When can the funder discontinue financing litigation?
Generally, in a litigation finance case, the funder can only discontinue financing if there is a ‘material adverse decline’ in the prospects of the case. That can include the defendant going bankrupt, a reduction in the claim value resulting from new evidence, or the position on liability declining below a 50% chance of success. However, if a funder does discontinue funding, they would pay all costs up to the date of termination (including adverse costs, if applicable). It’s rare for a funder to discontinue funding a claim - and it’s not a step taken lightly. Outside of the immediate investment loss, there is a reputational impact on the litigation funder, particularly if they were to discontinue funding on multiple occasions.