How Litigation Funding Works for Civil Fraud Claims in England (2026): Options, Requirements and Practical Steps

Litigation funding civil fraud uk claimants increasingly rely on third-party capital to pursue high-value fraud and asset-recovery claims that would otherwise be unaffordable to bring. In 2026, the funding market has matured but also faced significant uncertainty: funders now apply more rigorous due diligence, courts scrutinise funder influence more closely, and novel structures such as portfolio and hybrid after-the-event (ATE) packages have proliferated. Following the Supreme Court’s decision in R (PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28, which affected the enforceability of many funding agreements structured as damages-based agreements, the market has adapted its documentation, and the shape of any legislative response continues to be debated.

This guide sets out, in practical and procedural terms, how a claimant, insolvency practitioner or in-house counsel can secure funding for a civil fraud claim in England, what funders expect, what documents you must prepare, the realistic timeline, the costs mechanics, and the courtroom risks you must manage.

1. Overview, what litigation funding is and why it matters in civil fraud

Third-party litigation funding is an arrangement under which a commercial funder, unconnected to the dispute, agrees to pay some or all of the costs of pursuing a claim in return for a share of any recovery. If the claim fails, the funder generally loses its investment and the claimant owes it nothing. This non-recourse quality is what makes funding attractive: it converts an uncertain and potentially ruinous cost burden into a defined, recovery-contingent commercial arrangement. For civil fraud, where the sums at stake and the investigative costs are frequently large, funding can be the difference between a meritorious claim proceeding and being abandoned.

The regulatory backdrop is largely self-regulatory in England, principally through the Association of Litigation Funders (ALF) Code of Conduct, supplemented by the courts’ inherent supervision of costs and by the professional conduct rules governing solicitors and barristers. The Civil Justice Council has continued to review third-party funding, and its work remains a key reference point for policy analysis, with 2026 bringing renewed attention to funder conduct, conflicts, disclosure and the treatment of funding agreements after PACCAR.

What funders fund (single cases, portfolios, enforcement)

Funders will finance a range of scenarios: a single high-value fraud claim; a portfolio of claims spread across a law firm or corporate claimant to diversify risk; and, increasingly, the enforcement and asset-recovery stage alone, where a judgment already exists but realising it requires cross-border tracing and execution. In fraud matters, funders are particularly interested in whether there are identifiable, recoverable assets against which any judgment can ultimately be enforced.

Why civil fraud claims commonly seek funding

Civil fraud claims tend to combine three features that draw funders: large quantifiable losses, the need for expensive forensic and investigative work, and complex cross-border enforcement. Freezing orders, disclosure applications and forensic accounting all front-load cost before any recovery. Litigation funding civil fraud uk claimants use spreads that cost and risk across a specialist financier who is comfortable with the profile. The 2026 environment, with its heavier emphasis on enforceability, rewards claimants who can demonstrate a clear route from judgment to recovered assets.

2. Eligibility, which civil fraud claims attract funding

Not every meritorious claim is fundable. Funders screen aggressively because they carry the downside. Understanding their filters lets you position a case to attract capital and negotiate better terms.

Merits criteria funders use

The core merits test combines the strength of the evidence, the likelihood of establishing liability, and the enforceability of any judgment. In fraud, the substantive allegation must be capable of proof to the civil standard, the balance of probabilities, though courts require cogent evidence commensurate with the seriousness of an allegation of dishonesty. Funders will therefore ask what evidence is required to prove fraud in the particular claim: contemporaneous documents, banking and transactional records, admissions, forensic accounting reconstructing the flow of misappropriated funds, and witness evidence. A claim resting on inference alone, without documentary anchors, is far harder to fund. Quantifiable, well-evidenced loss and a realistic damages figure are essential, funders model returns against expected recovery, not headline pleaded sums.

Commercial and strategic criteria

Beyond merits, funders weigh commercial and strategic factors. Limitation is critical: a claim close to or past a limitation deadline is unattractive unless a clear extension or postponement argument exists. Jurisdiction matters, where are the defendant and the assets, and can an English judgment be enforced there? Cross-border enforcement risk is a recurring reason funders decline otherwise strong fraud claims. Funders also assess the defendant’s ability to pay or satisfy a costs order, the prospect of early settlement, and whether interim relief such as freezing orders has preserved the res. A claim with a mapped, reachable asset base and preserved evidence will out-compete a stronger claim with no realistic recovery route.

3. Step-by-step: how to obtain litigation funding for a civil fraud claim

The route from a promising claim to signed funding follows a recognisable sequence. Below is a quick checklist followed by the detailed steps. Approached methodically, litigation funding civil fraud uk applications move faster and secure keener commercial terms because the funder’s diligence is made easy.

1. Prepare a concise, evidence-led funding pack.
2. Identify and approach the right funder type.
3. Enter confidential discussions under an NDA.
4. Support the funder’s due diligence.
5. Negotiate the term sheet and protective clauses.
6. Execute the funding agreement and set drawdown governance.
7. Address court and disclosure considerations.

Step 1, Prepare a short funding pack

The funding pack is your pitch. It should contain a tight claim summary, a chronology, an indication of the recoverable asset map, a costs budget and an enforcement plan. Funders assessing civil fraud claims want to see the shape of the fraud, the documents that prove it, the loss figure and, crucially, where the money went and whether it can be recovered. Keep the initial pack short and compelling; detailed disclosure follows under NDA. A poorly organised pack signals a poorly organised case and depresses the terms on offer.

Step 2, Market the case and identify funder type

Different funders suit different claims. Large commercial funders move quickly and generally prefer higher-value claims; boutique or single-case funders offer bespoke terms and closer engagement; ATE insurers, sometimes as co-funders, focus on costs and liability risk. A specialist broker can widen your reach, but be alert to broker fees. Approach two or three appropriate funders in parallel to create competitive tension without over-marketing the case.

Step 3, Confidential discussions and NDAs

Before disclosing privileged or sensitive material, put a non-disclosure agreement in place. This protects privilege, controls onward circulation and preserves confidentiality if discussions fail. Disclose enough to allow a serious assessment, but stage the release of the most sensitive forensic material.

Step 4, Funder due diligence and directions

This is the most substantive stage. The funder, often with its own external counsel and forensic accountants, will test the evidence, interrogate counsel’s strategy, scrutinise the budget and assess enforcement viability. Expect probing on the weakest links: limitation, causation, the defendant’s solvency and the realism of asset recovery. Under-anticipating this stage is the commonest reason applications stall. Provide organised, cross-referenced material and be candid about weaknesses; funders discount for surprises far more heavily than for disclosed risks. The 2026 market has intensified this diligence, particularly on conflicts, enforceability and the drafting of the funding agreement itself following PACCAR.

Step 5, Term sheet, negotiation and key clauses to request

The term sheet fixes the commercial and control architecture. Key points to negotiate include the funder’s return (a percentage of net proceeds or a multiple of capital deployed), the priority waterfall on recovery, the commitment amount and how it may be increased, and, vitally, control provisions. As a claimant you should press for clauses confirming that the funder does not control the conduct of the litigation, that settlement decisions rest with you (subject to reasonable consultation), and that the funder cannot terminate capriciously. Red flags include broad termination rights, unilateral settlement vetoes, and vague budget-increase mechanics that expose you to funding withdrawal mid-case. Ensure the return mechanism is structured so as to remain enforceable in light of PACCAR.

Step 6, Funding agreement signature, drawdown mechanics and governance

The definitive litigation funding agreement translates the term sheet into binding obligations. Focus on the drawdown mechanics, how and when funds are released against milestones, and the governance framework, including reporting duties, budget-variation procedures and the consequences of adverse developments. Ensure the agreement complies with the ALF Code where the funder is a member, including capital-adequacy and non-control commitments. Clear milestone triggers protect both sides and reduce disputes of the kind seen in Excalibur Ventures LLC v Texas Keystone Inc [2016] EWHC 2436 (Comm).

Step 7, Court considerations and disclosure obligations

Once funded, consider how the arrangement interacts with the litigation. The historic doctrines of maintenance and champerty no longer render properly structured funding unlawful, but courts retain a supervisory interest in funder conduct and costs exposure. The Court of Appeal in Arkin v Borchard Lines Ltd [2005] EWCA Civ 655 addressed the extent of a funder’s liability for adverse costs, and later authorities, including Excalibur, have developed the position, with the courts moving away from a rigid cap on funder liability. You may face an application requiring disclosure of the funder’s identity, particularly in the context of a security for costs application. Plan for these possibilities from the outset rather than reacting to them.

Taken end to end, expect roughly two to five months from a well-prepared pack to signed funding, with the diligence stage the most variable element.

4. Required documents, funder pack and court papers

Funders and courts expect a defined body of documents. Preparing them early accelerates diligence and strengthens your negotiating position.

What funders always ask for

At minimum, funders require a case summary and chronology, the pleadings or draft particulars, a detailed costs budget and an enforcement plan supported by an asset map. For fraud specifically, a forensic accounting report tracing the misappropriated funds and identifying reachable assets is frequently decisive.

What courts may request and what you may need for security for costs

The court may require evidence of your funding arrangements where a security for costs application is made, and you may need to demonstrate the steps taken to preserve assets and evidence, such as any freezing orders already obtained.

5. Timeline and deadlines, typical stages and what triggers funding drawdowns

Funding is rarely released in a single lump. It is drawn down against defined stages, which aligns the funder’s exposure with the litigation’s progress and protects the claimant against over-commitment.

Pre-issue versus post-issue funding

Some funders commit before proceedings are issued, financing the investigative and pleading stage; others prefer to see issued proceedings and a defence before committing significant capital. Pre-issue funding is valuable in fraud, where early asset tracing and freezing orders are decisive, but it carries higher uncertainty and therefore attracts keener funder returns.

Milestone payments and enforcement-stage funding

Post-commitment, drawdowns typically follow milestones: disclosure, exchange of witness statements, expert reports, pre-trial review, trial and enforcement. Enforcement-stage funding is increasingly available as a discrete product for claimants holding a judgment but facing costly cross-border execution. Because enforcement costs in fraud cases can be substantial, ring-fencing this funding within the agreement avoids the risk of exhausting the facility before recovery is realised.

6. Costs and fees, typical structures and who pays what

Understanding the cost architecture is essential to assessing whether litigation funding civil fraud uk claimants are getting a fair deal. The headline point is that funding is expensive relative to self-funding, but it transfers risk, and the comparison is not cost against nil, but cost against the possibility of no claim at all.

Funder fee models

Funders price their return in one of several ways: a percentage of net proceeds, a multiple of capital deployed, or a hybrid combining both, often with the higher of the two applying. Percentage returns commonly fall in the region of around 20% to 40% of net recovery, and multipliers, where used, typically range from around 1.5x to 3.5x of deployed capital, though the precise figures are case-specific and negotiable. The number depends on risk, case duration and the size of the commitment. Note that, following PACCAR, agreements whose returns are calculated by reference to a share of damages may be treated as damages-based agreements and must be structured to comply with the applicable regulations if they are to be enforceable.

Interaction with solicitors’ and counsel’s fees

Solicitors and counsel are usually paid from the facility, though some act on partial conditional fee arrangements alongside the funder. How much UK lawyers charge varies widely: senior counsel in major fraud can command substantial hourly rates, and a substantial fraud claim’s solicitor costs can range from six figures to several million pounds depending on complexity. Clear budgeting and, where used, conditional fee terms should be reconciled with the funding waterfall so that everyone’s expectations of recovery priority are aligned.

After-the-Event insurance and how it sits with funder arrangements

ATE insurance covers the claimant’s exposure to the other side’s costs if the claim fails. It is frequently combined with funding: the funder finances the claim and ATE protects against adverse costs, sometimes with the premium itself funded or deferred. Note that, for most cases, ATE premiums have not been recoverable from the losing party since the changes introduced by the Legal Aid, Sentencing and Punishment of Offenders Act 2012. Hybrid packages remain common in 2026, but the interplay must be documented carefully so cover, premium payment and the funder’s priority do not conflict.

Security for costs and when claimants must provide

Under the Civil Procedure Rules (see CPR Part 25), a defendant may apply for security for costs where, for example, there is reason to believe the claimant cannot meet an adverse costs order. Funded claimants, particularly corporate vehicles or insolvent estates, are frequent targets. Security may be provided by deposit, guarantee or a suitably worded ATE policy. Whether the funder contributes to security should be agreed in the funding agreement, not left to be resolved under pressure once an application is made.

7. What changes in 2026, regulatory and market changes affecting funders and claimants

2026 has been a year of consolidation and heightened scrutiny in the funding market, driven substantially by the aftermath of PACCAR. Claimants pursuing litigation funding civil fraud uk claims should factor these developments into both their strategy and their negotiations.

Key statutory or regulatory reforms

The ALF Code of Conduct remains the principal industry standard, addressing capital adequacy, non-control of litigation and orderly withdrawal. Solicitors advising on funded claims must observe the Solicitors Regulation Authority’s Standards and Regulations, particularly on conflicts and fee transparency, while barristers are bound by the Bar Standards Board Handbook. The Civil Procedure Rules continue to govern costs budgeting and security for costs. Following PACCAR, the enforceability of funding agreements has been a live issue, and the Civil Justice Council has been reviewing the funding landscape; the shape of any legislative response continues to be debated. The direction of travel, reflected in judicial commentary and ongoing policy work, is towards greater transparency about who is funding litigation and on what terms.

Practical effects

The practical consequences for claimants are threefold. First, funder due diligence is more demanding, so a well-organised, candid funding pack is more valuable than ever. Second, conflicts scrutiny has increased, meaning solicitors and funders must document independence and non-control carefully, and funding agreements must be drafted to remain enforceable in light of PACCAR. Third, new hybrid products blending funding, ATE and portfolio structures give claimants more options but require closer legal review to avoid conflicting priority and disclosure obligations. Industry observers expect disclosure of funding arrangements to feature more frequently in interlocutory skirmishing, which strengthens the case for building protective and disclosure-ready structures at the outset.

8. Managing litigation and funding risk in court, costs budgeting, security for costs, disclosure of funder

Securing funding is only half the task; the arrangement must survive contact with the litigation. The most acute pressure points are security for costs, disclosure of the funder, and controlling funder influence.

Security for costs applications, standard defences and claimant tactics

Defendants in funded fraud claims routinely apply for security for costs. Standard responses include demonstrating that the claimant can in fact meet an adverse order, that ATE cover adequately protects the defendant, or that the application is oppressive and designed to stifle a genuine claim. Tactically, having ATE cover in place and a funder willing to stand behind security transforms your negotiating position. Prepare the evidence of means and cover before the application lands, and treat the court’s costs management powers under the CPR as an integral part of your strategy rather than an afterthought.

Disclosure of funder, champerty and maintenance considerations

Modern funding is lawful and champerty no longer bars properly structured agreements, but the court retains a supervisory eye. Following Arkin and later authorities, funders can face liability for adverse costs, and the extent of that liability shapes both funders’ appetite and the disclosure landscape. Claimants may be required to reveal the identity of a funder, particularly on a security for costs application. Anticipate this and ensure nothing in the funding structure would embarrass the claim if disclosed.

Controlling funder influence, governance clauses and case management

The single most important protection is a governance framework that keeps conduct of the litigation, and especially settlement decisions, in the claimant’s hands. The ALF Code requires funders not to take control of proceedings, and this should be reflected in express clauses: reasonable consultation rather than veto, clear escalation for budget variations, and a defined mechanism for resolving strategic disagreement. Well-drafted governance prevents the disputes that can arise when a funder’s commercial interests diverge from the claimant’s litigation objectives.

9. Common pitfalls and how to avoid them

Even well-funded fraud claims can be undermined by avoidable errors. The following are the most frequent, with mitigation steps.

• Over-reliance on the funder for strategy. The funder is a financier, not the client’s litigation lead. Retain independent counsel and reserve strategic and settlement decisions to the claimant through express clauses.
• Inadequate budgets and milestone forecasts. Optimistic or thin budgets cause funding shortfalls mid-case. Build a realistic, milestone-linked budget with contingency and revisit it as the litigation develops.
• Failure to secure enforcement and asset tracing early. Winning a judgment against a defendant with no reachable assets is a hollow victory. Commission forensic tracing and pursue freezing orders early so that the recovery route is protected from the outset.
• Overlooking the enforceability of the funding agreement. After PACCAR, ensure the agreement is structured so that the funder’s return remains enforceable and does not inadvertently fall foul of the damages-based agreement regime.

10. Conclusion: recommended action plan for claimants

For claimants weighing litigation funding civil fraud uk options, the path to a well-funded, well-protected claim is disciplined and front-loaded. Engage specialist counsel early to shape the claim and the funding pack. Commission forensic asset checks so enforcement viability is proven, not assumed. Prepare a tight, milestone-based costs budget. Run a competitive but focused pitch to two or three appropriate funders. Finally, lock in protective clauses on control, settlement, termination and security for costs, and confirm the agreement’s enforceability post-PACCAR, before you sign. Claimants who follow this sequence secure keener terms, survive interlocutory pressure, and preserve their ability to recover what the fraud took.

12. Further resources

To take the next step, consult the practice-area resources below and the primary sources listed. Any sample term sheets, NDAs or funding clauses referenced should be treated as illustrative only and adapted with professional advice before use.

Sources

1. Civil Procedure Rules (Ministry of Justice)
2. Arkin v Borchard Lines Ltd [2005] EWCA Civ 655
3. R (PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28
4. Association of Litigation Funders (ALF), Code of Conduct
5. Solicitors Regulation Authority (SRA), Standards & Regulations
6. Bar Standards Board (BSB), Handbook / guidance
7. Civil Justice Council