A ten-lawyer firm in a converted townhouse is not an obvious match for the in-house legal department of a multinational corporation, backed by outside counsel with hundreds of partners and an expense account that barely notices a seven-figure discovery bill. Yet cases pitting small firms against large corporate defendants happen constantly, in courts across the UK, the US and beyond, and they do not always end the way the size difference would suggest. Understanding why requires looking past the “David and Goliath” metaphor and into the actual mechanics: how litigation is financed, how costs are allocated, and where the size asymmetry helps rather than hurts the smaller side.
The resource gap is real, but it is not the whole story
Large corporate defendants typically have structural advantages that go beyond headcount. Research on “battle of the experts” litigation, published in 2025 by researchers writing for the University of Chicago’s ProMarket, found that defense-side expert witnesses in securities class actions are, on average, at least 36% more expensive per hour than plaintiff-side experts, and tend to come from more prestigious academic and professional backgrounds. The underlying dynamic is structural rather than personal: defendants often carry directors’ and officers’ insurance that funds a full defense regardless of outcome, while plaintiff-side firms working on contingency must front expert costs themselves and recover them only if the case succeeds.
That asymmetry is not limited to expert witnesses. A frequently cited academic account of large-scale liability litigation, published by researchers at the University of Amsterdam, describes the imbalance in blunter terms: corporate defendants generally have “unlimited financial resources” relative to the claim at hand, while individual claimants or small firms face “generally limited financial resources” and high personal exposure to the outcome. Discovery, expert reports and procedural motions all cost money, and a defendant with a retained relationship with a large firm can absorb those costs more easily than a claimant firm that is essentially betting its own capital on the case.
Where the size gap actually favours the smaller side
None of that means smaller firms are doomed to lose. A widely read 2012 analysis published on the legal industry site Above the Law made a point that experienced litigators still cite: the same size difference that produces a bigger budget for the corporate defendant also produces a bigger bill. A discovery request that costs a small firm a few hours to draft can cost the opposing large firm ten or twenty hours to answer, often billed at a considerably higher hourly rate. The larger the corporate party, the more documents it typically has to produce, and the more expensive that production becomes. Courts are also generally more willing to grant scheduling accommodations to a smaller firm or a solo practitioner than to a firm with dozens of available attorneys, which can offset some of the coordination advantages a larger opponent otherwise enjoys.
Firm size within the plaintiff bar can also cut against expectations. Academic research on “star” plaintiff law firms in corporate litigation, published in the Journal of Accounting Research in 2025, found that larger settlements achieved by prominent firms were substantially explained by case selection and the defendant’s available insurance coverage, rather than firm size alone – a reminder that outcomes in this area are driven as much by the underlying facts of a case as by which firm is arguing it.
How smaller firms actually fund a fight against a larger opponent
The single biggest reason a small firm can take on a large corporate defendant at all is that litigation against corporate giants is rarely funded out of pocket. Several mechanisms exist to spread or shift the up-front cost, and which ones are available depends heavily on jurisdiction.
| Funding mechanism | Who bears the up-front cost | How the provider is typically paid | Where it applies |
|---|---|---|---|
| Hourly billing | The client, as costs are incurred | Fixed rate regardless of outcome | Standard for corporate defendants and well-resourced clients generally |
| Contingency fee / conditional fee agreement (CFA) | The law firm | A percentage of any recovery, commonly in the region of 25%–40% depending on case type and jurisdiction, only if the case succeeds | Common in the US; permitted with restrictions in England and Wales as CFAs |
| Damages-based agreement (DBA) | The law firm | A share of damages recovered, subject to statutory formality requirements | England and Wales, under section 58AA of the Courts and Legal Services Act 1990 |
| Third-party litigation funding | An external funder unconnected to the case | A share of proceeds or a multiple of capital deployed, paid only on a successful outcome | Widely used in the UK, Australia and increasingly the US |
| After-the-event (ATE) insurance | An insurer, often paid for out of any eventual recovery | A premium, sometimes only payable if the case wins | England and Wales, frequently paired with a CFA |
These tools are what let a small firm credibly threaten litigation against a company with vastly greater resources. Without some mechanism to spread the up-front cost, most large-scale claims against corporate defendants simply would not be brought, since the cost of litigating would exceed what any individual claimant could afford, regardless of the merits of the claim.
Funding arrangements do not always run smoothly
These financing tools are also legally and financially delicate, and the law around them has been shifting. In 2023, the UK Supreme Court ruled in R (PACCAR Inc) v Competition Appeal Tribunal that many third-party litigation funding agreements amounted to damages-based agreements under UK law, and were therefore unenforceable unless they met formal statutory requirements most existing agreements did not satisfy. The ruling threw a large share of the UK’s litigation funding market into temporary uncertainty, and as of late 2026, legislation to reverse its effect had still not been brought before Parliament, despite recommendations to do so from the Civil Justice Council’s 2025 review of litigation funding.
The financial arrangements behind a case can also generate disputes of their own, sometimes long after the underlying litigation has concluded. Because large-scale cases can run for years and involve multiple firms, funders and disbursements, disagreements over what is owed to whom are not unusual; recent legal reporting on a claim for an unpaid legal bill illustrates the kind of billing dispute that can surface in extended, multi-party litigation. It is one reason funding and fee-sharing agreements are typically documented in detail from the outset, with clear provisions for what happens if a case runs long, settles for less than expected, or produces disagreement over costs.
A case that shows why “winning” is more complicated than it sounds
One of the better-known examples of a small firm taking on a large corporate defendant is the 1996 settlement in Anderson et al. v. Pacific Gas & Electric Co., a case that later inspired the film Erin Brockovich. The claim originated at Masry & Vititoe, a personal-injury firm based in Westlake Village, California, after a legal clerk working there identified a pattern of illness among residents of Hinkley, a small Mojave Desert community, connected to hexavalent chromium contamination traced to a nearby utility facility. PG&E, at the time the largest investor-owned utility in the US, faced claims from roughly 650 residents.
The firm eventually brought in two larger Los Angeles firms to help carry the litigation, and the case was resolved through binding arbitration rather than a jury trial, following contemporary news coverage of the settlement confirming a $333 million payment – at the time the largest settlement of its kind in US history. The case is frequently cited as proof that a small firm can beat a corporate giant, and in one sense it clearly did. But it also illustrates a less cinematic point: the contingency fees taken by the three firms involved amounted to roughly 40% of the settlement, a percentage the claimants had agreed to at the outset in exchange for firms fronting years of litigation costs with no guarantee of any recovery at all. The case is a genuine example of a small firm prevailing against a much larger opponent; it is also a reminder that large settlement figures and the amount ultimately available to each claimant are two different numbers, and that the difference is generally explained by the financing structure agreed before the case began, not by anything unusual to that particular dispute.
Group actions: strength in numbers, when the numbers show up
Individual claimants rarely take on a corporate giant alone. In England and Wales, the main procedural tool for combining similar claims against a single defendant is the Group Litigation Order (GLO), introduced in May 2000. According to the official registry of group litigation orders maintained by HM Courts & Tribunals Service, roughly 125 GLOs had been made by 2025, a rate legal commentators have described as modest relative to the growth in the size and value of the underlying claims – some GLOs, particularly diesel emissions cases, have involved well over a million claimants collectively. A parallel opt-out regime for competition claims before the Competition Appeal Tribunal has grown more quickly: 40 collective proceedings order applications had been filed by the end of 2023, up from a standing start in 2015. Separately, a 2025 mass-litigation study by the European Centre for International Political Economy counted 47 mass litigation actions filed in the UK in 2024 alone, up from fewer than 10 per year in the late 2010s, a trend the study attributes largely to the broader availability of third-party funding.
These procedures matter because they change the economics for the smaller side. A claim that would be uneconomical for one claimant to bring individually can become viable once costs and eventual recovery are spread across hundreds or thousands of claimants, which is part of why group actions have become closely linked to the growth of the litigation funding market described above.
Who pays if the smaller side loses?
One structural factor that shapes these cases more than almost anything else is which cost rule applies. Under the “American Rule,” followed in most US litigation, each side generally pays its own legal costs regardless of who wins, with limited statutory exceptions. Under the “English Rule,” which applies in England and Wales and most Commonwealth jurisdictions, a losing party can typically be ordered to pay a significant portion of the winning side’s costs, subject to the court’s discretion and a test of reasonableness. That difference has practical consequences for a smaller firm considering a case against a large corporate defendant: in an English Rule jurisdiction, losing does not just mean forfeiting the time invested, it can mean an additional costs order on top of it, which is one reason ATE insurance exists specifically to cover that risk.
Frequently asked questions
Do smaller law firms actually stand a reasonable chance against large corporate legal teams?
Case outcomes generally depend more on the underlying facts, available evidence and financing than on firm size alone. Academic research on plaintiff law firm performance in corporate litigation has found that settlement size is substantially explained by case characteristics and the defendant’s insurance coverage rather than which firm litigates it, and legal commentators have noted that discovery costs can, in some respects, scale against a larger defendant rather than against the smaller claimant firm.
What is third-party litigation funding, and how does it work?
It is an arrangement in which an outside funder with no prior connection to a case pays some or all of the litigation costs in exchange for a share of any damages recovered, typically calculated as a multiple of the capital invested or a percentage of the outcome. It is widely used in the UK and Australia and has grown in the US, though its legal treatment varies by jurisdiction and has recently been the subject of significant litigation itself, including the UK’s PACCAR ruling.
Are contingency fees allowed in every jurisdiction?
No. Contingency fees, where a lawyer’s payment depends entirely on winning the case, are broadly permitted in the United States, subject to state-level ethical rules. In England and Wales, the closest equivalents are conditional fee agreements and damages-based agreements, which are permitted but regulated by specific statutory conditions, and full US-style contingency arrangements are not generally used. Some jurisdictions restrict or prohibit contingency fees altogether.
What is a Group Litigation Order, and how common is it?
A GLO is a case-management order used in England and Wales to combine claims raising common issues against the same defendant so they can be managed together rather than litigated one by one. Roughly 125 have been made since the mechanism was introduced in 2000, an average of about five per year, though English courts have increasingly used informal case-management directions for large multi-party claims as an alternative to a formal GLO.
Why do disputes over legal costs sometimes arise even after a case has been resolved?
Large-scale litigation can run for years and involve multiple law firms, funders and cost-sharing arrangements, so disagreements about what is owed to which party can surface well after a settlement or judgment. These disputes are generally resolved through the terms of the funding or fee agreement itself, or through separate proceedings if the parties cannot agree.
Does the rule on who pays legal costs affect who can afford to sue a large company?
Yes, it is one of the more significant variables. In jurisdictions that follow the American Rule, a losing claimant generally only loses what they have already spent. In jurisdictions following the English Rule, a losing claimant can also be ordered to pay a share of the winning side’s costs, which is why insurance products such as ATE cover exist specifically to offset that additional risk for claimants and their firms.
Methodology note
This article draws on primary legal sources, including the UK Supreme Court’s 2023 judgment in PACCAR, the Civil Justice Council’s 2025 review of litigation funding, and HM Courts & Tribunals Service’s official registry of group litigation orders, alongside peer-reviewed and working-paper research on plaintiff-side litigation economics and contemporary news coverage of the 1996 PG&E settlement. Figures on group litigation and mass litigation volumes were current as of the sources’ most recent updates in 2025 and 2026 and may shift as new orders and cases are added to official registries. Legislative developments affecting litigation funding, in particular any UK bill addressing the PACCAR ruling, were current as of September 2026 and should be rechecked, since this is an area of active legislative attention.
