Litigation costs are soaring, legal finance is becoming a corporate necessity

Litigation risk is increasing across jurisdictions and industries, while the cost of pursuing and defending disputes continues to climb. The combined impact of rising dispute volumes and escalating legal costs is forcing businesses to rethink how litigation is funded and managed.

Recent data illustrates the scale of the shift. According to a new AlixPartners survey, 63% of risk executives expect an increase in corporate litigation in the year ahead. The finding reflects a business environment increasingly shaped by geopolitical instability, trade and tariff tensions, inflationary pressures, supply chain disruption and regulatory uncertainty. As companies navigate a more volatile global economy, disputes are becoming a more frequent byproduct of commercial relationships under strain.

At the same time, the economics of the legal market are becoming significantly more expensive, creating a perfect storm for corporate legal departments already facing an increasing number of disputes. Recent Am Law 100 results showed that revenue among the largest US law firms grew by approximately 13% in 2025, while profits rose 16.3%. Behind those figures is a familiar reality for corporate clients: Rising billing rates and increasing litigation costs. Many firms also reported annual billing rate increases of 7–10% or more, further compounding the cost burden facing corporate legal departments.

For many companies, litigation has become both unavoidable and extraordinarily capital intensive.

A single large-scale commercial dispute can cost millions of dollars in legal spend over several years, often with uncertain timing and outcomes. Pursuing these claims can place considerable strain on a business’s balance sheet, particularly when legal costs compete directly with investment in growth initiatives such as hiring or research and development.

As a result, companies are increasingly viewing legal assets through a financial lens rather than simply a legal one. Claims, judgments and arbitration awards can represent significant sources of value, but they are often illiquid and expensive to pursue. In this environment, legal finance is emerging as an increasingly important strategic solution.

Legal finance allows businesses and law firms to access third-party capital to fund litigation and arbitration costs in exchange for a share of a successful outcome. While the model has existed for decades, its role in the market has evolved substantially. Sophisticated businesses are not only using legal finance to manage litigation costs, but also to unlock and monetize the value of legal assets that would otherwise remain dormant on their balance sheets.

Monetization enables companies to convert a portion of the expected future value of their pending legal claims into immediate capital. That capital can then be redeployed into core business operations, acquisitions, expansion plans or other strategic priorities.

In some cases, companies are using portfolio-based legal finance facilities across multiple matters, allowing them to diversify litigation risk and create more predictable financial outcomes. Others are monetizing existing judgments or arbitration awards to accelerate recoveries and improve liquidity without waiting years for enforcement or appeal processes to conclude.

Importantly, legal finance is no longer viewed as a niche product designed only for distressed claimants. It has matured into a sophisticated financial and risk-management tool used by some of the world’s largest companies. In many respects, it reflects a broader shift in how businesses think about legal departments: Not solely as cost centers, but as strategic functions capable of generating and preserving enterprise value.

The broader economic environment is likely to accelerate this trend further. As litigation grows more complex and costly, GCs and CFOs are under increasing pressure to preserve liquidity and justify legal spend. Against this backdrop, legal finance offers a compelling proposition. It allows companies to pursue meritorious claims without diverting operating capital while also managing downside risk.

The convergence of higher litigation volumes and more expensive legal services is fundamentally reshaping corporate dispute strategy. Businesses that embrace legal finance not simply as a funding mechanism, but as a broader capital and monetization solution, may be better positioned to navigate the increasingly complex litigation landscape ahead.