Though dedicated litigation funding firms are in retreat after high profile defeats including the Sulu arbitration, conventional equity is expressing a growing interest litigation finance, one that may introduce greater billions in the opaque monetization of justice. Image Source: ACLU

A key example, Therium, has outsourced control of its cases to Fortress Investment Group, perhaps a sign that funders are becoming acquisition or outsourcing targets for private equity groups looking to get involved without building infrastructure from scratch while also limiting their own public exposure.

The decision is likely driven by a series of failed investments including the UK postmasters’ case and controversial international litigation like the infamous Sulu arbitration and Gbarabe v. Chevron Corp.

Specialized litigation funders in retreat

Therium’s move was not an isolated signal of strain. The UK law firm Pogust Goodhead, backed by Gramercy Funds Management, cut around 20% of its workforce late last year, with its founders later departing; Litigation Capital Management said in June 2025 that it had stopped actively marketing a fund, citing uncertainty linked in part to potential changes to US tax rules.

Even the largest players have struggled to escape headwinds. Shares in Burford Capital have fallen sharply this year. Although the firm won a major judgment in 2023 tied to Argentina’s nationalization of oil company YPF, payment has been delayed by proceedings in US courts. Within the industry, there is growing acknowledgment that management profits have historically been elusive, with returns concentrated in a small number of exceptional outcomes.

A frequently cited example is the long-running UK class action against Mastercard. Originally valued by claimants at tens of billions of pounds, the case was ultimately settled for a fraction of that figure. For critics, the gap between expectation and reality has become a shorthand for the sector’s structural problems.

Therium has responded by unveiling an advisory arm designed to link conventional finance, such as private equity, with legal claims, a shift that reflects a broader recalibration underway. Ethical rules still prevent non-lawyers, including private equity firms, from owning law firms outright. But investors have increasingly found routes in through alternative business structures or management services organizations. Fortress, for example, has taken a 20% stake in a personal injury practice in Arizona without directly breaching professional ownership rules.

A more conservative approach than Therium’s?

The question is whether institutions now entering the space intend to repeat the same high-risk strategies that defined the industry’s boom years. For Fortress, signs suggest a different approach.

The transfer of management over Therium’s caseload followed the launch of a new Fortress-backed vehicle, Fortress Legal Assets Fund II, which is seeking to raise up to $1 billion. The fund is intended to invest across legal assets, litigation finance and regulatory-driven situations, according to people familiar with the plans.

Its targeted returns, reported to be in the mid-teens, suggest a focus on smaller, less politically exposed claims rather than the high-profile international disputes that once defined Therium’s brand. Those investments, most infamously including the Sulu arbitration, promised eye-catching multiples on returns, but have uniformly failed to deliver.

“Fortress Legal Assets Fund II’s targeted returns, reported to be in the mid-teens, point toward a focus on smaller, less politically exposed claims rather than the high-profile international disputes that once defined Therium.”

A new threat to transparency?

There are other reasons private equity might find a firm like Therium useful. Buyout groups are often criticized for pursuing relatively short investment horizons, using leverage to limit their downside and exiting once performance has been reshaped, even if longer-term stability suffers. That model has left numerous portfolio companies under strain when conditions turn. If litigation assets are being managed with similar incentives, critics argue, the risks may be shifted rather than reduced.

Yet Fortress appears to be accumulating legal assets rather than quickly recycling them. That raises another possibility: that Therium itself functions as a buffer. While the precise terms of the arrangement are not public, Fortress could use Therium’s existing infrastructure, staff and brand as an intermediary to manage both current and future cases. Doing so would give access to experience in navigating Europe’s complex legal landscape, while keeping a degree of distance between Fortress and the disputes themselves.

This raises the specter that Fortress may not represent a more disciplined approach after all, but a future where controversial cases like the Sulu arbitration continue, this time with a controlling private equity hidden in the shadows of a hallowed out Therium.

“Fortress may represent a future where controversial cases like the Sulu arbitration continue, this time with a controlling private equity hidden in the shadows of a hallowed out Therium.”

That prospect introduces a renewed concern for an industry already criticized for its lack of transparency. For opponents of third-party funding, the fear is not just about who pays for lawsuits, but how much visibility remains over who ultimately stands to benefit when justice becomes an asset class.

REFERENCES

Bloomberg. Fortress law firm investment signals shift in legal industry. (2025, August 28). HK Law. https://www.hklaw.com/

Knowsulu (2025, June 17). Inside the Fortress: Capital, Control, and the Quiet Collapse of Therium. https://knowsulu.ph/

Knowsulu. (2025, November 14). Therium’s activity underscores national security risks in litigation funding. https://knowsulu.ph/

Naik, G. (2025, December 2). Litigation Finance Hits a Wall After Bets on Huge Gains Falter. Bloomberg. https://www.carriermanagement.com/

Siegel, E. (2025, August 30). A Fortress investment in Arizona law firm litigation finance. Bloomberg Law. https://news.bloomberglaw.com/