Source: AdobeStock. (Yuliia).

Litigation funding firms like Therium claim to provide access to justice for plaintiffs who otherwise couldn’t afford to pursue legal action. By covering legal fees in exchange for a portion of any financial award, these firms have positioned themselves as champions of fairness. However, a closer examination of their role in the legal system reveals a more troubling reality. While litigation funders undoubtedly help bankroll lawsuits, their true motives are profit-driven, often at the expense of plaintiffs and the integrity of the judicial system.

Therium: A Leader in the Litigation Finance Industry

Founded in 2009, Therium has established itself as a dominant player in litigation finance, funding cases across commercial litigation, international arbitration, and even mass torts. The firm boasts over a billion dollars in committed capital and has backed numerous high-profile cases. However, the company operates in a largely unregulated industry, raising concerns about conflicts of interest and the undue influence financiers may have on legal strategy and case outcomes.

Who Really Benefits? Plaintiffs or Investors?

Litigation funders like Therium present themselves as leveling the playing field, allowing financially disadvantaged plaintiffs to take on deep-pocketed defendants. In practice, however, these arrangements often serve the interests of investors more than those of the claimants. Plaintiffs will frequently fall victim to a large payout gap, the pressure to settle or prolong, and a loss of control.

In many cases, the funders will see high returns, but the plaintiffs will receive limited payout. The bulk of a settlement or court award is consumed by legal fees and funder profits. Plaintiffs may receive far less than they initially expected once all stakeholders take their cut. Typically a lawyer will receive around 30-40% of the recovery in a successful case. A litigation funder commonly receives 20-50% of the reward, though this often depends on the length and complexity of the case itself. Compounded on that, Some litigation funding agreements include interest rates that can significantly increase the funder's share over time. For instance, consumer legal funding interest rates may range from 15% up to 124%, reducing the plaintiff's net recovery.

Moreover, as profit-driven entities that only earn returns when cases succeed, litigation funders may pressure plaintiffs to settle, even if pursuing a trial could result in a more favorable outcome. Conversely, they have also been known to unduly prolong litigation as it can increase the revenue they will receive.

Finally, once funding is secured, plaintiffs may experience a loss of control as they find themselves sidelined as investors and their legal teams dictate the direction of the case. Often, the main issue at the heart of the plaintiff’s claim can get lost, misinterpreted, or ignored altogether.

…Once funding is secured, plaintiffs may experience a loss of control as they find themselves sidelined as investors and their legal teams dictate the direction of the case.

Case Studies: Therium’s Controversial Involvement

Several high-profile cases have raised ethical and legal questions about Therium’s influence on litigation. While confidentiality agreements prevent full transparency in many instances, certain cases provide insight into the firm’s practices.

The UK Truck Cartel Case: Therium was a major backer of a class-action lawsuit against truck manufacturers accused of price-fixing. The case settled for billions, but questions arose about how much of the settlement ultimately went to affected businesses versus the funders and law firms involved.

The Ingenious Media Dispute: Therium funded investors who sued the UK government over tax relief policies affecting media investment schemes. The lawsuit drew criticism for appearing to serve the financial interests of investors rather than genuinely addressing regulatory overreach.

The Malaysia-Sulu Arbitration: Therium financed a group claiming to be descendants of the Sulu sultanate in their arbitration case against Malaysia, seeking billions over a colonial-era land agreement. The case led to significant diplomatic and legal repercussions, with Malaysia challenging the legitimacy of the arbitration and Therium’s role in backing the claim. Critics argued that the litigation funding enabled an attempt to extract financial compensation under legally dubious circumstances.

Ethical and Regulatory Concerns

Therium’s activities highlight broader ethical concerns surrounding litigation finance. One major issue is lack of transparency, as many litigation funding agreements remain confidential. This secrecy makes it difficult for courts and regulators to assess the true influence funders exert on legal cases. Additionally, conflicts of interest arise when the financial goals of Therium and its investors do not necessarily align with what is best for plaintiffs or the integrity of the legal process. Furthermore, regulatory gaps persist, with litigation finance remaining largely unregulated in many jurisdictions. While some regions are moving toward stricter oversight, the lack of comprehensive regulations creates opportunities for exploitation and potential misuse of the legal system.

Conclusion

While Therium and other litigation funders promote their role as enablers of justice, their business model ultimately prioritizes profits over plaintiffs. The rise of litigation finance raises critical questions about fairness, transparency, and control within the legal system. Without greater oversight and regulation, the risk remains that these financial backers will continue to exert an outsized and often problematic influence in the courtroom. In the end, the real winners may not be those seeking justice, but the investors, like Therium, who turn lawsuits into lucrative financial instruments.

REFERENCES

Appelbaum, B. (2010, November 14). Investors put money on lawsuits to get payouts. The New York Times. https://www.nytimes.com/2010/11/15/business/15lawsuit.html

Claims Update: Third party litigation funding - TransRE. (2024, November 5). TransRe. https://www.transre.com/claims-update-third-party-litigation-funding

Post Office subpostmasters scandal | Case study - Therium. (2022, October 7). Therium. https://www.therium.com/case-studies/post-office-scandal

Road Haulage Association Limited | Price-Fixing Cartel - Therium. (2024, December 5). Therium. https://www.therium.com/case-studies/road-haulage-association-limited

Williams, D. (2023, October 25). Class Action Funding: PACCAR and now Therium – what does it mean for class action litigation? DWF. https://dwfgroup.com/en/news-and-insights/insights/2023/10/class-action-funding-paccar-and-now-therium

Womack, J. (2024, June 6). Litigation Funder Therium Accused of ‘Wilful Negligence’; in ‘Rogue Arbitration’ Lawsuit. Law.com International. https://www.law.com/international-edition/2024/06/04/litigation-funder-therium-accused-of-wilful-negligence-in-rogue-arbitration-lawsuit