Capital deployed to new commercial litigation funding deals rose sharply in 2025, though ongoing fundraising challenges kept the market tight, according to Westfleet Advisors.
New capital commitments in the U.S. commercial litigation finance market increased approximately 23% in 2025 compared with the prior year, snapping a two-year streak of declining activity, according to Westfleet Advisors’ 2025 Litigation Finance Market Report.
The rebound was driven not by a broad influx of new investor capital but by incremental deployment among a relatively small group of established funders, the report said. Westfleet identified 39 active litigation funders in the U.S. market, though several deployed very little new capital during the period, and only one new entrant joined the market as other participants entered wind-down phases.
Market Conditions Remain Constrained Despite Growth
While the uptick in commitments represents a notable shift from recent contraction, the litigation finance market has not returned to an expansionary footing, according to the report. Many funders continue to struggle with raising new capital from investors, Westfleet found, and those constraints have led to more cautious underwriting and selective deal-making across the industry.
The average transaction size across all deal types was approximately $8.1 million in 2025, roughly in line with the $8 million average in 2024, the report said. However, the composition shifted: single-matter deals averaged about $4.5 million, down from $6.6 million the prior year, while portfolio transactions averaged roughly $19.6 million, up from $16.5 million. Portfolio deals — which finance multiple, often unrelated, legal cases at once — continued to represent the majority of new capital commitments at 64%, compared with 67% in 2024.
The balance between client-directed and firm-directed funding also shifted. Client-directed arrangements accounted for 52% of capital allocations in 2025, reversing the prior year’s split in which firm-directed deals represented 58% of commitments, according to the report. Allocations to claim monetization — transactions in which funding is used to unlock the value of existing legal claims rather than to cover legal budgets — declined to approximately 17% of new commitments, down from 26% in 2024, though Westfleet cautioned that a single year of data may not signal a reversal of longer-term trends.
Big Law Funding Drops as Portfolio Deals Pull Back
One of the most significant shifts in 2025 was a sharp decline in litigation finance utilization among the 200 largest U.S. law firms, according to the report. Big Law, as Westfleet terms the sector, accounted for 24% of total funding commitments, down from 37% in 2024, according to the report. The decrease was largely driven by a substantial reduction in law firm portfolio deals involving these larger firms, the report said. While Big Law remains a meaningful participant in the market, the unusually high share of commitments directed toward large firms in 2023 and 2024 has moderated back toward historical norms.
Patent litigation remained one of the largest funded categories at 27% of commitments, down from approximately 32% in 2024, with most capital in the category deployed through portfolio transactions, Westfleet found.
Insurance and Co-Investment Trends Emerge
For risk managers and insurers tracking the intersection of litigation finance and insurance, the report noted that contingent risk insurance continued to play a growing role. Approximately 21% of new capital commitments in 2025 were fully or partially insured, up from 19% in 2024, according to the report.
Westfleet also introduced a new metric tracking co-investment activity — deals in which two or more litigation funders participated together, excluding sidecar arrangements with limited partners. Only 7% of deals in 2025 involved such co-investment arrangements. The firm said it began tracking the metric after observing increased collaboration among funders as a means of managing risk exposure and accommodating larger or more complex funding opportunities.
In a notable methodological change, Westfleet declined to publish industry-wide assets under management figures for the first time, stating that AUM is not a reliable measure of annual financing activity and that such figures “have frequently been misunderstood or mischaracterized in public policy debates regarding litigation finance.” The firm said annual deal volume and capital commitments to new transactions are more accurate indicators of the market’s size and direction.
Obtain the full report here. &