Case Study: Commercial Disputes

How Litigation Funding Secured a $25M Commercial Breach of Contract Claim

A real-world example demonstrating how third-party funding enabled a mid-sized corporation to pursue justice without risking capital or operational resources.

Audley Capital Advisory Team

Legal Finance Specialists | Case Study Series

Expert-reviewed content

What Happened in This Breach of Contract Case?

A mid-sized logistics company suffered $25 million in losses from a supply contract breach by a larger corporation. With no capital to litigate, third-party litigation funding covered all legal costs on a non-recourse basis, enabling a successful claim and full recovery.

A mid-sized logistics corporation (the Claimant) suffered a significant financial loss—estimated at $25 million in lost profits and consequential damages—due to a material breach of a supply contract by a larger, publicly traded manufacturer (the Defendant).

The Claimant had a strong legal opinion supporting their claim (high probability of liability), but pursuing the case was financially prohibitive.

What Were the Key Challenges?

Capital Constraints

The Claimant needed to reserve its cash flow for day-to-day operations and could not risk $4 million in legal fees and expert costs.

Time Horizon

The dispute could take two to three years to resolve, creating prolonged financial uncertainty that would impact P&L statements.

The in-house legal team sought a solution that would allow them to pursue the claim without impacting the company's P&L statement.

How Did Litigation Funding Solve This?

The Claimant partnered with a litigation funder on a Single-Case Funding Model.

The Funding Structure:

Capital Provided: $4 Million

Covering all legal fees, barrister fees, and expert witnesses.

ATE Insurance Secured

The funder secured an After-The-Event insurance policy to cover adverse costs liability, fully shielding the Claimant's balance sheet.

100% Non-Recourse

The agreement was entirely non-recourse. If the case failed, the Claimant would pay nothing.

Related: For model differences, see Portfolio vs. Single-Case Litigation Funding.

The Due Diligence and Outcome

The Funder's Due Diligence

The funder's investment committee focused heavily on two factors:

Damages Quantification

The damages were based on a clear loss of a profitable long-term contract, making the quantum certain and substantial.

Defendant Solvency

The Defendant was a large, well-capitalized entity, ensuring high enforceability of any final judgment or settlement.

The Strategic Outcome: Early Settlement

The Defendant's counsel, recognizing the claim's merit and the Claimant's new financial strength backed by a professional funder, became highly incentivized to negotiate. The case settled within 18 months—before the full discovery phase was complete—for a confidential amount close to the expected damages.

Financial Results for the Claimant

Metric	Result	Benefit
Claimant's Net Recovery	Significant	Achieved justice and substantial recovery of lost profits
Capital Risked by Claimant	$0	Maintained cash reserves for core business
Funder's Role	Validation	Funder's endorsement acted as catalyst for settlement

Key Takeaways

This case study demonstrates the power of litigation funding not just as a source of capital, but as a strategic tool that levels the playing field, validates the claim's strength, and often accelerates a favorable resolution.

For the full scope of legal finance applications and mechanics, read: The Complete Guide to Litigation Funding.

Frequently Asked Questions

Can litigation funding help with breach of contract claims?

Yes, breach of contract claims are among the most commonly funded commercial disputes. Funders look for clear liability evidence, quantifiable damages, and a solvent defendant.

How does litigation funding protect corporate balance sheets?

Litigation funding moves legal expenses off the balance sheet entirely. The non-recourse nature means if the case fails, the company pays nothing. This protects cash reserves and quarterly earnings.

What is ATE insurance in litigation funding?

After-The-Event (ATE) insurance covers the claimant's liability for adverse costs if they lose. Funders typically secure ATE policies to fully shield claimants from financial risk.

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