Legal funding (or third party funding) makes it possible for those who lack the necessary funds to issue and pursue a claim.

It is typically categorised as the use of third-party capital, ordinarily provided on a non-recourse and unsecured basis, for the specific purpose of paying some or all of the legal costs to pursue a claim. (e.g., legal fees, experts’ fees, disbursements and tactical costs, etc.)

In return for providing financing, the funder would be entitled to a proportion of the claimant’s damages
in the event of successful settlement or award at arbitration or litigation.

If the claim be unsuccessful, the funder would lose their investment (i.e., bears the financial loss).
That is their risk and how they price their investment.