While most companies are not in the business of litigating, legal action can sometimes be the most effective route to reclaim losses from significant financial harm. In today’s economic environment – characterised by tighter margins and elevated capital costs – more organisations are taking a proactive approach.

They are adopting affirmative recovery programs: structured initiatives designed to identify and pursue valuable legal claims stemming from breaches of contract, competition violations, fraud and other forms of commercial misconduct.

From defence to offence: Why recovery matters

Traditionally, litigation has been through a defensive lens, responding to disputes when they arise. Affirmative recovery programs flip that mindset. By systematically assessing where the business may have suffered losses, companies can treat litigation not just as risk management, but as an opportunity to recoup lost value, deter misconduct, and generate financial returns.

This approach also strengthens corporate governance. By aligning litigation strategy with financial and operational priorities, organisations create stronger accountability and send a clear signal that commercial harm will not go unchecked.

The role of legal finance

Even when the merits of a claim are strong, litigation can be costly and unpredictable. This is where legal finance becomes a powerful enabler. External funding allows businesses to pursue claims without tying up internal capital or increased balance sheet risk.

As Steven M. Greenspan, retired Vice President and Chief Litigation Counsel of RTX Corporation, explains:

“Legal finance can be an important tool even for large corporations as they evaluate whether to commence litigation because it can eliminate or substantially reduce the cost, while also enabling (and often accelerating) a recovery. Importantly, it provides an effective bridge between the legal and finance teams and, therefore, can be the difference between filing a lawsuit or staying on the sidelines.”

For in-house legal teams, the availability of external funding helps secure buy-in from finance departments, ensuring legal strategy is not sidelined by cost concerns. For CFOs, it transforms litigation from a pure expense into a potential asset-generating activity.

In an increasingly challenging business climate, companies that implement affirmative recovery programs gain a competitive edge. They maximise financial outcomes from disputes, manage risk more effectively, and reinforce a culture of accountability across their supply chains and counterparties.

Litigation funding services available

For many businesses, the decision to pursue litigation is not about whether a case is strong, but whether the financial risk is manageable. Even with meritorious claims, the upfront costs of legal action can deter companies from pursuing justice or recovering significant losses. That is where litigation funding services come in.

At Annecto Legal, we connect businesses and individuals with a range of funding agreement options designed to reduce or remove the financial barriers to litigation, enabling claims to be pursued in a commercially sensible way.

Third-party litigation funding – Third-party funding acts as a form of non-recourse financing for litigation. Third party providers take on the financial risk of litigation so that clients can pursue a claim without having to worry about the legal fees associated with it.

If the case has a successful outcome, the litigation funder will typically seek a share of the proceeds in the region of a fifth to a third of any damages recovered. This means that you keep up to 80% of the reward, having taken none of the risk. If the claim is unsuccessful, the funder will lose their investment.

After-the-Event (ATE) Insurance – ATE insurance is taken out after the event that has led to a dispute has taken place to protect you in the case of your claim being unsuccessful. ATE insurance can protect you from paying your opponent’s legal costs, should your claim not be successful.

However, ATE insurance is not free, and it is important to remember that if your case is successful, you may have to use some of your reward to pay the cost of the insurance premium, which will be included in the terms and conditions.

Damages based agreement – A damages-based agreement (DBA), also known as a contingency agreement, is a type of arrangement made between a client and a solicitor in which the solicitor agrees to fund their case and share the risk of litigation. In return, the solicitor will be paid a percentage sum of the damages recovered as long as the client’s case is successful.

DBAs provide that, instead of being paid on a conventional hourly rate, the solicitor’s legal fees are only payable in the event that the case is successful. Therefore, these types of agreements allow clients the opportunity to pursue a case without having to worry about the solicitors’ fees associated with it. In some circumstances, however, fees for Counsel and other disbursements may still be payable by the client.

How can Annecto Legal assist?

At Annecto Legal, we bridge the gap between businesses and the specialist litigation funding market. Many organisations are unaware of the breadth of funding and insurance options available or find it difficult to navigate the market on their own. Our role is to provide independent guidance, drawing on relationships with leading funders and insurers with strong track records to secure the most competitive and appropriate terms.

We work closely with clients to understand their objectives, ensuring that funding and insurance arrangements are tailored to fit. Most importantly, we make sure that litigation funding services are not just a legal tool, but a commercial one. By aligning claims strategy with wider corporate and financial goals, we enable companies to pursue strong cases with confidence.

For more information, get in touch with an expert member of our team to find out which litigation cover is the right litigation funding option for you to reduce your commercial litigation costs.