"Investment decisions are typically made very early in the life cycle of a case, when, in most cases, the full evidential picture is unavailable. Funders price this risk into the returns sought.""
"Investors will inevitably be attracted by the high rates of return that can potentially be achieved through investing in litigation, particularly at a time when investment performance elsewhere may be underwhelming. Funders typically look for returns of at least 2.5/3 times the amount invested (plus principal), or a percentage of damages, 25 / 30% seems commonplace, whichever is greater."
"Funders must ensure that they do not control the litigation, as this would offend the common law rules of champerty and maintenance. The law does, however, recognise that providing finance is not in and of itself "control." Potential funders should also be aware of the risks of being liable for the opponent's costs if the litigation fails. To address this risk, funders typically require specialist insurance cover, known as After The Event insurance, to be in place alongside the funding package in order to meet any potential adverse costs orders."