Why can litigation investments take much longer than forecast?

Because each stage can slip: pleadings and motions, discovery, expert evidence, trial dates, appeals and enforcement all depend on courts' calendars and the parties' tactics. Burford's 10-K attributes some 2025 delays to court backlogs, and AltStreet's LexShares review lists COVID-era court delays that stretched hold periods well beyond projections.

How long do funded cases actually take?

It varies by funder and strategy. Burford's 303 concluded assets had a weighted average life of 2.6 years weighted by deployed cost and 2.7 years weighted by realizations at September 30, 2026; its active deployed capital had been outstanding 3.6 years on average, up from 3.1 at the end of 2024. AltStreet's Omni Bridgeway review reports average time to completion rising from 2.7 years for FY2019 completions to 4.6 years for FY2026.

What does an extra year do to returns?

It lowers the annual rate on the same multiple. A 2.0x payout is about 41.4% a year over two years, 26.0% over three, 14.9% over five and 10.4% over seven. The dollar profit is the same; the time cost is not.

Do concluded-case durations understate the problem?

They can. Fast cases conclude first, so early concluded portfolios look short. Burford notes that the weighted average life of its concluded portfolio 'may lengthen over time if the longer-tenor assets in our existing portfolio account for a greater share of future concluded cases.' Omni Bridgeway's own fair value portfolio assumes a 6.5-year life against 3.5 years in its track record, per AltStreet's review.

How do funders protect against duration?

With time-based terms and by pricing it. Burford says 'in some cases, we are protected on duration risk, because some of our assets have time-based terms that increase our absolute returns as time passes.' AmBase's 2026 agreement steps the funder's entitlement from plus 50% to plus 1.8x as time passes. Those terms shift duration cost to the claimant.

How does duration affect a fund investor?

It delays distributions, extends the fund's life and can push investors into extensions or secondary sales at a discount. It also interacts with fair value: longer expected duration lowers present value, so delays show up first as write-downs and only later as lower realized IRRs.

Litigation Duration Risk

Litigation Finance & Legal Claims

Definition

Litigation duration risk is the risk that a funded case takes longer than expected to produce cash, through court backlogs, procedural delays, appeals, enforcement or slow settlement. A longer case usually lowers the annual return on a fixed payout and keeps capital locked up. Burford's 2025 Form 10-K says some court systems 'continue to face backlogs, delaying adjudication,' and that 'extensions of expected duration reduced the fair value of certain assets' in 2025.

Why it matters

Duration is the risk that is easiest to underestimate in litigation finance, because a case that eventually pays still looks like a win. But a 2.0x multiple over seven years is a modest return, and capital tied up that long cannot be reinvested. The evidence from funders' own disclosures is that durations have been lengthening: Burford's active capital has aged and Omni Bridgeway's completions have slowed. Time-based terms protect funders, not claimants or necessarily fund investors. Ask a manager for durations by vintage and by case type, how its forecasts compared with outcomes, and what its returns would look like if every case took two years longer.

Common misconceptions

•A high multiple is not a high return, because the annual rate falls steeply as the holding period lengthens.
•Concluded-case durations are not a forecast, because fast cases conclude first and longer ones follow.
•Time-based step-ups do not remove duration risk, because they move its cost to the claimant and can make settlement harder.
•Delays are not neutral to valuation, because longer expected duration lowers fair value through discounting.
•A fund's stated term is not its actual life, because pending cases can force extensions.

Technical details

Worked example (illustrative): one 2.0x outcome, four durations

Two years: about 41.4% a year.

Three years: about 26.0% a year.

Five years: about 14.9% a year.

Seven years: about 10.4% a year.

The multiple is identical; only the time the capital is tied up changes.

Sources of delay

Court backlogs and trial scheduling.

Motions, discovery disputes and expert phases.

Appeals, remands and annulment proceedings.

Enforcement and collection.

Settlement negotiations and installment payments.

What AltStreet's reviews and filings show

Burford 10-Q (September 30, 2026): WAL of 303 concluded assets 2.6 years (cost-weighted) and 2.7 years (realization-weighted); WAL of active deployed capital 3.6 years, against 3.3 at December 31, 2025 and 3.1 at December 31, 2024.

Burford 2025 10-K: court backlogs delayed adjudication; 'extensions of expected duration reduced the fair value of certain assets'; time-based terms protect some assets.

AltStreet's Omni Bridgeway review: average completion time 2.7 years (FY2019) to 4.6 years (FY2026); fair value portfolio life 6.5 years against a 3.5-year track record.

AmBase's March 2026 funding agreement with its chief executive (10-Q for June 30, 2026) pays the funder first until it has received the fund amount plus 50% if proceeds arrive by September 30, 2026, plus 1.0x within 12 months of funding, plus 1.5x within 24 months and plus 1.8x after that, with the company receiving the rest.

Questions about duration

What were forecast and actual durations on concluded cases?

How old is the active portfolio, by deployment date?

What do returns look like if every pending case takes two years longer?

How many cases carry time-based step-ups?

What happens at the end of the fund's term if cases are still pending?

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 can litigation investments take much longer than forecast?: Because each stage can slip: pleadings and motions, discovery, expert evidence, trial dates, appeals and enforcement all depend on courts' calendars and the parties' tactics. Burford's 10-K attributes some 2025 delays to court backlogs, and AltStreet's LexShares review lists COVID-era court delays that stretched hold periods well beyond projections.
How long do funded cases actually take?: It varies by funder and strategy. Burford's 303 concluded assets had a weighted average life of 2.6 years weighted by deployed cost and 2.7 years weighted by realizations at September 30, 2026; its active deployed capital had been outstanding 3.6 years on average, up from 3.1 at the end of 2024. AltStreet's Omni Bridgeway review reports average time to completion rising from 2.7 years for FY2019 completions to 4.6 years for FY2026.
What does an extra year do to returns?: It lowers the annual rate on the same multiple. A 2.0x payout is about 41.4% a year over two years, 26.0% over three, 14.9% over five and 10.4% over seven. The dollar profit is the same; the time cost is not.
Do concluded-case durations understate the problem?: They can. Fast cases conclude first, so early concluded portfolios look short. Burford notes that the weighted average life of its concluded portfolio 'may lengthen over time if the longer-tenor assets in our existing portfolio account for a greater share of future concluded cases.' Omni Bridgeway's own fair value portfolio assumes a 6.5-year life against 3.5 years in its track record, per AltStreet's review.
How do funders protect against duration?: With time-based terms and by pricing it. Burford says 'in some cases, we are protected on duration risk, because some of our assets have time-based terms that increase our absolute returns as time passes.' AmBase's 2026 agreement steps the funder's entitlement from plus 50% to plus 1.8x as time passes. Those terms shift duration cost to the claimant.
How does duration affect a fund investor?: It delays distributions, extends the fund's life and can push investors into extensions or secondary sales at a discount. It also interacts with fair value: longer expected duration lowers present value, so delays show up first as write-downs and only later as lower realized IRRs.