Sara Mebtouche
By Sara Mebouche, Borrower Relations Associate at Legal Futures Associate Fenchurch Legal
For many SME law firms and claims management companies operating in the consumer claims sector, the challenge is no longer identifying demand. It is funding it.
Consumer claims such as housing disrepair and personal injury claims continue to generate significant volumes, with other consumer claims progressing through the courts and establishing clear precedent. Across these areas, firms are managing high volumes of relatively low-value, protocol-driven claims with predictable legal frameworks.
Yet behind that predictability lies a persistent commercial pressure: cashflow.
Running consumer claims at scale requires upfront investment. Case acquisition costs must be funded. Disbursements such as medical reports, expert evidence and court fees must be paid. After-the-Event (ATE) insurance premiums must be secured. Work in progress accumulates for 12 to 24 months before settlement income is realised.
For SME firms in particular, this creates a structural funding gap.
The core problem: Capital tied up in case cycles
Unlike traditional commercial litigation, high-volume consumer claims are built on throughput and operational efficiency. Margins are often consistent but modest per case. Profitability comes from volume and disciplined case management.
When firms fund acquisition, disbursements and WIP internally, capital becomes tied up in live cases for extended periods.
Traditional funding options rarely align with litigation cycles. Overdrafts and bank loans operate on fixed repayment schedules that do not flex with court delays or settlement timelines. Refinancing at the wrong moment increases pressure, and partner capital has limits.
The result is often one of three outcomes:
- Growth stalls because capital is constrained.
- Firms increase volumes without sufficient operational resource.
- Cashflow volatility creates operational risk.
This is where litigation finance has evolved into a practical tool for SME law firms and CMCs.
How litigation finance works in consumer claims
Litigation finance in the consumer claims space differs from the high-profile, non-recourse commercial model often associated with large disputes.
In high-volume consumer claims, funding typically operates through structured revolving credit facilities. Capital is advanced to support:
- Case acquisition and marketing costs
- Disbursements
- ATE premiums
- Work in progress
Rather than taking a share of damages, this model operates as structured lending. Firms retain control of their cases and their client relationships. Funding is repaid when cases settle in line with agreed facility terms.
The focus is not on a single case outcome, but on supporting diversified, precedent-backed portfolios with predictable settlement patterns.
For the right firm, this structure can create significant operational advantages.
The benefits for SME law firms and CMCs
- Improved Cashflow Stability
External funding of disbursements and acquisition costs prevents working capital from being locked into files for up to two years.
Capital can instead be allocated to staffing, systems and strategic development. Facilities structured around expected settlement cycles provide greater predictability than fixed-term bank borrowing.
- Controlled, Sustainable Growth
Access to structured funding allows firms to increase case volumes in line with operational capacity.
Growth in consumer claims must be supported by appropriate staffing, compliance oversight and case management systems. When funding is aligned with that capacity, firms can scale confidently rather than reacting to demand without adequate infrastructure.
- Reduced Balance Sheet Exposure
Self-funding large disbursement portfolios concentrates financial risk within the firm. External finance distributes that risk and preserves internal capital for strategic investment.
For SME firms without institutional banking relationships, this strengthens financial resilience.
- Competitive Advantage in Case Acquisition
In competitive claim types, speed matters. Firms with reliable access to capital can onboard cases and invest in acquisition channels with confidence.
Those constrained by cashflow may be forced to limit intake or delay expansion.
- Greater Strategic Focus
Reducing short-term liquidity pressure allows leadership teams to focus on case quality, client outcomes and regulatory compliance rather than managing immediate funding gaps.
Responsible lending: Funding is not for everyone
It is important to stress that litigation finance is not a universal solution and is not suitable for every firm or every claim type.
Responsible funders undertake detailed due diligence to ensure facilities align with a firm’s capacity and strategy. Increased scrutiny across the consumer claims sector has reinforced the importance of disciplined underwriting and ongoing monitoring.
When funding is deployed without proper structure or oversight, the consequences can extend beyond a single firm and affect confidence in the wider market.
Responsible lending means ensuring that:
- Facilities align with operational capacity.
- Case volumes remain manageable.
- Reporting and monitoring are transparent.
- Growth is sustainable
Funding should strengthen a firm’s long-term position, not create instability.
A growth tool when structured correctly
For SME law firms and CMCs operating in high-volume consumer claims, external finance can be transformative when structured appropriately.
The objective is not simply to provide capital. It is to structure funding around:
- Case lifecycles
- Portfolio behaviour
- Operational infrastructure
- Risk management controls
When done correctly, litigation finance becomes an enabling tool. It stabilises cashflow, supports measured expansion and reduces financial concentration risk.
As consumer claims markets continue to evolve, firms that combine strong legal delivery with disciplined financial management will be best positioned to succeed.
External funding, applied responsibly, can play a central role in that structure, helping SME law firms and CMCs unlock growth without compromising control, compliance or sustainability.
At Fenchurch Legal, we specialise in providing fast, flexible funding for high-volume consumer claims, supporting firms with the capital they need to scale efficiently.
To find out more about how we work with law firms and claims management companies and the types of claims we fund, visit www.fenchurch-legal.co.uk.
