By Simon Steele-Williams, Partner and Disputes Resolution Solicitor at Parfitt Cresswell

Most people associate litigation funding with large commercial disputes, the sort of multi-million-pound claims fought between corporations, frequently involving international arbitration or complex financial litigation. For many years, that perception broadly reflected reality, but recently we’ve started to see a change. It is now being explored as an option in smaller, though still high-value, disputes involving individuals, business partners and property owners.

This shift is still the minority, but it is beginning to reshape how some disputes are approached, and it raises important questions about both access to justice and the future of private litigation.

The economics of private disputes

Many private disputes, particularly those involving property, partnerships or shareholder disagreements, can quickly become expensive to resolve through the courts.

Even cases that appear relatively straightforward at the outset can involve complex legal issues, multiple parties, expert evidence and extensive disclosure. As proceedings progress, costs can escalate rapidly. It is not unusual for a dispute involving a valuable property or a business partnership to involve legal costs running well into six figures.

Clients often have an emotional investment to winning a case (sometimes anger but more often a sense of needing to see justice served). For many individuals or smaller businesses, this creates an impossible dilemma. A claim may be strong on its legal merits but pursuing it through litigation requires a financial commitment that is hard to justify or simply impossible to fund.  In these cases, some people are turning to litigation funding.

This involves a third-party funder covering some or all of the legal costs, in return for a share of any recovery. This type of funding can make it possible for claimants to pursue claims that would otherwise remain unresolved.

Changing the balance of power

One of the most significant impacts of litigation funding is the way it can alter the balance of power between parties.

In many disputes, one side has significantly greater financial resources than the other. That imbalance can influence the decision to bring a claim and how the dispute unfolds once proceedings begin. That leaves our legal system open to accusations of ‘justice only for the rich’ and larger corporations and individuals with deeper pockets can use that power to win or escape litigation entirely.

The practical realities

Despite growing interest, litigation funding is unlikely to become the norm for most private disputes.

Funders will naturally focus on cases where there is a realistic prospect of recovery and where the potential damages justify the financial risk involved. Many disputes simply will not meet those thresholds.

Where funding is considered, it also introduces additional layers of complexity. Funders will typically undertake detailed due diligence on the merits of the case and the financial position of the parties involved. Agreements must carefully define the funder’s entitlement and address issues such as control over litigation strategy and settlement decisions. For solicitors and clients alike, these considerations require careful thought.

The potential risks

While litigation funding can expand access to justice, it also raises legitimate concerns.

One of the most frequently discussed risks is that the availability of funding may encourage claims that might otherwise not have been pursued. Critics argue that the involvement of third-party funders could incentivise more aggressive litigation or prolong disputes that might otherwise have settled earlier.

In practice, most professional funders are highly selective and invest only in cases they consider to have strong legal merit. Nevertheless, the growing presence of litigation funding inevitably changes the incentives and dynamics within the system.

A developing trend

For now, litigation funding remains far more common in large commercial cases than in private disputes. But its presence outside the corporate sphere is slowly expanding.

As awareness grows and funding models evolve, law firms like ours may see more clients exploring whether third-party funding could support claims involving property, business relationships or other high-value private disputes.

However litigation funding is unlikely to transform every private dispute. But where it does appear, it has the potential to change the entire dynamic of a case, from the willingness to pursue a claim in the first place to the balance of power during settlement negotiations. As funding models continue to evolve, the real challenge for the legal profession will be ensuring that the availability of capital supports genuine access to justice, without encouraging disputes that might otherwise have been resolved more quickly and constructively. That balance will shape how the next phase of litigation funding develops beyond the commercial courts.