Can the funder stop paying legal costs before the case ends?

Often yes, on the events the agreement allows. Typical triggers include an adverse ruling or a fall in the assessed prospects, the client's breach or refusal of advice, a change of counsel, budget exhaustion and insolvency. After Silver Bull's ICSID claim was dismissed on May 29, 2026, its funder, Bench Walk, terminated the agreement, and Silver Bull wrote off $192,132 of unreimbursed costs, per its 10-Q.

What does the funder keep after terminating?

Usually an entitlement on what it has already deployed, sometimes reduced. Agreements commonly keep the funder's return on capital paid in, sometimes at a lower multiple, ranking as before, so a client who continues the case with other money still owes the original funder from any recovery. Burford names 'dilution in our returns or the loss of our deployed capital' as consequences when it fails to fund definitive commitments.

Can a funder be released from future funding?

Yes, by agreement. AmBase's 2019 amendment, approved by a special committee, released its funder 'from all further funding obligations under the 2017 LFA' and in exchange reset the split of proceeds: the first $7.5 million to the company and 25% of the excess to the funder, per AmBase's 10-Q. The company later had to find new money, which came through new agreements in 2026.

How does termination affect priority?

It can create several claims on the same proceeds. A terminated funder's entitlement usually survives, and a replacement funder will want to rank ahead of it, which pushes the claimant's share down. Read whether the original funder's entitlement is fixed at termination and whether it can be subordinated to new money.

Why does this matter to a fund investor?

Termination is how funders cut losses on cases going badly, which protects investors, but it also leaves claims on proceeds that may never pay, and the fund's reported commitments can fall when it walks away. Burford's discretionary undrawn commitments fell 21% between December 31, 2025 and September 30, 2026, though its filings do not attribute the change to terminations.

Funding Termination Rights

Litigation Finance & Legal Claims

Definition

Funding termination rights are the terms of a funding agreement that let the funder stop providing further capital, or let either side end the agreement, on defined events, and that set what each party owes afterwards. Burford's 2025 Form 10-K distinguishes definitive commitments, where failing to fund 'would typically result in adverse contractual consequences (such as a dilution in our returns or the loss of our deployed capital in a case),' from discretionary ones, where it can decline after further underwriting.

Why it matters

Termination rights decide what happens when a funded case goes wrong, and most cases have moments when it might. For funders they are a way to stop throwing good money after bad; for claimants they are the risk of being left mid-case without money, still owing the original funder from any recovery. The terms that matter are the triggers, what entitlement survives, how it ranks against new money, and what the client must repay. For an investor, ask how often the manager has terminated funding, at what stages, and what it recovered from those cases afterwards.

Common misconceptions

•A commitment does not guarantee funding to the end, because agreements let funders stop on defined triggers.
•Termination does not end the funder's claim on proceeds, because its entitlement on deployed capital usually survives.
•Being released from future funding is not free, because AmBase's 2019 release came with a reset share of proceeds.
•Clients can sometimes terminate too, because agreements such as Zerify's allow it for breach or missed milestones.
•New money does not slot in automatically, because a replacement funder's priority must be agreed against the original funder's surviving entitlement.

Technical details

Worked example (illustrative): termination mid-case

Original funder deploys $3.0 million at 3.0x; after an adverse ruling it terminates, keeping an entitlement of 2.0x on what it deployed, $6.0 million.

Claimant finds a replacement funder for $2.0 million at 3.0x, $6.0 million, ranking first.

Case settles for $15.0 million: replacement funder $6.0 million, original funder $6.0 million, claimant $3.0 million.

Without the termination (original funder funds the $2.0 million at 3.0x): funder $15.0 million, claimant $0.

Termination terms decide how the same recovery is split, and whether the claimant keeps anything.

Common termination triggers

Adverse ruling or reassessed prospects below a threshold.

Client breach, misrepresentation or refusal of advice.

Change of counsel without consent.

Budget exhaustion or failure to agree further funding.

Insolvency of the client or another key party.

What AltStreet's reviews and filings show

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); Silver Bull wrote off a $192,132 receivable.

AmBase 10-Q (June 30, 2026): the 2019 amendment released the funder from all further funding obligations and reset proceeds to the first $7.5 million to the company and 25% of the excess to the funder.

Zerify 8-K EX-10.1 (August 2024): termination for uncured material breach on 30 days' notice; company termination if no $5 million of bona fide proposals within 24 months, tolled during patent office reviews; costs and fees on earlier events survive.

Burford 10-Q (September 30, 2026): discretionary undrawn commitments $627.4 million, down from $793.5 million at December 31, 2025.

Questions about termination rights

What triggers let the funder stop funding, and on what notice?

What entitlement survives termination, and how does it rank?

Can the client terminate, and what does it owe then?

Can a replacement funder rank ahead of the original one?

How often has the manager terminated, and what did those cases return?

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

Can the funder stop paying legal costs before the case ends?: Often yes, on the events the agreement allows. Typical triggers include an adverse ruling or a fall in the assessed prospects, the client's breach or refusal of advice, a change of counsel, budget exhaustion and insolvency. After Silver Bull's ICSID claim was dismissed on May 29, 2026, its funder, Bench Walk, terminated the agreement, and Silver Bull wrote off $192,132 of unreimbursed costs, per its 10-Q.
What does the funder keep after terminating?: Usually an entitlement on what it has already deployed, sometimes reduced. Agreements commonly keep the funder's return on capital paid in, sometimes at a lower multiple, ranking as before, so a client who continues the case with other money still owes the original funder from any recovery. Burford names 'dilution in our returns or the loss of our deployed capital' as consequences when it fails to fund definitive commitments.
Can a funder be released from future funding?: Yes, by agreement. AmBase's 2019 amendment, approved by a special committee, released its funder 'from all further funding obligations under the 2017 LFA' and in exchange reset the split of proceeds: the first $7.5 million to the company and 25% of the excess to the funder, per AmBase's 10-Q. The company later had to find new money, which came through new agreements in 2026.
Can the client terminate?: Sometimes. Zerify's August 2024 agreement let either side terminate for an uncured material breach after 30 days' notice, and let the company terminate if it did not receive bona fide proposals worth at least $5 million within 24 months, with that period tolled during patent office reviews or stays. On termination the company still owed reimbursement of advanced costs and fees on monetization events concluded before termination.
How does termination affect priority?: It can create several claims on the same proceeds. A terminated funder's entitlement usually survives, and a replacement funder will want to rank ahead of it, which pushes the claimant's share down. Read whether the original funder's entitlement is fixed at termination and whether it can be subordinated to new money.
Why does this matter to a fund investor?: Termination is how funders cut losses on cases going badly, which protects investors, but it also leaves claims on proceeds that may never pay, and the fund's reported commitments can fall when it walks away. Burford's discretionary undrawn commitments fell 21% between December 31, 2025 and September 30, 2026, though its filings do not attribute the change to terminations.