Over the past two decades, third-party litigation funding (i.e., litigation finance, legal finance or alternative litigation financing) has become common in the U.S. legal sector. As individual claimants, commercial claimants and attorneys become increasingly familiar with the practice, capital markets players have taken notice. The result is that an estimated $12.4 billion in assets under management was committed to U.S. litigation financing strategies as of the end of 2021. The increased popularity of third-party litigation funding can be attributed to several factors, including attractive returns and the uncorrelated nature of the investment. Fund managers should be aware, however, that third-party litigation funding is not a “one-size-fits-all” investment. Instead, it involves bespoke situations with a multitude of different investment opportunities, structures and considerations. In a guest article, Schulte Roth & Zabel attorneys Boris Ziser and James E. McGuire provide a primer on third-party litigation funding to both commercial claimants and law firms. Specifically, the article delves into the primary features of each type of litigation funding; the regulatory landscape at both the state and federal level for funders to navigate; and practical considerations for funders to weigh. For more on another uncorrelated investment type, see our three-part series on contingent dislocation funds and market disruptions: “Appeal, Application and Adoption Before Adverse Events” (Mar. 15, 2022); “Unique Mechanisms That Position Them to Pounce” (Mar. 22, 2022); and “Suitable Fund Participants and Potential Downsides to Avoid” (Mar. 29, 2022).