Non-Recourse Litigation Funding
Litigation Finance & Legal Claims
Definition
Non-recourse litigation funding provides capital to a claimant or law firm where repayment depends primarily on a successful case outcome rather than general borrower credit.
Why it matters
The risk resembles contingent claim exposure more than ordinary credit. Underwriting focuses on merits, damages, collectability, timing, counsel quality, and settlement behavior.
Common misconceptions
- •Non-recourse does not mean risk-free to the claimant; control rights, consent provisions, and cost obligations can still matter.
- •A strong legal claim can still be a poor investment if damages are hard to collect or timing is uncertain.
Technical details
Underwriting Variables
Core diligence includes liability merits, damages model, defendant solvency, jurisdiction, expected duration, appeal risk, budget sufficiency, and counsel track record.
Return Form
Returns may be structured as multiples of invested capital, IRR-style preferred returns, percentage shares of proceeds, or hybrids with negotiated caps.