What are the typical terms of investment for litigation finance?

Edward Truant

Edward Truant

Chief Executive Officer

An investment is almost always non-recourse—meaning that funders do not earn an investment return if the underlying litigation is unsuccessful. Otherwise, the contract has terms relating to the economics of the transaction, the priority of the distributions, withdrawal clauses, and other highly customized terms specific to the transaction. It is very typical for funding contracts to have a variety of financial conditions (% of proceeds, IRR hurdle, multiple of invested or committed capital, etc.) that dictate the benefits that accrue to the funder.