Litigation Funding: SMEs Discover the Value of Legal Disputes as a Source of Liquidity

The following article was originally published in Italian on economymagazine.it one of Italy’s leading business and finance publications.

We are now pleased to share an English language version of the article below written by Giacomo Lorenzo – Head of Italy & Senior Legal Counsel, Deminor

Turning a legal dispute into an asset — that is the rationale behind litigation funding, a financial instrument that allows companies to outsource their legal expenses through the intervention of a third party — the litigation funder — who covers the costs of the case and receives a fee only in the event of a successful outcome. If the case is lost, the company pays nothing, and the fund absorbs the loss.

This mechanism, already widespread in Anglo-Saxon countries, is now expanding in Italy, where the potential fundraising volume is approaching €185 million and could reach €325 million by 2027, according to estimates by Deminor, one of Europe’s leading players in the field, founded in Brussels in 1990.

“Italian companies are starting to view litigation not merely as a cost, but as an asset to be managed with financial efficiency,” explains Giacomo Lorenzo, Head of Italy & Senior Legal Counsel at Deminor. “This applies both to SMEs, which may struggle to bear the costs of litigation, and to large corporations seeking to optimise legal costs and risks.”

SMEs, the backbone of the Italian economy with over 4.3 million active businesses, particularly those that are more structured and operate internationally, are often involved in complex national and cross-border disputes that demand liquidity and technical expertise — resources that can be difficult to manage internally. For these companies, litigation funding represents an effective solution, especially for high-value or cross-border proceedings.

From international arbitrations to private enforcement actions — such as those related to the cardboard and truck cartels, in which Deminor played a leading role — as well as post-M&A disputes, intellectual property (IP) litigation, and tax controversies across key industries such as energy, manufacturing, food, and technology, this instrument provides tangible support to businesses engaged in long and complex cases.

“Our role,” adds Lorenzo, “is to enable SMEs to defend their rights without locking up liquidity, offering concrete support and improving financial planning so they can focus their resources on growth and innovation.”

The trend is also reshaping the legal profession. “We are increasingly working with Italian law firms that want to offer their clients transparent and structured litigation funding solutions,” Lorenzo continues. “This way, the protection of rights is no longer dependent on a company’s financial resources.”

This growing role is evident internationally as well: Deminor’s recent €100 million fundraising, completed in May 2025 — assisted in Italy by Gianni & Origoni, while Contingency Capital, one of the main investors, was advised by Pedersoli Gattai — will strengthen the company’s investment capacity in European and Asian proceedings.

Across Europe, the overall value of the litigation funding market is estimated at over €1.2 billion, while the regulatory landscape continues to evolve. The study “Mapping Third Party Litigation Funding in the EU,” published in March 2025 on behalf of the European Commission, highlights the sector’s growth and the increasing number of significant cases, with values ranging from €5 million to €300 million.

The report also shows that 58% of operators favour a “light-touch” regulatory approach based on transparency and capital adequacy requirements — one that does not stifle innovation in the sector.

“Litigation funding,” Lorenzo concludes, “is poised for strong expansion. Italian companies, both large and small, are beginning to understand that protecting their rights no longer requires immobilising capital. With litigation funding, they can manage it strategically — as already happens in Europe’s most advanced markets.”

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Giacomo Lorenzo - color picture for the website

Get in touch with Senior Legal Counsel Giacomo Lorenzo to learn more about how Deminor Litigation Funding can help your Investment Recovery, Antitrust Damages and Commercial Litigation claims within Italy.

Litigation Funding: SMEs Discover the Value of Legal Disputes as a Source of Liquidity

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Litigation Funding: SMEs Discover the Value of Legal Disputes as a Source of Liquidity

Your success is our success:

We are only paid when we win or settle your case.

77.8%

success rate

Latest news & insights

Get in touch with one of our experts.

We’ll give you a quick first assessment of your claim.

Deminor Litigation Funding - International Office Locations

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