Broadly speaking, litigation funding is the funding of legal cases by third parties for a pre-agreed share of the proceeds (costs + damages) if the case is successful - either through settlement or winning at trial.

In the UK, litigation finance can be traced back to the 1967 Criminal Law Act, which helped to address third-party litigation funding within the context of Maintenance and Champerty laws. Maintenance focuses on people who are not part of a legal case providing funding for that case, while Champerty is Maintenance for a price.

Maintenance and Champerty had a history of being illegal in the UK, so the 1967 Criminal Law Act needed to include a caveat that respected public policy. When this occurred, there was still confusion over the context in which litigation finance could be used.

In the 1990s, legislation was introduced to clear up this confusion and remove Maintenance and Champerty as crimes and torts. Parliament even enacted laws to help middle-income litigants who were unqualified or unable to access legal aid.

Today, litigation funding has seen growing acceptance both by the public, investors and the judiciary - particularly with the recent reforms to the UK justice system and rapidly rising cost of pursuing legal claims.

Outside the UK, litigation funding is a well established tool in other common and civil law jurisdictions such as Australia, the USA and Canada.
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