Therium’s Multi‑Million Gambles Expose Structural Risks in Litigation Finance

Manila, Philippine - An investigation by KnowSulu highlights how Therium, once a litigation funding powerhouse, is scaling back and transferring liabilities amid mounting losses, a cautionary tale for third‑party legal finance.

Big Capital, Bigger Risks

Therium amassed over £1 billion in committed funding from institutional investors over the past decade. But these “committed” sums are long‑term investments, locked into a few protracted, high‑stakes cases, exposing millions to single-case downfall.

Litigation Funding Mechanism Under Scrutiny

Funders back legal claims in exchange for a multiple‑of‑capital plus a percentage of recoveries. For instance, Therium structured returns as 3× the investment plus 20% above £100 million in the HSBC/ECU case. Yet, when claims fail, funders can even be on the hook for pre-investment costs, highlighted in recent UK rulings.

Showcase Failures

Post Office Horizon: Therium invested around £24million. After reimbursement of its stake, funders, and legal fees in the £58million settlement, claimants received just £12million collectively, barely breaking even.Sabah Arbitration: Over $20million already spent on a $15billion claim tied to Sulu heirs, yet enforceability remains uncertain, and returns are far from assured.

Regulatory Shifts: PACCAR Fallout

The 2023 UK Supreme Court’s PACCAR decision reclassified many litigation finance deals as damages‑based agreements (DBAs), subject to regulation capping recovery at 50% and limiting eligible parties to licensed lawyers. That has invalidated or weakened many funder agreements.

Funders pivoted to investment‑multiple models, yet courts are scrutinizing even small DBA‑style clauses. Therium v Bugsby Property is now testing whether they can strip such clauses and still secure payment.

Facing legal uncertainty, concentration risk, and lacklustre returns, Therium has scaled back operations and transferred portfolios to Fortress Investment Group. Internal sources indicate the firm now focuses on managing legacy cases rather than launching new ones.

What This Means for the Industry

While litigation finance broadens access to justice, especially in group suits, its viability hinges on balancing social impact with investor returns. As UK courts reclassify agreements, enforcement grows murky, and big‑ticket deals underperform, the model’s future credibility is at stake.

Read full article:  https://knowsulu.ph/unforeseen-consequences/theriums-gamble-how-big-money-still-breeds-big-losses-in-litigation-funding