Despite raising over £1 billion in committed capital, Therium’s aggressive bets in high‑risk cases, from the Sabah $15 billion arbitration to the Post Office scandal, have yielded paltry returns, exposing systemic vulnerabilities in the litigation funding industry.
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
This press release has also been published on VRITIMES
