Does a litigation investor own the lawsuit or only part of its proceeds?

Usually only part of the proceeds. In most funding agreements the claimant remains the party to the case and the lawyers' client; the funder holds an economic right to a share of the recovery, typically secured by a lien. Silver Bull's 10-Q describes its funding as 'a purchase of a contingent entitlement to damages in the event that a damages award is recovered,' secured by a security interest in the claim and its proceeds.

Why don't funders just buy the claims?

Because many claims cannot be freely assigned, assignment can raise champerty and public policy objections in some places, and the claimant's own standing, evidence and witnesses are usually essential to the case. Owning a claim also makes the funder the litigant, with its costs exposure and conduct duties. Burford notes that 'most legal jurisdictions and our capital provision agreements generally stipulate that as a passive investor ... we may not directly control or litigate cases.'

When are claims assigned outright?

In some markets and structures. Burford's 10-K notes that Germany 'has seen strong appellate level and Supreme Court endorsement of assignment-based enforcement models within the collective redress framework,' where claims are assigned to a vehicle that sues in its own name. Judgment purchases can also transfer the right to collect: GAO describes judgment enforcement as letting a company 'sell the rights to an awarded judgment to a funder.'

Does assignment change costs exposure?

It can. In England and Wales, CPR 25.28 lets a court order security for costs against a person who 'has assigned the right to the claim to the claimant with a view to avoiding the possibility of a costs order being made against them,' or who has contributed to the claimant's costs for a share of the recovery. Courts look through structures designed to shift costs risk away from the party that benefits.

What does a proceeds interest mean for priority?

It is a contractual claim on the claimant's recovery, protected by whatever security the funder took. If the claimant becomes insolvent, the funder's position depends on that security and the agreement. Williams Industrial's lender agreement shows capital providers holding a separate Security Agreement and UCC filings over the borrower's assets in connection with a funded arbitration.

Can interests in proceeds be sold on?

Sometimes. Burford's 10-K says it has occasionally made 'a secondary sale of all or a portion of an asset prior to its conclusion,' and describes Colorado Investments Limited as 'established for the secondary sale of some of our entitlement in the YPF-related Petersen matter.' Those buyers acquired an economic entitlement, not the claim or control over it.

Assignment of Proceeds vs Claim Ownership

Litigation Finance & Legal Claims

Definition

An assignment of proceeds gives a funder a contractual right to part of whatever a claim recovers, often secured on the claim, while the claimant keeps ownership, legal standing and control of the case. Claim ownership means the funder or an assignee holds the claim itself and pursues it in its own name. Burford's 2025 Form 10-K says 'we generally do not own or control the claims that we finance and, therefore, are not the client of the law firm representing the claimant.'

Why it matters

Whether a funder owns a claim or only part of its proceeds decides who controls the case, who is exposed to costs, and what the funder actually holds if things go wrong. Most commercial funding is a proceeds interest: the claimant stays in charge, the funder's protection is its contract and security. That keeps control where professional rules expect it, but it means the investor depends on the claimant's cooperation and solvency. For an investor, ask what the fund actually holds in each case, an assigned claim, a secured proceeds interest or an unsecured contractual right, and how it ranks against the claimant's other creditors.

Common misconceptions

•Funding a case is not owning it, because most funders hold a share of proceeds while the claimant keeps standing and control.
•A proceeds interest is not automatically secured, because security exists only if the agreement grants it and it is perfected.
•Assigning a claim does not avoid costs exposure, because English courts can order security against those who assign to dodge costs.
•Claim assignment is not available everywhere, because many claims cannot be freely assigned and some jurisdictions restrict it.
•Buying a funder's entitlement is not buying the case, because secondary buyers acquire economic rights without control.

Technical details

Worked example (illustrative): two structures, one claim

Proceeds interest: funder pays $4.0 million for 30% of recovery, secured on the claim; claimant sues and controls the case.

Claim purchase: funder buys the claim outright for $4.0 million and sues in its own name; the seller keeps no further interest.

Recovery of $30.0 million: proceeds interest pays the funder $9.0 million and the claimant $21.0 million; claim purchase pays the funder all $30.0 million.

Loss with a $2.0 million adverse costs order: under the proceeds interest the costs fall on the claimant (unless insured or shifted to the funder by the court); under the purchase they fall on the funder as the party.

Higher upside for the owner comes with control, costs exposure and, where allowed, the legal risks of assignment.

What a funder can hold

Contractual right to a share of proceeds, unsecured.

Secured proceeds interest: lien over the claim and its proceeds.

Assigned claim: the funder or a vehicle is the claimant.

Purchased judgment or award: right to collect.

Secondary interest: a share of another funder's entitlement.

What AltStreet's reviews and filings show

Burford 2025 10-K: it 'generally do[es] not own or control the claims' it finances and is 'not the client of the law firm'; Colorado Investments Limited formed for the secondary sale of part of its Petersen entitlement; Germany's assignment-based models endorsed on appeal.

Silver Bull 10-Q (July 31, 2026): funding provided 'as a purchase of a contingent entitlement to damages,' with a security interest in the claim, proceeds, documents and appeal bond rights.

CPR 25.28 (England and Wales): security for costs against a person who assigned the claim to avoid a costs order, or who funds for a share of the recovery.

Williams Industrial 2022 10-K EX-10.13: capital providers' Security Agreement and UCC filings tied to a funded arbitration.

Questions about what the fund owns

Does the fund hold the claim or a share of its proceeds?

Is the interest secured and perfected, and against what?

Who has standing and control, and who is exposed to costs?

Can the interest be sold, and has any been?

How does it rank against the claimant's lenders and other creditors?

How investors apply the term

Investors usually apply this term by tying the definition back to the controlling documents and then asking which cash flows, rights, restrictions, or valuation assumptions it changes. A useful review looks at the term alongside fees, leverage, liquidity, reporting frequency, and manager discretion rather than treating it as a standalone concept.

The practical diligence test is simple: identify who benefits if the assumption is wrong, who has control when conditions change, and what evidence the investor receives after closing. Terms that cannot be reconciled to documents, cash movements, and monitoring data should be treated as marketing shorthand until proven otherwise.

Frequently asked questions

Does a litigation investor own the lawsuit or only part of its proceeds?: Usually only part of the proceeds. In most funding agreements the claimant remains the party to the case and the lawyers' client; the funder holds an economic right to a share of the recovery, typically secured by a lien. Silver Bull's 10-Q describes its funding as 'a purchase of a contingent entitlement to damages in the event that a damages award is recovered,' secured by a security interest in the claim and its proceeds.
Why don't funders just buy the claims?: Because many claims cannot be freely assigned, assignment can raise champerty and public policy objections in some places, and the claimant's own standing, evidence and witnesses are usually essential to the case. Owning a claim also makes the funder the litigant, with its costs exposure and conduct duties. Burford notes that 'most legal jurisdictions and our capital provision agreements generally stipulate that as a passive investor ... we may not directly control or litigate cases.'
When are claims assigned outright?: In some markets and structures. Burford's 10-K notes that Germany 'has seen strong appellate level and Supreme Court endorsement of assignment-based enforcement models within the collective redress framework,' where claims are assigned to a vehicle that sues in its own name. Judgment purchases can also transfer the right to collect: GAO describes judgment enforcement as letting a company 'sell the rights to an awarded judgment to a funder.'
Does assignment change costs exposure?: It can. In England and Wales, CPR 25.28 lets a court order security for costs against a person who 'has assigned the right to the claim to the claimant with a view to avoiding the possibility of a costs order being made against them,' or who has contributed to the claimant's costs for a share of the recovery. Courts look through structures designed to shift costs risk away from the party that benefits.
What does a proceeds interest mean for priority?: It is a contractual claim on the claimant's recovery, protected by whatever security the funder took. If the claimant becomes insolvent, the funder's position depends on that security and the agreement. Williams Industrial's lender agreement shows capital providers holding a separate Security Agreement and UCC filings over the borrower's assets in connection with a funded arbitration.
Can interests in proceeds be sold on?: Sometimes. Burford's 10-K says it has occasionally made 'a secondary sale of all or a portion of an asset prior to its conclusion,' and describes Colorado Investments Limited as 'established for the secondary sale of some of our entitlement in the YPF-related Petersen matter.' Those buyers acquired an economic entitlement, not the claim or control over it.