Litigation funding for costly asset tracing and disclosure applications

In high net worth divorce cases the cost of asset tracing, forensic accounting and cross border disclosure can become prohibitive. Litigation funding often provides the practical means to pursue costly but necessary lines of enquiry without exhausting personal resources or undermining commercial stability. In this guide I explain how litigation funding works in England and Wales how I assess whether funding suits a client the types of funders and funding structures available, due diligence expectations, contractual and ethical considerations, and practical steps I take to protect clients’ interests while pursuing asset tracing and disclosure applications.

What litigation funding is and why it matters

Litigation funding supplies capital to pay legal fees expert reports and investigative costs in return for an agreed funding fee or share of recoveries. For high net worth divorce clients funding can be the difference between running full scale forensic tracing across jurisdictions and accepting a compromised settlement. Funders invest in the merits of the case and in the anticipated recoveries that follow successful disclosure, freezing orders or settlements. Using external funding preserves liquidity for the client’s business needs and isolates personal balance sheets from protracted discovery expenses.

When I consider funding for asset tracing and disclosure

I propose funding when the cost of investigation or international enforcement outweighs the client’s appetite to self‑fund, or when pursuing disclosure will materially improve bargaining power but requires immediate outlay. Typical triggers include:

– Complex cross border tracing involving multiple jurisdictions.

– Substantial expert work such as blockchain analytics, forensic accounting or valuations.

– Applications for Norwich Pharmacal orders or urgent freezing orders that require urgent expert input.

– Cases where the respondent has deep concealment strategies and a high risk of dissipation.

– When the client wants to preserve capital for business operations rather than divert funds to litigation.

I weigh funding as a practical tool, not a panacea. Funding suits cases with a credible merits case a realistic recovery path and manageable legal risk.

Types of funders and funding models

The market offers different funder types and deal structures. Knowing options helps you choose a suitable partner.

– Third party funders. Specialist litigation finance firms provide capital in return for a proportionate share of proceeds. They typically underwrite on a non‑recourse basis so the client does not repay if the case fails.

– Law firm financing arrangements. Some firms offer deferred fee structures or introduce funders. These may reduce immediate cash calls but require careful conflict checks.

– Boutique family litigation funders. Smaller funders sometimes focus on family law or asset recovery and may offer flexible terms tailored to matrimonial contexts.

– Hybrid arrangements. Funders sometimes combine cash funding with providing access to networks of forensic experts, overseas counsel and enforcement specialists. This bundled approach can accelerate investigations.

– Insurance and adverse costs insurance. After an order or at a defined stage clients may secure insurance to cover adverse costs risk. While not funding per se, insurance complements funding by limiting downside exposure.

Each model carries different costs, control implications and disclosure requirements. I help clients match the model to the case’s profile.

What funders assess: merits, recoverability and enforceability

Funders conduct rigorous due diligence. I prepare clients for those inquiries and structure the case to maximise funding prospects.

Key funder criteria include:

– Merits of the claim. Funders assess whether the underlying claim is credible and whether disclosure or tracing is likely to lead to a measurable recovery. I produce early forensic reports that show the flow of funds and corroborate the claim.

– Quantum and recoverability. Funders want a plausible valuation of recoverable assets and a clear path to enforcement. I present valuation ranges, secure freezing or preservation evidence, and demonstrate reachable nodes such as correspondent banks custodial exchanges or formation agents.

– Legal and enforcement risk. Funders examine jurisdictional risks, enforceability of orders abroad and the likelihood of opponent resistance. They scrutinise prior procedural history and possible legal defences.

– Costs estimate and escalation risks. Funders need a realistic budget from the outset, including expert fees, foreign counsel costs and likely forensic work. I present phased budgets and decision points.

– Conflict and ethical issues. Funders check for conflicts with counsel or advisers they might intend to appoint. They also evaluate the client’s credibility and litigation history.

– Exit scenarios. Funders prefer clear exit mechanisms such as settlement, freezing and sale of assets, or enforced judgment recoveries. I quantify potential exits and timeframes.

Preparing this dossier improves the chance of funding and often sharpens the litigation strategy.

How funding agreements are typically structured

Funding agreements set the commercial relationship and must balance the client’s interests with the funder’s return expectations. Typical terms cover:

– Funding amount and permitted uses. The agreement defines precisely which costs the funder will cover such as lawyer fees expert reports forensic services foreign counsel and enforcement costs.

– Non‑recourse provision. Most funders take non‑recourse positions limited to a share of recoveries, leaving the client responsible only for agreed undertakings such as accurate disclosure about assets. I negotiate to limit any residual client liability.

– Share of proceeds or multiple. Funders seek either a percentage of proceeds or a multiple of funds advanced plus costs. I negotiate sliding scales and caps to protect client upside.

– Control, decision making and settlement approval. Agreements often require funder consent for major decisions including settlement, discontinuance or change of counsel. I aim to limit consent rights and preserve client control over settlement decisions.

– Security and charge. Funders sometimes require a charge over recoveries or over particular assets. I limit charges to proceeds of the funded litigation rather than broader personal or corporate assets.

– Confidentiality and publicity. Clients demand confidentiality; funders usually accept non‑public funding but may require limited disclosures to their compliance teams.

– Termination and default provisions. The agreement must set out events of default, consequences and dispute resolution mechanisms. I negotiate gentle cure periods and mediation steps before extreme remedies.

– Costs on adverse outcomes. I ensure adverse costs exposure is clear and where possible secured by separate insurance rather than the funding agreement.

I instruct specialist funding counsel to review terms and to protect client autonomy and upside.

Ethical considerations and professional obligations

Funding introduces ethical dimensions that solicitors must manage.

– Conflict of interest. Solicitors must avoid conflicts with funders. I check funder relationships, disclose funding arrangements to the court where necessary and obtain informed client consent.

– Independence of counsel. Funders sometimes propose panel counsel. I ensure the client retains right to choose lawyers and I reject funder control that undermines duty of advocacy.

– Confidentiality and privilege. Funding due diligence may require sharing privileged material. I structure staged disclosures and protective undertakings to preserve privilege and to ensure funder confidentiality.

– Duty to the court. Funding must not encourage frivolous or oppressive litigation. I maintain professional obligations to present cases honestly and to avoid funder driven strategies that conflict with best client interests.

Clear documentation and transparency avoid ethical pitfalls.

Practical tactics to improve funding prospects

I use practical measures that make a funding application attractive.

– Produce an initial forensic memo. A concise skeleton report from forensic accountants or blockchain analysts shows funders the likely flow of funds and the nodes to target.

– Secure early interim relief. Freezing orders preservation notices and early Norwich Pharmacal returns materially improve recoverability and thus funding terms. I coordinate urgent relief before formal funding where possible.

– Stage the budget. I present funding in tranches linked to milestones such as Norwich Pharmacal return receipt, expert report delivery and first foreign application. This reduces upfront commitment and clarifies decision points.

– Propose realistic settlement thresholds. Funders like clear settlement thresholds and exit events. I negotiate ranges and approval procedures that respect client interests.

– Use insurer or security for adverse costs. Securing adverse costs insurance independently improves funding terms because funders face lower downside risk.

These steps speed funding and secure more favourable economics for the client.

Managing cross border and enforcement costs within funded cases

Cross border work often inflates budgets. I manage those costs carefully.

– Prioritise nodes with UK nexus. Many foreign traces pivot on UK correspondent banks registrars or service providers. Targeting them first yields high leverage at lower cost.

– Use local counsel selectively. I summon foreign counsel only where necessary and coordinate their work tightly to avoid duplication.

– Negotiate fixed fees with key experts. Where possible I obtain capped fees or staged payments with deliverables to control escalation.

– Consider contingent enforcement budgets. For particularly risky jurisdictions I negotiate additional funding tranches conditioned on positive domestic returns.

Pragmatic planning keeps funded projects within realistic cost bounds.

What I negotiate on behalf of clients

I focus negotiation on client protective points:

– Minimise funder control over settlement. Clients must retain ultimate settlement authority. I aim for funder consultation rights but not absolute veto.

– Cap funder return wherever possible. Sliding scales with decreasing funder share as recovery increases protect client upside.

– Limit security to specific recoveries. I resist charge over broader client assets. Security should attach only to litigation proceeds or specific identified assets.

– Ensure transparency and reporting. Funders should provide periodic reports but confidentially and subject to privilege protections.

– Provide termination protections. I secure grace periods, dispute resolution and protections against unilateral funder withdrawal at critical moments.

Negotiation secures a balanced commercial relationship that supports litigation while protecting the client.

Court notification and confidentiality

English courts expect transparency about funding in certain circumstances. I disclose funding arrangements when ordered, when adverse costs insurance interacts with funding or when funder consent is relevant to settlement approval. I resist unnecessary public disclosure and secure sealed filings where confidentiality is vital. Courts accept confidentiality protocols where funders demonstrate legitimate confidentiality concerns.

Practical checklist before seeking funding

– Produce a concise forensic memo showing asset flows and likely recoverable nodes.

– Secure early preservation or freezing relief where possible to demonstrate recoverability.

– Prepare phased budgets with clear milestones and contingency plans.

– Identify likely funders and review their track record in family or asset tracing contexts.

– Instruct funding counsel to review term sheets and to draft client protective clauses.

– Obtain preliminary counsel and expert estimates to support funder due diligence.

– Consider adverse costs insurance to improve funding terms.

– Negotiate control and return mechanics emphasising client autonomy and upside protection.

– Prepare privilege and confidentiality protocols for funder due diligence.

– Plan for court disclosure only when necessary and seek sealed protocols to protect reputation.

Conclusion — use funding strategically not reflexively

Litigation funding unlocks possibilities in high net worth divorce that would otherwise prove unaffordable. Used wisely it funds the tracing, forensic and cross border work that uncovers concealed assets, secures freezing orders and transforms negotiation outcomes. My role as senior partner at Alexander JLO is to assess merit, prepare the case to attract favourable funding, negotiate protective terms and manage ethical and practical risks so clients retain control while pursuing justice. If you face a costly asset tracing or disclosure challenge contact us. We will assess whether funding suits your case outline the likely budget and funding options and help secure the best possible commercial terms so you pursue the disclosure and recovery necessary to protect your financial future.

Alexander JLO Solicitors are well aware that going through divorce can be very difficult. Whilst the implementation of no-fault divorce back in 2022 has made the legal process much simpler, there are times, especially in relation to financial matters, when input from an experienced solicitor is vital.

With that in mind we have developed a revolutionary new service which will ascertain whether or not it’s wise to have legal advice on finances when going through divorce. Simply called Form Easy it will assess your level and type of assets and determine if you qualify for a free, no-obligation consultation to discuss your case with us and decide on the best ways forward for you. Simply click the Form Easy button, or visit the page here, answer a few short questions and we will let you have our input on whether we can help. 

Alexander JLO we have many years of experience of dealing with all aspects of family law and will be happy to discuss your case in a free no obligation consultation. Why not call us on +44 (0)20 7537 7000, email us at info@london-law.co.uk or get in touch via the contact us button and see what we can do for you?

This blog was prepared by Peter Johnson on 2025 and is correct at the time of going to press. With over forty years of experience in almost all areas of law Peter is happy to assist with any legal issue that you have. He is widely regarded as one of London’s leading divorce lawyers. His profile on the independent Review Solicitor website can be found Here.

To follow up on any of the above please contact Guy Wilton of our family department. Guy has wide experience of acting for the firm’s clients, their family and their businesses. Guy’s experience as a lawyer started in the Northern and Welsh Circuits, including the Liverpool Courts, where he represented numerous clients after being called to the Bar, before opting to join Alexander JLO in 2017 and qualifying as a solicitor in 2024. He is a highly experienced family lawyer with a particular interest in financial remedy proceedings and child contact disputes.

Guy’s profile on the independent Review Solicitor website can be viewed here.