What is Class Action Funding?

Class action funding is the crucial third party funding mechanism that facilitates and enables class action litigation and other complex group proceedings. Class action funding involves external investors, normally specialised litigation funding firms such as Woodsford, providing the necessary capital to claimants or law firms to pursue class actions and related legal matters.

Class action funding plays a pivotal role in levelling the playing field by ensuring that access to justice is not contingent on a claimant’s financial resources. It allows claimants, including individuals and smaller businesses, to participate in class actions against larger, well-funded defendants, such as corporations or institutions.

Providers of the class action funding assess the potential merits of a class action and provide funding for legal fees, expert witnesses, court costs, and other litigation expenses. In return, they typically receive a portion of the eventual settlement or judgment, if successful. This arrangement mitigates the financial risk for claimants and their lawyers, but also ensures only meritorious class actions proceed.