Litigation Finance Fund — Legal Claims Portfolio

Litigation Finance Fund: Capital Markets Returns from Commercial Justice

Commercial litigation finance — the provision of capital to fund legal claims in exchange for a share of the proceeds — has matured from a niche legal product into an established institutional asset class. Leading law firms, institutional claimants, sovereign governments, and large corporations routinely use third-party litigation funding to manage the cost and risk of commercial disputes. The asset class is actively traded by specialist funds with institutional backing, and is represented in the portfolios of some of the largest sovereign wealth funds and insurance companies in the world.

The appeal is straightforward: litigation finance returns are driven by the merits of legal claims and the quality of legal execution — not by interest rates, equity markets, or macroeconomic cycles. A well-diversified portfolio of commercial litigation claims generates returns that are genuinely, structurally uncorrelated to anything in a conventional portfolio.

This fund provides non-recourse capital to commercial claimants pursuing high-value disputes in English courts, US federal and state courts, and international arbitration forums, targeting net IRRs of 15–25% over a five-to-seven-year fund life.

What Litigation Finance Is — and Is Not

Litigation finance is not lending. When the fund finances a case, it provides capital in exchange for a contractual entitlement to a portion of any judgement or settlement — typically a multiple of the capital invested (for example, 3× the invested amount, or 25–35% of total recoveries, whichever is greater). If the case is lost, the fund receives nothing — the capital invested is not repaid. This non-recourse structure means the fund shares downside risk with the claimant: the fund wins when the claimant wins, and loses when the claimant loses.

The fund does not control litigation strategy. The claimant retains full conduct of the litigation, supported by their chosen legal team. The fund's involvement is as a capital provider, not a litigation controller — the legal privilege and attorney-client relationship remain entirely with the claimant and their lawyers.

Case Selection and Due Diligence

The fund's returns are entirely dependent on the quality of its case selection. The investment team includes:

• In-house barristers and solicitors with litigation experience in commercial, arbitration, and insolvency matters
• Specialist external counsel — KC opinions commissioned on all cases above a minimum threshold
• Quantum analysts who independently assess the damages quantum (what money is realistically recoverable if the case succeeds)
• Enforcement analysts who assess the enforceability of any judgement against the defendant's assets

The due diligence process for each case covers five questions: (1) Is the legal case strong — does the claimant have a realistic prospect of success? (2) Is the damages quantum realistic — are the claimed losses supportable under applicable legal principles? (3) Is the defendant solvent and capable of satisfying a judgement? (4) Is the jurisdiction reliably enforcing — will a court in this jurisdiction deliver and enforce a final judgement? (5) Is the legal team credible and well-resourced to prosecute the case to completion?

Cases that do not pass all five tests are declined regardless of expected return.

Case Types

Commercial litigation (approximately 40%): Contractual disputes, fraud claims, shareholder disputes, professional negligence claims, and breach of fiduciary duty cases in English and US courts. These cases typically have a clear documentary paper trail, established legal frameworks, and predictable procedural timelines.

International arbitration (approximately 35%): Investment treaty arbitrations, international commercial arbitrations under ICC/LCIA/ICSID rules, and investor-state disputes. International arbitration cases tend to be larger in quantum (many involve claims of $50 million or more), take longer to resolve, and carry additional enforcement risk in jurisdictions with unreliable court systems. However, well-structured international arbitration against solvent defendants represents some of the most attractive risk-adjusted returns in the asset class.

Insolvency claims (approximately 25%): Claims by insolvency practitioners (liquidators, administrators, receivers) against directors, advisers, and counterparties for breach of duty, wrongful trading, or fraudulent preference. These cases are funded on behalf of the insolvency estate, with recoveries benefiting creditors. Insolvency claims are typically lower risk than commercial litigation because insolvency practitioners are professionally neutral, legally experienced, and motivated to maximise estate returns.

Portfolio Construction

The fund targets a portfolio of 30–50 active cases at any point in time. This diversification is critical in litigation finance — any individual case carries binary risk (win or lose), and even cases with strong merits can be lost for reasons unrelated to the underlying legal strength (a key witness recants, a judge applies an unexpected legal principle, a defendant files for bankruptcy). Across a well-diversified portfolio of carefully selected cases, the fund expects wins to substantially outnumber losses, with the wins generating returns large enough to offset the losses and deliver the target net IRR.

Duration and Liquidity

Commercial litigation has unpredictable duration. Cases can settle quickly (some within six to twelve months of funding) or extend through multiple rounds of appeals over five to seven years. The fund's projected duration reflects a portfolio of cases at different stages, with expected cash receipts spread across the fund life as cases resolve. There is no liquid secondary market for litigation fund interests — investors commit for the full projected term.

Risk Considerations

Binary case risk: Every funded case carries the risk of total loss of the invested capital. No matter how strong the case, litigation outcomes are uncertain. This binary risk is the principal risk in the asset class, mitigated through portfolio diversification across multiple cases.

Duration risk: Cases may take significantly longer to resolve than projected, extending the effective fund life and delaying capital returns to investors.

Defendant insolvency risk: Even a successful judgement generates no return if the defendant is insolvent and cannot pay. Defendant solvency assessment is a core part of the fund's due diligence, but a defendant who is solvent at the time of funding may become insolvent before judgement is enforced.

Counterparty risk: The claimants, law firms, and experts engaged in funded cases are counterparties to the funding agreement. If a law firm collapses or a key individual becomes unavailable, case conduct may be materially affected.

Regulatory risk: The regulation of litigation funding is evolving in several jurisdictions. Changes to rules on champerty, maintenance, or conditional fee arrangements could affect the enforceability of funding agreements in some markets.

Suitability

Litigation finance suits sophisticated investors who understand binary risk, are comfortable with the long and uncertain duration of returns, and are specifically seeking a genuinely uncorrelated alternative strategy. It is not appropriate as a core portfolio allocation but as a specialist diversifier for investors who have exhausted more conventional alternatives. Deep familiarity with legal processes and case assessment is not required from investors — but an intellectual comfort with the underlying concept is important. Minimum investment $250,000.

How to Invest

Contact our investment team to receive the fund's private placement memorandum, case selection criteria, sample case study (anonymised), and current portfolio summary. Extensive qualification and suitability process required. Minimum investment $250,000.

Important: Capital is at risk. Litigation finance carries the risk of total loss of the invested capital on individual cases. Past performance of litigation portfolios is not a guarantee of future returns. This is for information purposes only and does not constitute a personal recommendation. Seek independent legal and financial advice before investing. This fund illustrates the type of litigation finance opportunity Global Investments advises on — it is not a live investment offer.