As economic recovery lags and absolute, uncorrelated returns remain hard to come by, litigation funding – an investment strategy that has been popular in the U.K. and Australia for many years – is gaining traction among U.S. hedge funds.  The strategy essentially involves advancing a portion of the costs of a lawsuit in exchange for a multiple of the investment paid out of any damages or settlement.  This article provides a thorough overview of litigation funding, based on interviews with leading practitioners in the field, including discussions of: finding investment opportunities; the unique due diligence process; how litigation funding deals are structured; relevant legal concerns, including champerty and maintenance; attorney-client privilege issues; avoidance of influence on the litigation; the appeal of litigation funding as an investment strategy; and who is investing in the strategy.