Third-party litigation funding has introduced a new actor into liability claims -- one with deep pockets, a long time horizon, and no interest in early resolution.
When a litigation funder backs a plaintiff, the economic calculus of settlement changes. The claimant has access to sustained legal resources regardless of their own financial position. The funder's business model incentivizes the largest possible ultimate recovery, not early settlement. The result is often more aggressive litigation and higher resolution values.
Claims leaders need to identify funded cases early in the lifecycle, adjust reserve adequacy assumptions for litigation expenses and extended duration, and review settlement authority levels that were calibrated to a pre-funding environment.
The litigation funding industry is growing rapidly and is increasingly active in general liability, commercial auto, and mass tort contexts. Understanding its impact is no longer a niche concern for large-account claims teams -- it is a mainstream claims management challenge.
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