How does $111 million flow into Camp Lejeune advertising in a single year? How do aggregators buy $400 million in mass tort TV ads across five torts? The answer: litigation funding.
The Scale of the Market
Third-party litigation funding has grown from a niche financing vehicle to a $16 billion global market in 2024. Mass tort advertising is a primary use case.
The growth has been explosive: as mass tort opportunities multiply and advertising costs rise, the capital requirements exceed what most law firms can fund from their own balance sheets.
How It Works
The Basic Structure
Litigation Funding Flow
Funder Provides Capital
Investment of $5-20M for advertising, intake, and case processing.
Aggregator Deploys Capital
Runs advertising campaigns, manages intake, builds case inventory.
Handling Firm Prosecutes
Attorneys prosecute cases through settlement or verdict.
Settlement Proceeds Flow
Returns distributed through “waterfall” structure to all parties.
Typical Deal Structure
For a $10 million mass tort campaign:
| Party | Role | Economics |
|---|---|---|
| Funder | Provides $10M capital | Returns based on settlement waterfall |
| Aggregator | Runs advertising, intake | Percentage of fee or fixed return |
| Handling Firm | Prosecutes cases | Primary contingency fee |
| Claimants | Plaintiffs | Net settlement after fees |
The waterfall prioritizes return of capital, then splits profits according to negotiated percentages.
Non-Recourse Structure
Most litigation funding is non-recourse. If the cases fail (like Zantac), funders lose their investment. They cannot pursue the law firm or aggregator for repayment.
This risk profile explains why:
- Funders conduct extensive due diligence
- Returns can be high (compensating for risk)
- Funder interest validates tort viability
Who Are the Funders?
Dedicated Litigation Finance Firms
Specialized companies like Burford Capital, Longford Capital, and others focus exclusively on litigation investment. They have legal expertise to evaluate case quality.
Private Equity and Hedge Funds
Mainstream financial institutions increasingly allocate to litigation as an “alternative asset class,” uncorrelated with stock market performance.
Family Offices
High-net-worth families diversify portfolios with litigation investments, typically through fund structures.
Aggregator-Funder Partnerships
Specialized companies operate programs connecting funders directly with mass tort opportunities, providing:
- Case acquisition infrastructure
- Medical record services
- Handling firm relationships
- Ongoing reporting and transparency
Why Funding Matters
Scale
No single PI firm has $100 million to deploy into Camp Lejeune advertising. Litigation funding enables campaigns that individual firms couldn’t finance.
Speed
Mass tort opportunities are time-sensitive. Funders can deploy capital quickly, enabling first-mover advantages that capture cases at $1,000 instead of $5,000.
Risk Distribution
Spreading risk across portfolio of torts protects against individual failures (Zantac) while capturing winners (Camp Lejeune).
Expertise Access
Funders bring analytical rigor: modeling settlement probabilities, evaluating case quality, timing entry and exit.
The Program Model
Some organizations offer structured funding programs connecting funders directly with mass tort opportunities. These programs typically provide:
For Funders
- Tort selection control. Choose which mass torts to invest in
- Handling firm partnerships. Access to MDL leadership relationships
- Proprietary data. Medical record and case modeling information
- Reporting. Ongoing transparency on case status and projections
Program Economics
| Factor | Typical Range |
|---|---|
| Investment size | $5M - $20M per campaign |
| Structure | Non-recourse, waterfall |
| Timeline | Varies by tort stage (6-48 months) |
| Return profile | Varies by tort and timing |
Diversification
Funders can spread investment across multiple torts:
- Some early-stage (higher risk, higher return potential)
- Some mature (lower risk, clearer timeline)
- Some emerging (optionality on future winners)
The Controversy
Critics’ Arguments
Insurance companies and business groups attribute “social inflation” partly to litigation funding:
- Increased advertising drives more claims
- Higher settlement expectations as funders seek returns
- Extended litigation as funded plaintiffs can wait longer
- Frivolous claims when advertising prioritizes volume over quality
Regulatory Response
At least 12 states and 2 other jurisdictions are considering TPLF disclosure requirements, rules that would require revealing when litigation funding is involved.
Proponents of disclosure argue:
- Courts should know who’s financing litigation
- Defendants deserve transparency
- Conflicts of interest should be visible
Opponents argue:
- Work product protection applies
- Disclosure disadvantages plaintiffs
- Level playing field with corporate defendants
Industry Response
The litigation funding industry generally:
- Emphasizes ethical case sourcing
- Supports access to justice framing
- Works with bar-compliant advertising
- Invests in data and modeling to improve case quality
For PI Firms: What This Means
Access Points
Traditional PI firms can access litigation funding through:
Direct relationships: Established firms with track records may secure funding directly for specific cases or portfolios.
Aggregator partnerships: Work with organizations that have funder relationships, participating in cases without needing direct capital.
Referral arrangements: Refer mass tort cases to funded firms, receiving referral fees without capital commitment.
Considerations
Advantages
- Scale cases beyond balance sheet capacity
- Share risk on uncertain litigation
- Access handling firm relationships
- Benefit from funder expertise and modeling
Disadvantages
- Share economics with funders
- Less control over case strategy
- Relationship complexity
- Potential regulatory scrutiny
Evaluating Programs
Questions to consider:
- What handling firms are involved?
- What’s the track record on specific torts?
- How transparent is reporting?
- What’s the fee structure?
- Who controls case criteria and quality?
The Future
Continued Growth
The litigation funding market is expected to continue growing as:
- Mass tort opportunities expand
- Advertising costs rise
- Institutional capital seeks diversification
- Data and modeling improve
Potential Regulation
Disclosure requirements may become more common, affecting:
- How funding relationships are structured
- Discovery implications
- Competitive dynamics
Sophistication
The industry is becoming more sophisticated:
- Better data on case outcomes
- More precise tort evaluation
- Portfolio approaches across litigation types
- Secondary markets for funded positions
Bottom Line
Mass tort advertising at $100+ million scale requires capital beyond what law firms typically have. Litigation funding fills that gap, creating the campaigns that drive claims.
Understanding this financing layer helps explain:
- Why advertising explodes so quickly (capital is available)
- Why some torts get funded (attractive economics)
- Why others don’t (funders pass on weak cases)
- How the industry continues scaling
The $16 billion market behind the scenes is as important as the ads on screen.