Herbert Smith has ploughed ahead with third-party litigation funding, putting on hold its working group on the matter, as it assesses the flood of new entrants to the market.
The country's leading litigation firm is the first firm to directly instruct a broker to find financial backing for a case after asking broker Calunius, which matches hedge funds to firms and their clients, for help with two matters, the details of which remain confidential.
Herbert Smith litigation partner Matthew Weiniger said: "We're excited about funding. It means clients who couldn't normally afford Herbert Smith can come to us."
It is understood that both claims were in excess of $50m (£24.65m). The first case, an arbitration, did not progress, while the second is just starting.
Calunius's instruction is the latest development in a burgeoning industry where regulation is inevitable, said top City practitioners.
A June report by the Civil Justice Council welcomed funding as long as it is properly regulated. Concerns include the compulsory disclosure of funding details and reinforcing lawyers' independence from funders.
There is a debate raging as to whether rules on transparency and control are needed.
Norton Rose litigation partner Sam Eastwood said: "There's no need for regulation. I can secure for my clients the comfort they are entitled to entering into third-party funding through a contractual framework."
But Christian Stuerwald, the UK head of litigation funding for Allianz, said his group had no problem with reasonable regulation. "In fact, it could be beneficial if the rules are made more clear as there's still a lot of uncertainty around issues of funders being able to influence litigation," he said.
The issue of influence has resulted in accountancy firm Smith & Williamson launching its own funding model, claiming that it cuts out the middle man.
The auditor's product sees it pay for legal claims where it acts as liquidator.
Director Stephen Cork said: "Third-party litigation funders can't have control over the litigation because of the maintenance and champerty rules, but we, as liquidators, through the Insolvency Act 1986 don't have that issue."