Who we help
Litigation Funders
Non-recourse capital, recourse-shaped protection.
- A judgment or award won
- A judgment against you
- Funder capital deployed
- Law firm fees and WIP
- Security for costs
- The opponent's costs
- Disbursements
- Own legal costs
Illustrative. The exposures a dispute can put on a balance sheet. What a policy responds to is set by its wording.
How can litigation insurance apply to litigation funders?
Preserving deployed commitments and improving the risk profile presented to investors. Litigation insurance may be used here to convert an open-ended downside into a more defined one, depending on policy terms and subject to underwriting. Structures, where available, are arranged case by case.
On this page2 min read
Key points
- Terms, where available, are set case by case through underwriting.
- Preserving deployed commitments and improving the risk profile presented to investors.
- Exposure can be measured across costs, capital and judgment risk together.
- Protection, where available, is arranged around the specific decision being taken, not sold as a package.
- Jurisdiction can affect how much of the exposure is costs-driven.
The exposure
A funder's committed capital is non-recourse: if the case fails, the capital is lost.
Adverse costs undertakings to claimants add a further exposure, and concentration in a few large cases can dominate a fund's returns.
What can be protected
- Deployed capital on single cases or portfolios through capital protection
- Adverse costs through ATE bought for the funded claimant
- Security for costs obligations
How engagements usually run
Insurance is typically arranged alongside the funding decision, so the funding terms and the policy are negotiated together.
For portfolios, cover may be agreed at fund level with case-by-case eligibility.
Illustrative scenario
A funder commits £8m to an arbitration. It insures the claimant's adverse costs of £2m and protects £5m of its principal through a capital protection policy with a premium payable from proceeds. If the claim fails, the funder loses its return and the uninsured £3m, not the whole £8m.
Figures are invented to show the mechanics. They describe no real client, matter or outcome.
Questions worth asking first
- What layer of loss would change our investment decision?
- How correlated are the cases in our book?
- Will investors or lenders see the policy wording?
Frequently asked
What insurance do litigation funders use?
ATE for the funded claimant's adverse costs, security for costs cover, and capital protection for the funder's own deployed capital.
Can capital protection lower a funder's cost of capital?
It can, by reducing the downside that investors or lenders need to price, though the benefit depends on the premium and structure.
Can a funder insure a single large case?
Yes, single-case capital protection is available, though concentrated risks are priced accordingly.
Do funders pay the ATE premium for claimants?
Sometimes. The premium may be paid by the funder, by the claimant or deferred and paid from recoveries.
Can capital protection cover a whole fund?
Portfolio structures can cover a vintage or book of cases, netting wins against losses before the policy responds.
General information only. This page is not legal, financial, investment or insurance advice. Any insurance is subject to underwriting and to the terms of the policy wording issued.
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