Nick McDonnell comments in Law360 on litigation funding risk and legacy liabilities
Nick McDonnell comments in Law360 on the wider implications of the Court of Appeal’s recent ruling in AXA v Santander, drawing parallels with the litigation funding market.
Nick highlights the risks arising from arrangements involving solicitors, funders and ATE insurers, particularly where large volumes of claims are pursued under the same model and losses can give rise to significant disputes over where liability ultimately falls.
He also considers the potential risks arising from increased private equity investment and acquisitions in the legal sector, noting that buyers of law firms and claims businesses may inherit historic funding, insurance and indemnity arrangements. Nick explains that, as consolidation continues, proper due diligence around these legacy liabilities will become increasingly important.
Nick’s comments were published in Law360, 22 September 2026, and can be found below:
“There are some obvious parallels here between the Axa/Santander findings and the litigation funding market. We increasingly see arrangements involving solicitors, funders and ATE insurers, often with indemnities sitting behind them. Where you have thousands of claims being pursued under the same model, the sums involved can be substantial. If those claims fail, or something goes wrong with the model, the resulting losses have to fall somewhere and extremely expensive litigation may ultimately be needed to determine where. As we have already seen in cases such as the Novitas/AmTrust litigation, that can lead to significant disputes between funders, insurers, solicitors and others over who ultimately picks up the bill.”
“There is also a potential future risk. We are seeing a significant increase in private equity investment and acquisitions within the legal sector. As law firms and claims businesses change hands, the new owners may also be acquiring books of historic work involving funding, insurance and indemnity arrangements entered into years earlier. The more consolidation we see, the more important proper due diligence around those legacy liabilities becomes.”
