Why is a billion-dollar claim not a billion-dollar investment asset?

Because several things must all go right before any cash arrives, and each is uncertain. The claimant must establish liability, the court must award damages near the amount claimed, the award must survive appeal, the defendant must pay or be made to pay, and all of that takes years. Multiply the chances, subtract costs and discount for time, and the expected recovery is a fraction of the headline figure.

How far apart can the two be?

Very far. Burford's YPF-related assets rested on a $16.1 billion judgment. At December 31, 2025, before the appeal was decided, Burford carried them at $2.6 billion on a consolidated basis and $1.7 billion on a Burford-only basis, about 11% of the judgment. After the Second Circuit reversed the judgment on March 27, 2026, the consolidated value was $145.9 million at September 30, 2026, against a cost basis of $202.9 million.

How do funders value a pending case?

With probability and discount assumptions that change at milestones. Burford's policy adjusts forecast cash flows by case type, geography and milestone, so 'when there is an objective event in the underlying litigation that would cause a change in fair value,' the value moves. Since December 2023 Omni Bridgeway values its portfolio at the discounted, loss-adjusted expected cash flows at a 12% rate, per AltStreet's review.

Do the assumptions match the track record?

Not always, and the gap is worth reading. AltStreet's Omni Bridgeway review notes the company's own comparison at June 2026: its track record shows a 3.5-year duration and a 21% loss rate, while its fair value portfolio assumes a 6.5-year life and a 33% loss rate. A valuation that is more conservative than history protects against overstatement; one that is less conservative should be questioned.

Do realized returns include the value changes?

Not at Burford. Its concluded-case ROIC and IRR 'do not include fair value adjustments, either positive or negative,' and a case is not counted as concluded until 'there is no longer any litigation risk remaining.' So a reported return on concluded cases and the carrying value of pending cases measure different things and should not be added together.

What should an investor take from the claimed amount?

Only the ceiling. The claimed figure tells you the most the claimant could get; it says nothing about the probability of getting it. Ask instead what the funder expects to collect, by when, on what assumptions, and how that has compared with what its concluded cases actually produced.

Claim Value vs Expected Recovery

Litigation Finance & Legal Claims

Definition

Claim value is the amount a party asserts or a court awards. Expected recovery is the probability-weighted cash the claim is likely to produce, after liability risk, the damages actually awarded, appeals, collection, legal costs and the time until payment. Burford values its pending assets with 'a discounted cash flow model' and a risk adjustment 'in prescribed percentages to the forecasted cash inflows based on the type of case (e.g., commercial litigation or patent), geography and case milestone.'

Why it matters

Every litigation finance return is built on the difference between what a claim says it is worth and what it is likely to produce. Headline claim values and judgments are what get reported, but an investor is paid from expected recovery: probability times realistic damages times collection, less costs, discounted for years of waiting. The YPF assets show that even a judgment won at trial can lose most of its value on appeal, and that carrying values move sharply at milestones. Treat claimed amounts as ceilings. Ask for the funder's assumptions on probability, duration and loss rate, and compare them with the funder's own concluded-case record.

Common misconceptions

•The damages claimed are not the value of the claim, because liability, the award, appeal, collection, costs and time all reduce what is likely to be received.
•A trial judgment is not the expected recovery, because Burford carried the $16.1 billion YPF judgment at about 11% of its face before the appeal and far less after it.
•Fair value marks are not realized returns, because they move with case milestones and discount rates and can fall after rising, as Burford's valuation policy warns.
•A conservative valuation is not a forecast of loss, because Omni Bridgeway's fair value assumptions (33% loss rate, 6.5-year life) are deliberately harsher than its track record (21%, 3.5 years).
•Probability-weighting does not remove the binary outcome, because any one claim still pays either near its awarded value or nothing.

Technical details

Worked example (illustrative): from claim value to present value

Damages claimed: $100.0 million.

Probability of establishing liability: 60%; damages awarded if liable: 70% of the claim, $70.0 million.

Probability the award survives appeal: 85%; share collected: 90%.

Expected gross recovery: $100.0 million x 0.60 x 0.70 x 0.85 x 0.90 = about $32.1 million.

Less $8.0 million of legal costs: about $24.1 million; discounted 4 years at 12%: about $15.3 million, roughly 15% of the claimed amount.

Worked example: the YPF assets at four dates (Burford filings)

September 15, 2023: final judgment of $16.1 billion against Argentina.

December 31, 2025: fair value $2.6 billion consolidated, $1.7 billion Burford-only (about 11% of the judgment); cost basis $193.6 million consolidated.

March 27, 2026: Second Circuit reverses the judgment.

September 30, 2026: fair value $145.9 million consolidated, $91.6 million Burford-only; cost basis $202.9 million and $126.9 million; unrealized loss of $57.1 million consolidated.

What AltStreet's reviews and filings show

Burford 2025 10-K: discounted cash flow model with risk adjustments by case type, geography and milestone; YPF assets about 46% of capital provision assets at December 31, 2025.

Burford 10-Q (September 30, 2026): capital provision assets fell from $5,609.9 million to $3,337.6 million over nine months, with a $2,245.6 million loss for the period.

AltStreet's Omni Bridgeway review: fair value since December 2023 at a 12% discount; track record 3.5-year duration and 21% loss rate against 6.5-year life and 33% loss rate in the fair value portfolio (June 2026).

AltStreet's LexShares review: a 47% IRR marketed on resolved cases against roughly 4% on Fund I's resolved cases, a gap between early winners and the full book.

Questions to ask about any claim value

What probability of success and what damages does the funder assume, and why?

What appeal and collection assumptions are in the valuation?

What discount rate and duration are used, and how do they compare with the funder's concluded cases?

What milestones would move the value, in either direction?

What is the cost basis, so you can see how much of the carrying value is unrealized gain?

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

Why is a billion-dollar claim not a billion-dollar investment asset?: Because several things must all go right before any cash arrives, and each is uncertain. The claimant must establish liability, the court must award damages near the amount claimed, the award must survive appeal, the defendant must pay or be made to pay, and all of that takes years. Multiply the chances, subtract costs and discount for time, and the expected recovery is a fraction of the headline figure.
How far apart can the two be?: Very far. Burford's YPF-related assets rested on a $16.1 billion judgment. At December 31, 2025, before the appeal was decided, Burford carried them at $2.6 billion on a consolidated basis and $1.7 billion on a Burford-only basis, about 11% of the judgment. After the Second Circuit reversed the judgment on March 27, 2026, the consolidated value was $145.9 million at September 30, 2026, against a cost basis of $202.9 million.
How do funders value a pending case?: With probability and discount assumptions that change at milestones. Burford's policy adjusts forecast cash flows by case type, geography and milestone, so 'when there is an objective event in the underlying litigation that would cause a change in fair value,' the value moves. Since December 2023 Omni Bridgeway values its portfolio at the discounted, loss-adjusted expected cash flows at a 12% rate, per AltStreet's review.
Do the assumptions match the track record?: Not always, and the gap is worth reading. AltStreet's Omni Bridgeway review notes the company's own comparison at June 2026: its track record shows a 3.5-year duration and a 21% loss rate, while its fair value portfolio assumes a 6.5-year life and a 33% loss rate. A valuation that is more conservative than history protects against overstatement; one that is less conservative should be questioned.
Do realized returns include the value changes?: Not at Burford. Its concluded-case ROIC and IRR 'do not include fair value adjustments, either positive or negative,' and a case is not counted as concluded until 'there is no longer any litigation risk remaining.' So a reported return on concluded cases and the carrying value of pending cases measure different things and should not be added together.
What should an investor take from the claimed amount?: Only the ceiling. The claimed figure tells you the most the claimant could get; it says nothing about the probability of getting it. Ask instead what the funder expects to collect, by when, on what assumptions, and how that has compared with what its concluded cases actually produced.