.
03
Underwriting
Depends on completeness and complexity
Damages models submitted by a claimant are tested independently rather than accepted as presented, and the jurisdictions that would have to honour any judgment are assessed for enforceability.
04
Investment Committee consideration
Depends on completeness and complexity
A matter advances to Investment Committee consideration only at this stage. Terms are issued in writing; nothing is agreed on a call.
05
Documentation and deployment
After execution
Capital is drawn against the agreed schedule. Reporting obligations run for the life of the matter; control of the case does not pass to Hudson.
Pricing
How commercial terms are settled.
Terms are settled for the transaction in front of us, in writing, and not by published schedule.
Pricing depends on the solution, transaction structure and circumstances of the matter, and is set out in writing for the specific transaction before any obligation arises. Hudson does not publish rates, multiples or return figures.
Where Hudson purchases an interest in a claim, or takes a silent participation alongside a claimant, commercial terms, including any fee, are set transaction by transaction and stated in writing. Nothing is payable at the point of submission, and several solutions carry no upfront fee at all.
Nothing is priced on a claimant’s own damages model as submitted. Every model is tested independently before it informs any commercial term.
What litigation finance is not
Hudson Litigation Capital is not a law firm and does not provide legal advice. It is not an investment adviser, and nothing on this page is an offer of securities or a solicitation of any investment.
Capital is not a substitute for merit. A claim that does not withstand review is declined regardless of quantum, and a claim whose proceeds are already spoken for is assessed only on what sits inside the perimeter. Prior-judgment recoveries sit outside it.
Selected references
Independent sources for verification.
Hudson’s positions can be checked against the public record. These are the sources counsel most often asks for.
- Trends in Third-Party Litigation Funding: A Cross-Jurisdictional Analysis
WilmerHale, 14 July 2026. A survey of the funding market and its regulation in the United States, the United Kingdom, Germany, the Unified Patent Court and China.
- A Comparative Analysis of Third-Party Litigation Funding in the United States and the United Kingdom
Gary Myers, University of Missouri School of Law, 2024. An academic comparison of the two most developed funding markets.
- Review of Litigation Funding, Final Report
Civil Justice Council, June 2025. Values the United Kingdom funding market at between one and a half and four and a half billion pounds and recommends reversing PACCAR.
- Third-Party Litigation Financing: Market Characteristics, Data, and Trends
United States Government Accountability Office, 2023. The principal public account of the size and structure of the American market.
- Intellectual Property: Information on Third Party Litigation Financing of Patent Litigation
United States Government Accountability Office, 2024. Reports that roughly twenty per cent of commercial funding capital is committed to patent litigation.
- Litigation Funding Transparency Act of 2026, S.3826
119th Congress. A proposed federal disclosure regime for funding arrangements.
External sources are cited for context. Hudson does not endorse them and is not responsible for their content. Where a figure appears on this website, it is Hudson’s own published position.
Insights
01
Commentary
Notes from the house.
02
Letters from the House
Occasional correspondence.
03
Introduction to Legal Capital
This page
04
Definitions
Terms as Hudson uses them.
Read our commentary, or put a matter in front of us.
Correspondence is by written inquiry, under formal information barriers.