Private Credit Associate - Litigation Finance AMA
Associate at boutique credit fund. We manage investments within the litigation finance sector. We have seen tremendous growth over the last 5 years. Ask me anything.
Associate at boutique credit fund. We manage investments within the litigation finance sector. We have seen tremendous growth over the last 5 years. Ask me anything.
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Thanks for doing this!
What types of cases have you found to be the most predictable in terms of returns? I imagine commercial contracts might be more straightforward than, say, mass torts or intellectual property disputes.
How do you handle the binary nature of litigation outcomes (win/lose) in your portfolio construction? I'd be interested in your diversification strategies.
What has been your experience with institutional investors' appetite during periods of market stress?
What's been your experience with international arbitration cases versus domestic litigation? Curious about both the risk/return profiles and any jurisdictional challenges.
Thanks again!
On the Domestic side of our investments. We place a focus on Mass Tort and Personal injury firms (motor vehicle accidents, abuse, and class action).
Regarding international arbitrations. We have found that the binary risk is more applicable within this aspect of our portfolio. As a risk profile we tend to limit our funds exposure to 15-20% of LP commitments. However it’s important to note that in binary cases the returns have much higher yields and can generate larger MOICs. So if we have 10 cases within this risk pool only 2 would need to settle to cover the cost of investment.
Domestically, the mass tort dockets are more profitable in terms of return multiples, but is is important to include these single event PI cases as solid cash flow to mitigate and distributions or GP expenses.
We are US based so it’s important to keep up with settlement updates which periodically adjust payment models based and how we value the borrowers collateral.
LTV covenants are an extremely useful tool within our loan docs.
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