Introduction: Global Trends and Local Context

In recent years, litigation funding has evolved from a niche financing tool into a globally recognised mechanism for facilitating access to justice. As of 2024, the litigation finance industry is estimated to surpass USD18 billion in assets under management worldwide, with sustained double-digit growth projected over the next decade. This expansion is being driven not only by the increasing complexity and cost of legal disputes, but also by the appetite of investors for non-correlated, high-yield opportunities in sectors like intellectual property, commercial arbitration, mass torts, and cross-border litigation.

Countries such as the United States and the United Kingdom have led the way, supported by well-established legal frameworks, secondary markets for claims, and a growing base of institutional capital. Even emerging economies – such as India, South Africa and Brazil – have begun formalising their litigation funding ecosystems through clearer regulation and judicial precedent.

Mexico, by contrast, remains at the early stages of this transformation. While awareness of litigation finance is slowly increasing, the industry remains largely informal and underdeveloped. There is no specific legal framework regulating third-party funding, no public database of funded cases, and minimal participation from institutional investors.

Yet, this nascent stage also presents a unique opportunity. With the right mix of technological innovation, legal standardisation and investor education, Mexico could rapidly catch up with global trends and become a key hub for litigation finance in Latin America. Platforms are already laying the groundwork for this transformation – introducing transparency, structure and professional rigour into a market long characterised by opacity and fragmentation.

The Current State of Litigation Finance in Mexico

Despite its global rise, litigation finance in Mexico remains a fragmented and largely informal practice. Unlike jurisdictions where third-party funding is recognised and regulated, Mexico lacks a codified legal definition of litigation funding and has yet to build an institutional infrastructure to support it as an asset class. As a result, litigation finance operates in the margins – often indistinguishable from other legal or financial services.

Historically, the few mechanisms that have resembled litigation funding in Mexico have taken the form of non-recourse loans to plaintiffs, typically provided by high net worth individuals or private lenders. These arrangements are negotiated privately, with limited or no transparency, and are rarely disclosed in court records or public databases. This opacity makes it difficult to quantify market size, measure impact or attract sophisticated capital.

Parallel practices, such as the purchase of non-performing loans (NPLs) or traditional factoring agreements, have been more widespread. These involve purchasing debts or legal claims at a steep discount and pursuing them for recovery. However, these practices lack the merit-based evaluation and structured underwriting process that define litigation finance in mature markets. They are often opportunistic, lacking the legal rigour or professional assessment that would make them viable investment vehicles in institutional portfolios.

Another limiting factor is the lack of standardised documentation and valuation frameworks. In the absence of uniform metrics for risk assessment, expected value or duration, it becomes difficult to compare cases or structure portfolios. This hinders the creation of diversified investment products or secondary markets, which are essential for the scalability of litigation finance.

Nonetheless, change is underway. A new generation of lawyers – particularly within boutique litigation firms – is beginning to see litigation finance as a tool for expanding access to justice, de-risking contingency work and improving cash flow. At the same time, family offices, legal tech entrepreneurs and forward-thinking investors are showing growing curiosity about the potential of this model.

Legal and Regulatory Landscape

One of the most significant barriers to the development of litigation funding in Mexico is the absence of a clear and comprehensive legal framework. To date, there is no statute, court ruling or regulatory guidance that explicitly governs third-party litigation funding. This legal vacuum creates uncertainty around the enforceability of funding agreements, particularly in disputes involving complex or sensitive matters such as shareholder conflicts, class actions or international arbitration.

Mexican law does not prohibit litigation funding per se. However, existing procedural codes – both at the federal and local levels – were not designed to accommodate third-party participation in legal disputes beyond the traditional roles of litigant, legal representative or judicial authority. This means that funders, unless carefully structured, may face questions about their legal standing, discoverability of funding terms or potential conflicts of interest.

Additionally, attorney ethics rules in Mexico remain silent on whether lawyers can work with funders, receive contingency fees supported by third-party capital or disclose funding relationships to courts. This ambiguity poses risks for legal professionals, especially in high-stakes cases, where the opposing party may attempt to challenge the legitimacy of funding arrangements on procedural grounds.

Despite these challenges, there is increasing interest in exploring regulatory models that could support the responsible growth of the industry. Legal professionals and funders alike recognise that some level of formalisation is necessary to build trust and credibility in the market. There is also a growing consensus that a hybrid approach – combining soft regulation with self-regulatory standards – may be the most effective way forward.

Several global frameworks could serve as references for Mexico. The IBA Guidelines on Party Representation in International Arbitration, the UK’s Association of Litigation Funders Code of Conduct, and the European Law Institute’s Principles for Third-Party Funding all provide robust models for transparency, capital adequacy and conflict of interest management. Adapting these principles to the Mexican legal environment could provide a baseline for ethical and commercial standards in the sector.

In the meantime, digital financing platforms are helping fill the regulatory gap by implementing their own due diligence protocols, legal documentation standards and funder guidelines. By institutionalising internal best practices, platforms not only reduce legal friction for investors and claimholders but also signal to the market that litigation funding can operate within a framework of transparency, legality and professional accountability – even in the absence of formal regulation.

The Role of Funding Platforms in Market Development

New platforms are emerging that bring transparency, structure and institutional standards to litigation funding in Mexico. These can facilitate every stage of the funding process – from legal validation to case monitoring – ensuring that all participants operate within a professional and compliant ecosystem.

Through independent legal due diligence and a dual-validation system for legal opinions, such platforms ensure that only meritorious cases are listed for funding. A ticket-based model lowers the entry barrier for investors and allows diversified participation in individual claims.

Moreover, legal technology and investment tools can be integrated into a single platform, enabling real-time tracking of litigation milestones, structured IRR offerings and investor dashboards that promote informed decision-making.

By establishing ethical standards and market discipline in an unregulated environment, such platforms set a precedent not only for how litigation finance should work in Mexico, but also for how it can scale responsibly across Latin America.

Opportunities for Growth and Innovation

Mexico’s litigation landscape offers ample room for innovation – particularly in commercial, tax and administrative litigation. As awareness spreads, family offices and alternative investors are showing growing interest in funding high-value disputes through structured platforms.

Collective actions and class litigation, if expanded through regulatory reform, could further amplify demand for funding. Additionally, the future introduction of ATE insurance and judgment enforcement policies would enhance funders’ ability to price and manage risk.

Meanwhile, digital platforms are pioneering tech-enabled underwriting and portfolio diversification strategies that could serve as blueprints for broader financial innovation in Latin American legal markets.

Looking Ahead: What Will Drive the Industry Forward?

The next phase of growth will depend on regulatory dialogue, judicial education and investor confidence. Stakeholders must collaborate to define ethical frameworks that enable growth without compromising legal integrity.

Training judges and lawyers in the mechanics of litigation funding, standardising investment data and continuing to build structured platforms will be key to unlocking the full potential of this asset class in Mexico.

Conclusion

Litigation funding in Mexico is emerging from the shadows of informality to become a professional, scalable financial product. With the leadership of digital funding platforms, the market is establishing the infrastructure, transparency and credibility needed to attract serious capital and deliver justice to claimholders who would otherwise lack the means to pursue valid claims.

As regulation, education and innovation converge, Mexico has the opportunity not only to participate in the global rise of litigation finance – but to lead it in Latin America.