Litigation Funding as Law Firm Strategy: Six Ways Forward-Thinking Firms Use Capital to Compete

Large law firms now account for 37% of new litigation finance commitments in 2024, according to Westfleet Advisors, a figure that reflects how fundamentally the relationship between law firms and litigation capital has matured. The litigation funding market was valued at $20.64 billion in 2025 and is projected to reach $51.09 billion by 2036, growing at a CAGR of 8.08%. That growth is being driven not just by more cases but by more sophisticated law firm strategies around how capital is used.

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Here is how forward-thinking contingency firms are deploying litigation finance as a competitive advantage.

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1. Taking on larger cases without cash flow risk

An active plaintiff's firm can have hundreds of thousands or even millions of dollars locked up in case costs at any given time, capital unavailable for growing the practice or distributing to partners. Litigation funding changes that calculus. By advancing capital against a case's expected recovery, funding allows firms to accept matters that would otherwise exceed their capital capacity.

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Funded firms can invest fully in expert witnesses, e-discovery, depositions, and trial preparation without rationing based on available cash.

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2. Portfolio funding to smooth revenue

Portfolio funding — where a funder advances against a firm's entire docket rather than individual cases — introduces diversification that smooths the feast-or-famine cycle inherent to contingency practice. Wins across the portfolio offset losses on individual matters, and the economics are typically more favorable than case-by-case arrangements.

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Litigation finance is shifting from single-case support to portfolio deals as its primary growth driver, reflecting how firms are using funding for long-term risk management across their entire docket rather than one-off matters.

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3. Funding as a competitive differentiator

When pitching a prospective client, the ability to say "we can fund this case regardless of its size" is a meaningful differentiator. Highly successful firms with millions in expected future receivables can still struggle to meet monthly overhead and fund case expenses — and the firms that solve this problem can pursue cases that competitors with the same legal expertise must turn away. Funding access converts legal excellence into a capacity advantage.

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4. Working capital facilities separate from case funding

Contingency firms don't bill by the hour. They front every dollar spent on a case — staff salaries, expert witnesses, court costs, discovery, litigation technology — sometimes for years, with no revenue until settlement or verdict. A firm with a strong docket can be simultaneously "rich on paper" and cash-poor in practice.  A working capital facility is a revolving or term credit line extended to the law firm itself (not against any single case) that allows the firm to fund day-to-day operations and case expenses. 

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5. How funding affects firm valuation and partner distributions

A firm with predictable, smoothed revenue is a more valuable firm than one lurching between large paydays and cash crunches. Litigation funding — particularly post-settlement/judgment funding against confirmed receivables — allows firms to accelerate partner distributions, reduce reliance on over extended credit facilities, and present a more stable financial profile. For firms contemplating a merger, acquisition, or succession planning, financial predictability is a direct driver of valuation.

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6. Deferring expert and discovery costs

Expert witnesses, e-discovery, depositions, and trial preparation represent costs that can easily exceed $500,000 or more in complex commercial or mass tort cases, all of which must typically be funded before a single dollar of fee income arrives. Pre-settlement funding allows firms to defer these costs against future recovery rather than drawing on operating capital. The firm invests fully in the quality of the case. The funder bears the timing cost of that investment.

Where RD Legal Funding fits

RD Legal Funding has provided post-settlement/judgment funding to contingency law firms since 1998. For firms whose capital needs are concentrated not in pending litigation but in the gap between confirmed settlements and distributed payments, we offer a specific and immediate solution: liquidity against confirmed legal receivables, without the timeline uncertainty of pre-settlement funding.

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The firms that use litigation finance most effectively are not those that rely on it as a last resort. They are the ones that have incorporated it as a deliberate component of their business strategy — using it to shape which cases they take, how they fund them, and how they manage revenue across a docket designed for long-term growth.

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To learn more about strategic options for your practice:

Phone: (800) 565-5177

Email: info@legalfunding.com

Website: www.legalfunding.com

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Roni Dersovitz is the founder and CEO of RD Legal Funding, a pioneer in providing innovative liquidity solutions for contingency law firms, settlement claimants, and legal receivables. With over 25 years of experience in litigation finance, Roni has helped transform legal victories into immediate financial results for thousands of clients. To learn more, visit www.legalfunding.com or contact us at info@legalfunding.com or (800) 565-5177.

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Sources: Westfleet Advisors 2024 Litigation Finance Market Report; Research Nester Litigation Funding Market Forecast 2026–2036; Remo Litigation Finance 2025 Trends; GLS Capital 2025 Litigation Finance Trends; Wolters Kluwer ELM Solutions 2024; Plaintiff Magazine, "Financial Management in a Contingent Fee Practice."