Iwasaki Masaki, Leveraging third-party litigation funding for environmental litigation(2025)
<abstract>
Environmental litigation is gain ing attention as a way to address harms such as pollution, ecosystem destruction and climate change while holding governments and corpora tions accountable, echoing recent calls to broaden justice in environmental law1. Yet many individuals and environmental organiza tions struggle with limited financial resources, and the high costs of these lawsuits frequently force them to forgo or abandon socially ben eficial cases.
Third-party litigation funding (TPLF) is a contractual arrangement in which a third party pays a plaintiff’s litigation costs in exchange for a portion of any damages or settlement. The US commercial TPLF market alone man ages upwards of US$12.4 billion in assets, reflecting the potential scale of this mecha nism2. Leveraging TPLF for environmental litigation could enhance access to justice for under-resourced plaintiffs, enabling them to pursue lawsuits that advance environmental protection and social justice. At the same time, it carries potential drawbacks that deserve careful evaluation.
Environmental litigation is widely recog nized as expanding and diversifying across jurisdictions3, signalling both the urgency of the environmental crisis and the inadequacy of government and corporate responses. Systematic data are most developed for climate change cases: since the 2015 Paris Agree ment, more than 1,800 such cases have been filed globally4. Environmental lawsuits often demand extensive scientific evidence, expert testimony and advanced legal expertise — resources that require substantial funding. Large corporate or government defendants generally possess greater financial means than citizen or non-governmental organiza tion plaintiffs, creating a significant disparity. This imbalance prevents many plaintiffs from pursuing otherwise strong claims, forfeiting the broader social impacts that favourable rulings could bring and limiting deterrence for harmful environmental practices.
Amid this backdrop, there is increasing demand for innovative funding solutions such as TPLF. It allows plaintiffs to pursue legal action without shouldering the entire financial burden. Although still nascent in environmental litigation, a landmark example signals its potential: more than 15,000 Indo nesian seaweed farmers filed a class action against PTTEP Australasia over damages from an oil spill5. Harbour Litigation Funding, a UK-based firm, provided around £17 million to finance the suit6; when the case settled for AU$192.5 million (£102 million), the funder secured AU$57.75 million, equivalent to 30% of the settlement.
However, within environmental litigation, the use of TPLF in climate cases remains chal lenging. Climate claims face distinctive hur dles: causation is complex and often spans long temporal and geographic scales, making inves tors cautious, as potential returns seldom jus tify the costs and risks involved. Many climate lawsuits therefore depend on crowdfunding or philanthropic support. A notable example is the case of a Peruvian farmer against RWE AG, alleging that the company’s emissions contrib uted to glacier melt and flood risks, which drew global attention for testing corporate liability for climate harm. German courts allowed the case to reach the evidentiary stage but ulti mately rejected it in 2025 (ref. 7). Even so, the decisions were consequential: they affirmed that climate change, although global, is not beyond private law and that emitters could, in principle, be held liable if causation between emissions and specific harm is proven.
Given its reliance on financial returns, TPLF fits damages actions better than non-monetary suits, such as injunctions, which are common in environmental litiga tion. Yet its potential remains considerable. Legal, evidentiary and financial barriers oper ate together. Doctrinal and causation hur dles are real, but with sufficient resources to retain leading counsel and to fund rigor ous expert work, many of them become surmountable; without those resources, promising damages claims are never filed or abandoned. Broader access to financing could revive such cases, help reconfigure liability doctrines and valuation methods through adjudication, and reshape the landscape of environmental litigation.
Despite its potential benefits, TPLF also raises concerns about funders exerting undue influence over litigation strategy, such as pushing for high settlements or directing lawyers to prioritize funder interests above client needs. That said, empirical evidence remains limited, and many observers sug gest that best practices and well-crafted regulatory frameworks could mitigate these risks8. Different jurisdictions regulate TPLF in varying ways9. England and Wales allow it under a combination of legal principles, self-regulation and judicial oversight. In most European Union member states, TPLF has a key role in supporting collective redress mechanisms, whereas Ireland prohibits it altogether. In the USA, regulatory approaches differ by state, with some requiring disclosure of funding arrangements.
Ultimately, TPLF is a critical mechanism for improving access to justice in environmental litigation, especially in cases where the costs and risks discourage individuals from suing, despite the issues affecting broad populations and long-term interests. Although ethical and legal complications warrant attention, it seems possible to develop optimal regulatory systems that address these concerns while maximizing the benefits of TPLF. TPLF offers a market-based way to correct environmen tal externalities through private litigation rather than government intervention. It can advance justice, corporate responsibility and sustainability.
Iwasaki Masaki, Leveraging third-party litigation funding for environmental litigation(2025)
<abstract>
Environmental litigation is gain ing attention as a way to address harms such as pollution, ecosystem destruction and climate change while holding governments and corpora tions accountable, echoing recent calls to broaden justice in environmental law1. Yet many individuals and environmental organiza tions struggle with limited financial resources, and the high costs of these lawsuits frequently force them to forgo or abandon socially ben eficial cases.
Third-party litigation funding (TPLF) is a contractual arrangement in which a third party pays a plaintiff’s litigation costs in exchange for a portion of any damages or settlement. The US commercial TPLF market alone man ages upwards of US$12.4 billion in assets, reflecting the potential scale of this mecha nism2. Leveraging TPLF for environmental litigation could enhance access to justice for under-resourced plaintiffs, enabling them to pursue lawsuits that advance environmental protection and social justice. At the same time, it carries potential drawbacks that deserve careful evaluation.
Environmental litigation is widely recog nized as expanding and diversifying across jurisdictions3, signalling both the urgency of the environmental crisis and the inadequacy of government and corporate responses. Systematic data are most developed for climate change cases: since the 2015 Paris Agree ment, more than 1,800 such cases have been filed globally4. Environmental lawsuits often demand extensive scientific evidence, expert testimony and advanced legal expertise — resources that require substantial funding. Large corporate or government defendants generally possess greater financial means than citizen or non-governmental organiza tion plaintiffs, creating a significant disparity. This imbalance prevents many plaintiffs from pursuing otherwise strong claims, forfeiting the broader social impacts that favourable rulings could bring and limiting deterrence for harmful environmental practices.
Amid this backdrop, there is increasing demand for innovative funding solutions such as TPLF. It allows plaintiffs to pursue legal action without shouldering the entire financial burden. Although still nascent in environmental litigation, a landmark example signals its potential: more than 15,000 Indo nesian seaweed farmers filed a class action against PTTEP Australasia over damages from an oil spill5. Harbour Litigation Funding, a UK-based firm, provided around £17 million to finance the suit6; when the case settled for AU$192.5 million (£102 million), the funder secured AU$57.75 million, equivalent to 30% of the settlement.
However, within environmental litigation, the use of TPLF in climate cases remains chal lenging. Climate claims face distinctive hur dles: causation is complex and often spans long temporal and geographic scales, making inves tors cautious, as potential returns seldom jus tify the costs and risks involved. Many climate lawsuits therefore depend on crowdfunding or philanthropic support. A notable example is the case of a Peruvian farmer against RWE AG, alleging that the company’s emissions contrib uted to glacier melt and flood risks, which drew global attention for testing corporate liability for climate harm. German courts allowed the case to reach the evidentiary stage but ulti mately rejected it in 2025 (ref. 7). Even so, the decisions were consequential: they affirmed that climate change, although global, is not beyond private law and that emitters could, in principle, be held liable if causation between emissions and specific harm is proven.
Given its reliance on financial returns, TPLF fits damages actions better than non-monetary suits, such as injunctions, which are common in environmental litiga tion. Yet its potential remains considerable. Legal, evidentiary and financial barriers oper ate together. Doctrinal and causation hur dles are real, but with sufficient resources to retain leading counsel and to fund rigor ous expert work, many of them become surmountable; without those resources, promising damages claims are never filed or abandoned. Broader access to financing could revive such cases, help reconfigure liability doctrines and valuation methods through adjudication, and reshape the landscape of environmental litigation.
Despite its potential benefits, TPLF also raises concerns about funders exerting undue influence over litigation strategy, such as pushing for high settlements or directing lawyers to prioritize funder interests above client needs. That said, empirical evidence remains limited, and many observers sug gest that best practices and well-crafted regulatory frameworks could mitigate these risks8. Different jurisdictions regulate TPLF in varying ways9. England and Wales allow it under a combination of legal principles, self-regulation and judicial oversight. In most European Union member states, TPLF has a key role in supporting collective redress mechanisms, whereas Ireland prohibits it altogether. In the USA, regulatory approaches differ by state, with some requiring disclosure of funding arrangements.
Ultimately, TPLF is a critical mechanism for improving access to justice in environmental litigation, especially in cases where the costs and risks discourage individuals from suing, despite the issues affecting broad populations and long-term interests. Although ethical and legal complications warrant attention, it seems possible to develop optimal regulatory systems that address these concerns while maximizing the benefits of TPLF. TPLF offers a market-based way to correct environmen tal externalities through private litigation rather than government intervention. It can advance justice, corporate responsibility and sustainability.