Third-Party Funding in Focus at Merilampi's DR Executive Forum

Merilampi's Dispute Resolution team recently welcomed a good number of in-house counsels from the Finnish businesses to the DR Executive Forum, a traditional breakfast seminar at Merilampi. This time the forum focused on third-party funding (TPF) and its growing role in arbitration and litigation.

The forum was co-presented by Emil Melén from Merilampi Attorneys and Oscar Holm from Litigium Capital, a Swedish litigation funder established in 2020 that focuses on commercial disputes across the Nordics. Combining law firm’s perspective with the funder's practical experience, the session gave attendees a well-rounded view of how TPF works in practice. Concrete case studies, spanning minority shareholder disputes, construction claims, and IP matters, prompted a lively discussion among the participants.

Three Key Takeaways

1. A settlement-signaling effect. Funders conduct rigorous due diligence before committing capital, so only claims with strong merits and a realistic path to recovery are typically funded. A reputable funder’s involvement therefore signals confidence in the claim’s strength and commitment by the funder to fund the claim until the final verdict – a dynamic that can shift the opposing side’s settlement calculus.
2. Flexible funding structures. In the classic model, a funder covers claimant's legal costs in exchange for a share of any recovery and typically it also covers adverse costs if the claim is unsuccessful. Arrangements can, however, be tailored to the nature of the claim and the parties involved. For clients, this can mean transferring litigation risk off the balance sheet, preserving liquidity, improving key financial ratios, and freeing up resources for other investments – all while strengthening the likely outcome of the dispute.
3. Cost predictability for clients. Because the funder bears the claim’s financial risk, and because a properly structured agreement makes the funder's adverse-cost commitment unambiguous and contractually binding, funded parties can pursue significant claims without exposure to open-ended cost risk.

TPF Market on the Rise

TPF remains at an early but growing stage across the Nordic countries. Finland's market is still modest, yet it is attracting increasing interest in commercial disputes. TPF is poised to become a tool that Finnish businesses and their advisors can no longer afford to overlook.