Who pays if a funded case costs more than expected?

Whoever the agreement says. The main options are the funder providing more capital, usually at the same or a higher return; the claimant paying the overrun itself; counsel absorbing part of it through capped or contingent fees; or nobody, which can leave the case short of money. Omni Bridgeway's Fund 6, per AltStreet's review, offered '100% cost coverage as per agreed budget,' which leaves the question of costs outside the budget to the agreement.

How does extra funding affect the claimant?

It usually dilutes the claimant's share. If the funder's return is a multiple of deployed capital, every extra dollar of costs adds that multiple to what the funder takes. Burford's 10-K notes that 'returns on most of our assets are at least partially based upon a multiple of those fees and expenses,' so higher costs raise the funder's return on a win. In the worked example below, a $2 million overrun cuts the claimant's share of a $30 million settlement from $18 million to $12 million.

What causes overruns?

Mainly time and complexity. Delays add months of legal work, new motions and experts, appeals and enforcement add stages, and inflation raises hourly rates. Burford's 2025 10-K says court backlogs slowed some matters and that inflation 'can increase the size of commitments, deployments and damages sought.' AltStreet's LexShares review lists COVID-era court delays that stretched hold periods well beyond projections.

What do real agreements do about it?

They vary. AmBase's 2026 agreement covers an initial $6.0 million 'plus such additional amounts as may be necessary from time to time and as agreed,' and a July 2026 letter agreement added $1.0 million on the same terms. Its funder had earlier been released from all further funding obligations under a 2017 agreement in 2019. Silver Bull's agreement capped funding at $9.5 million for legal, tribunal, expert and defined corporate costs.

Does a funder have to cover overruns?

Only if it agreed to. Definitive commitments oblige the funder to fund to the committed amount; beyond that, or under discretionary commitments, it can decline. Burford's discretionary commitments are 'subject to further case-level underwriting.' A funder that declines can leave the claimant to find new money, often on worse terms, or to settle early.

Do budgets include adverse costs?

Usually not. Budgets cover the claimant's own spending. An order to pay the other side's costs, such as the roughly $998,000 Silver Bull was ordered to pay Mexico in May 2026, is a separate exposure covered only if the agreement or an insurance policy says so.

Case Budget and Cost Overruns

Litigation Finance & Legal Claims

Definition

A case budget is the estimate of legal fees, expert costs and other expenses a funded case will need, usually by stage, which sets the funder's commitment. A cost overrun is spending beyond that budget. Burford asks prospective clients for 'a detailed budget for outside counsel's fees and costs, set to the stage of the litigation,' and says it monitors 'management of spending and performance against budget.'

Why it matters

Budgets set the funder's commitment and, under multiple-based returns, much of its payout, so an overrun changes the economics for everyone. Long cases rarely finish on their first budget: delays, extra stages and inflation add costs, and each extra dollar funded at a multiple comes out of the claimant's recovery. For an investor, overruns raise deployed capital and stretch duration, which can lower the IRR even as the dollar return rises. Ask how the manager's concluded cases compared with their original budgets, and who paid the difference.

Common misconceptions

•A budget is not a cap on costs, because cases can need more, and the agreement decides who funds the difference.
•Extra funding is not free for the claimant, because a multiple-based return grows with every dollar deployed.
•A higher dollar return is not a better investment, because overruns usually come with longer duration, which lowers the annual return.
•Funders are not obliged to fund overruns, because commitments beyond the agreed amount, and discretionary ones, can be declined.
•Adverse costs are not part of the case budget, because they are owed to the other side and need their own cover.

Technical details

Worked example (illustrative): a $2 million overrun

Budget $4.0 million; funder's return 3.0x deployed capital.

Settles for $30.0 million on budget: funder $12.0 million, claimant $18.0 million.

Costs run to $6.0 million and the funder funds the extra $2.0 million at the same 3.0x: funder $18.0 million, claimant $12.0 million.

If the overrun also adds two years, the funder's dollar return rises but its annual return can fall.

If the funder declines the extra $2.0 million, the claimant must find it or settle earlier, possibly for less.

Ways agreements handle overruns

Funder tops up at the same terms (dilutes the claimant).

Funder tops up at higher terms, or the extra ranks ahead of the original amount.

Claimant pays the excess itself.

Counsel carries part of the risk through capped, deferred or contingent fees.

No obligation: funding stops at the cap, and the case continues only if new money is found.

What AltStreet's reviews and filings show

Burford 2025 10-K: monitoring includes 'management of spending and performance against budget'; returns 'at least partially based upon a multiple of those fees and expenses'; inflation can enlarge commitments and deployments.

AltStreet's Omni Bridgeway review: Fund 6 offered '100% cost coverage as per agreed budget,' with a 10% hurdle and 20% to 30% carry.

AmBase 10-Q (June 30, 2026): initial $6.0 million plus additional amounts as agreed; a further $1.0 million in July 2026; the 2017 funder was released from further funding obligations in 2019.

Silver Bull Resources' funding agreement with Bench Walk Advisors (September 5, 2023) committed up to $9.5 million for legal, tribunal, expert and defined corporate costs of its ICSID arbitration against Mexico; on May 29, 2026 the tribunal dismissed the claim, concluding it lacked jurisdiction and/or the claim was time-barred, and ordered Silver Bull to pay about $998,000 of Mexico's legal costs, and Bench Walk then terminated the agreement (Silver Bull 10-Q for July 31, 2026).

Questions about budgets

How is the budget set, by stage, and who prepares it?

Who pays costs above budget, and at what return?

How did concluded cases compare with their original budgets?

Does counsel share the risk of overruns?

Are adverse costs and security for costs covered, and by whom?

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

Who pays if a funded case costs more than expected?: Whoever the agreement says. The main options are the funder providing more capital, usually at the same or a higher return; the claimant paying the overrun itself; counsel absorbing part of it through capped or contingent fees; or nobody, which can leave the case short of money. Omni Bridgeway's Fund 6, per AltStreet's review, offered '100% cost coverage as per agreed budget,' which leaves the question of costs outside the budget to the agreement.
How does extra funding affect the claimant?: It usually dilutes the claimant's share. If the funder's return is a multiple of deployed capital, every extra dollar of costs adds that multiple to what the funder takes. Burford's 10-K notes that 'returns on most of our assets are at least partially based upon a multiple of those fees and expenses,' so higher costs raise the funder's return on a win. In the worked example below, a $2 million overrun cuts the claimant's share of a $30 million settlement from $18 million to $12 million.
What causes overruns?: Mainly time and complexity. Delays add months of legal work, new motions and experts, appeals and enforcement add stages, and inflation raises hourly rates. Burford's 2025 10-K says court backlogs slowed some matters and that inflation 'can increase the size of commitments, deployments and damages sought.' AltStreet's LexShares review lists COVID-era court delays that stretched hold periods well beyond projections.
What do real agreements do about it?: They vary. AmBase's 2026 agreement covers an initial $6.0 million 'plus such additional amounts as may be necessary from time to time and as agreed,' and a July 2026 letter agreement added $1.0 million on the same terms. Its funder had earlier been released from all further funding obligations under a 2017 agreement in 2019. Silver Bull's agreement capped funding at $9.5 million for legal, tribunal, expert and defined corporate costs.
Does a funder have to cover overruns?: Only if it agreed to. Definitive commitments oblige the funder to fund to the committed amount; beyond that, or under discretionary commitments, it can decline. Burford's discretionary commitments are 'subject to further case-level underwriting.' A funder that declines can leave the claimant to find new money, often on worse terms, or to settle early.
Do budgets include adverse costs?: Usually not. Budgets cover the claimant's own spending. An order to pay the other side's costs, such as the roughly $998,000 Silver Bull was ordered to pay Mexico in May 2026, is a separate exposure covered only if the agreement or an insurance policy says so.