How much of a reported settlement actually reaches investors?

Often a minority of it. In the worked example below, a $50 million award is settled for $42 million on appeal; after counsel's success fee, an insurance premium and the funder's entitlement, the claimant keeps $21.8 million and the fund receives $15.0 million, of which its investors receive about $13.4 million after fees, expenses and carry, about 27% of the headline award.

What is the difference between an award and a recovery?

An award is what a court or tribunal orders; a recovery is what is collected. Appeals, settlements on appeal, enforcement and the defendant's solvency all sit between them. Burford's YPF assets rested on a $16.1 billion judgment that was reversed in March 2026 before anything was collected.

What comes out at the case level?

Counsel's contingency or success fees, insurance premiums (often deferred and contingent), the funder's capital and return, and sometimes earlier funders, lenders or advisers. Zerify's 2024 agreement shows a real order: approved costs plus 15% a year, then amounts under any litigation funding agreement, then 40% of the remainder to the adviser, then the company.

Is the claimant's net recovery the same as the investor's?

No. They sit at different points: the claimant receives what is left after the funder and others at the case level; the fund investor receives what is left of the funder's share after the fund's costs. Williams Industrial's $8.1 million net, after attorney's fees and funding costs, is the claimant's net; the funder's share went to its own investors through its own structure.

How should an investor read a headline settlement?

As the start of a reconciliation. Ask what was collected, when, what ranked ahead of the funder, what the funder received on its deployed capital, and what reached investors after fund costs, and compare the result with the capital and time it took.

Gross vs Net Recovery

Litigation Finance & Legal Claims

Definition

Gross recovery is the headline amount of a judgment, award or settlement. Net recovery is what a particular party actually receives after everything ranking ahead of it is paid: amounts not collected, counsel's fees, insurance premiums, the funder's entitlement, and, for fund investors, the fund's fees, expenses and carried interest. Williams Industrial Services Group's 2022 10-K, for example, reported 'net proceeds of $8.1 million (after payment of attorney's fees and third-party funding costs)' from a funded arbitration settlement.

Why it matters

Litigation headlines report awards and settlements; investors are paid from what is left several layers down. Between the two sit collection, appeals, counsel, insurers, the funder's entitlement and the fund's own costs, and each can be large. The gap is not a sign of anything wrong, but it is the reason a famous win can produce a modest investor return, and a reversed judgment nothing at all. For an investor, every reported recovery should come with a reconciliation from gross to net at each level, and with the time it took. Ask for that reconciliation on a few concluded cases before relying on a manager's headline results.

Common misconceptions

•An award is not a recovery, because it must survive appeal and be collected, and settlements on appeal often discount it.
•A settlement figure is not the funder's revenue, because counsel, insurers and others can rank ahead and the claimant keeps a share.
•The funder's share is not the investor's return, because fund fees, expenses and carry come out next.
•A claimant's reported 'net proceeds' is not the investor's figure, because it is measured after the funder is paid, at a different level.
•A large headline does not imply a large return, because time and the layers of cost can shrink it to a modest annual rate.

Technical details

Worked example (illustrative): from a $50 million award to investors

Award $50.0 million; settled on appeal for $42.0 million, collected.

Counsel's 10% success fee: $4.2 million. Deferred ATE premium: $1.0 million.

Funder: deployed $6.0 million; entitlement 2.5x = $15.0 million. Claimant: $42.0 million - $4.2 million - $1.0 million - $15.0 million = $21.8 million.

Fund: investors paid in $7.2 million ($6.0 million deployed plus $0.8 million of fees and $0.4 million of expenses); profit $7.8 million; carry at 20%: $1.56 million.

Investors receive about $13.4 million, 1.87x on $7.2 million and about 27% of the headline award.

Reconciliation steps

Award or settlement (gross).

Less: amounts not collected, and settlement discounts.

Less: counsel's fees, insurance premiums and other senior claims.

Funder's entitlement; claimant's net.

Less: fund fees, expenses and carry; investors' net, with the time taken.

What AltStreet's reviews and filings show

Williams Industrial Services Group's 2022 10-K reports that a funded arbitration settled in 2022 for 'net proceeds of $8.1 million (after payment of attorney's fees and third-party funding costs),' which it used to prepay its term loan; the company and its subsidiaries filed Chapter 11 petitions in Delaware on July 22, 2023 (8-K of July 24, 2023).

Zerify 8-K EX-10.1 (August 2024): costs plus 15% a year first, litigation funding amounts second, 40% of the remainder to the adviser third, the balance to the company.

AltStreet's Omni Bridgeway review (October 31, 2026): the newest funds charge about 2% a year on active commitments and transaction fees targeted at 2.5% to 3.0% of commitments, with an 8% hurdle, catch-up and carried interest of 20% up to a 20% IRR and 30% above it, on an American (deal-by-deal) waterfall; fees and carry about 29% of outside investors' gross profit in the company's illustration.

Burford's YPF-related assets rested on a $16.1 billion judgment against Argentina entered September 15, 2023; the Second Circuit reversed it on March 27, 2026, and the assets' consolidated fair value fell from $2.6 billion at December 31, 2025 to $145.9 million at September 30, 2026.

Questions for any reported recovery

How much of the award was actually collected, and when?

What ranked ahead of the funder?

What did the funder receive on its deployed capital?

What reached the fund's investors after fees, expenses and carry?

What annual return does that represent over the time taken?

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

How much of a reported settlement actually reaches investors?: Often a minority of it. In the worked example below, a $50 million award is settled for $42 million on appeal; after counsel's success fee, an insurance premium and the funder's entitlement, the claimant keeps $21.8 million and the fund receives $15.0 million, of which its investors receive about $13.4 million after fees, expenses and carry, about 27% of the headline award.
What is the difference between an award and a recovery?: An award is what a court or tribunal orders; a recovery is what is collected. Appeals, settlements on appeal, enforcement and the defendant's solvency all sit between them. Burford's YPF assets rested on a $16.1 billion judgment that was reversed in March 2026 before anything was collected.
What comes out at the case level?: Counsel's contingency or success fees, insurance premiums (often deferred and contingent), the funder's capital and return, and sometimes earlier funders, lenders or advisers. Zerify's 2024 agreement shows a real order: approved costs plus 15% a year, then amounts under any litigation funding agreement, then 40% of the remainder to the adviser, then the company.
What comes out at the fund level?: Management fees, transaction fees, fund expenses and carried interest. AltStreet's Omni Bridgeway review (October 31, 2026): the newest funds charge about 2% a year on active commitments and transaction fees targeted at 2.5% to 3.0% of commitments, with an 8% hurdle, catch-up and carried interest of 20% up to a 20% IRR and 30% above it, on an American (deal-by-deal) waterfall. In Omni Bridgeway's own illustration, fees and carry take about 29% of outside investors' gross profit.
Is the claimant's net recovery the same as the investor's?: No. They sit at different points: the claimant receives what is left after the funder and others at the case level; the fund investor receives what is left of the funder's share after the fund's costs. Williams Industrial's $8.1 million net, after attorney's fees and funding costs, is the claimant's net; the funder's share went to its own investors through its own structure.
How should an investor read a headline settlement?: As the start of a reconciliation. Ask what was collected, when, what ranked ahead of the funder, what the funder received on its deployed capital, and what reached investors after fund costs, and compare the result with the capital and time it took.