Litigation Financing
Fund legal cases for potential returns when cases settle favorably. This alternative investment allows investors to fund litigation in exchange for a portion of the settlement, providing capital to plaintiffs who might otherwise be unable to pursue valid claims.
Legal Merit-Based
Investments selected based on comprehensive case analysis by experienced legal experts
Uncorrelated Returns
Performance independent of market cycles and traditional investment performance
Portfolio Diversification
Access to a non-traditional asset class that helps balance overall investment risk
Key Features
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Non-correlated returns independent of market performance
Case outcomes are determined by legal merit rather than economic conditions, providing true diversification from stocks and bonds.
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Potential for significant returns upon successful case resolution
Successful litigation investments can yield multiples of the initial investment amount, particularly in complex commercial cases with substantial damages.
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Professional case selection and risk assessment by legal experts
Our team of experienced litigators and legal analysts conducts thorough due diligence, evaluating legal precedent, evidence strength, and potential recovery amounts.
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Portfolio approach to mitigate individual case risk
Investment across multiple cases provides risk diversification, with returns from successful cases offsetting those that may be unsuccessful.
Potential Returns
Litigation financing can offer substantial returns when cases resolve favorably. Returns are contingent on case outcomes, with proceeds typically distributed after settlement or judgment. Our historical portfolio has generated:
Return Drivers:
- Settlement amount or judgment award size
- Duration of litigation until resolution
- Legal costs incurred throughout the process
- Priority position in the distribution of proceeds
Risk Assessment
The primary risk is case outcomes - if a case is unsuccessful, investors may lose their principal. However, rigorous case selection processes help mitigate this risk.
Risk Factors:
- Case outcome uncertainty despite thorough analysis
- Potential for extended litigation timelines
- Possibility of adverse court rulings
- Enforcement challenges even with favorable judgments
How It Works
Case Selection
Legal experts evaluate cases for merit, likelihood of success, and potential settlement value. Only ~5% of reviewed cases pass our rigorous selection criteria.
Investment
Investors fund the litigation costs through structured agreements that clearly define investment terms and return calculations based on case outcomes.
Case Resolution
Upon successful resolution, investors receive their principal plus returns from the settlement proceeds according to a predetermined distribution formula.
Investment Example
A mid-sized manufacturing company had its patented technology infringed by a larger competitor but lacked the financial resources to pursue litigation.
Investment Details:
- $2.5 million investment for legal expenses
- 24-month estimated timeline
- Priority distribution of first $3 million
- 25% of remaining proceeds after expenses
Outcome:
- Case settled pre-trial after 18 months
- $15 million settlement amount
- Investors received $3 million priority return
- Plus $2.75 million from remaining proceeds
- Total return: $5.75 million (2.3x, 65% IRR)
Note: This example is illustrative only. Past performance is not indicative of future results.
Frequently Asked Questions
What happens if a case is unsuccessful?
If a case is unsuccessful, investors may lose their principal investment. This is the primary risk in litigation financing. However, our thorough case selection process is designed to minimize this risk.
We mitigate this risk through thorough due diligence, expert legal assessment, and by creating diversified portfolios of cases when possible. Some investment structures may include partial downside protection mechanisms such as insurance or cross-collateralization among multiple cases.
How long does it typically take to see returns?
The timeline varies by case complexity, but most litigation investments resolve within 18-36 months. Some cases may settle quickly, while complex litigation might take longer.
Our portfolio average duration is approximately 24 months from investment to resolution. We provide quarterly updates on case progress and expected timelines. For longer cases, some investment structures may include provisions for interim distributions if certain milestones are reached prior to final resolution.
What types of cases are typically funded?
We primarily fund commercial litigation, including breach of contract, intellectual property disputes, antitrust cases, and other business-related legal matters with strong merits and clear paths to recovery.
Our case selection criteria focus on disputes with damages typically exceeding $10 million, strong documentary evidence, financially stable defendants able to pay judgments, and experienced legal counsel representing the plaintiffs. We avoid speculative cases, class actions, and matters involving complex regulatory issues or novel legal theories without precedent.
How is the investment structured?
Litigation investments are typically structured as non-recourse financing, meaning investors only receive returns if the case is successful. The specific terms vary by case and investment vehicle.
Common structures include a preferred return with a multiple on invested capital (e.g., 1.5x priority return) plus a percentage of remaining proceeds after expenses, or a simple percentage of the gross recovery. All terms are clearly defined in investment agreements, including distribution waterfalls, priority of payments, and scenarios for partial recoveries.