Reading a funding arrangement

Roles are not interchangeable

A funder provides capital against the outcome of a claim. An adviser or broker arranges funding but does not necessarily hold deployable capital. A claims purchaser or aggregation vehicle takes assignment of claims and litigates in its own name. A representative body or qualified entity brings a collective or representative action on behalf of a class. A single brand may operate several of these through different legal entities; treat each entity separately.

Vocabulary

Committed vs deployed capital

Committed capital is what a funder says investors have promised; deployed capital is what has actually been advanced. Neither is a recovery figure.

Adverse costs

In "loser pays" systems the losing party may owe the other side's costs. Who bears that risk — and whether after-the-event insurance or security for costs applies — is jurisdiction- and forum-specific.

Waterfall / priority

The order in which proceeds are shared among funder, lawyers and claimants after a recovery.

Control

Whether the funder may influence strategy or settlement. Courts and rules differ on what degree of control is acceptable.

Termination

When and how either side may exit, and what happens to costs already incurred.

Questions worth asking

• Who controls settlement decisions, and what happens on disagreement?
• What is the adverse-cost exposure and who bears it?
• Must the arrangement be disclosed to the court or opponent in this forum?
• Are there conflicts between the funder, lawyers and representative?
• How are fees and the funder's return calculated, capped and prioritised?
• How is a judgment enforced across borders, and who pays for enforcement?

Limits of this guide

Every legal rule on this site carries a jurisdiction, proceeding scope, source and as-of date. This guide does not state a universal rule, suggest contract terms or assess any person's eligibility. Case-specific advice from a qualified lawyer in the relevant forum is required.