Portfolio Litigation Funding for Law Firms and Businesses
Non-recourse capital advanced against a group of legal claims. Advised and arranged by Audley Capital; funded by third-party capital partners. Capital is at risk.
What is portfolio litigation funding?
Portfolio litigation funding is a form of non-recourse legal finance in which a funder commits capital against a defined pool of cases handled by the same law firm or held by the same business. Rather than underwriting one dispute at a time, the funder underwrites the pool as a whole and prices the facility on its aggregate risk and expected recoveries.
The capital can be used for legal fees, disbursements, expert costs, ATE insurance premiums and, in law-firm facilities, for working capital that supports growth of the contingent book. Because repayment comes only from case proceeds, the facility does not sit as debt on the balance sheet of the borrower.
How portfolio funding differs from single-case funding
Portfolio and single-case funding solve different problems. The table below sets out the practical differences most firms and clients ask about.
| Feature | Single-case funding | Portfolio funding |
|---|---|---|
| Risk to funder | Concentrated on one outcome | Diversified across multiple matters |
| Pricing | Higher — reflects binary risk | Keener — reflects diversification |
| Minimum size | From ~£1m in deployed capital | Usually ~£5m+ facility, 3–5+ cases |
| Speed to draw | Case-by-case approval each time | Draw against a pre-approved facility |
| Best for | A single strong claim | Firms/businesses with a pipeline of claims |
| Control of cases | Retained by claimant and lawyers | Retained by firm; reporting to funder |
Why law firms use portfolio facilities
Working capital
Turn contingent WIP into drawable capital that funds fees, disbursements and day-to-day operations while cases run their course.
De-risk the book
Transfer some of the downside on contingent work to third-party capital, so a single lost matter does not disrupt firm economics.
Growth
Take on more high-value claims and alternative fee arrangements than the firm's own balance sheet would otherwise allow.
Predictability
Smooth cashflow across a portfolio rather than depending on the resolution of any one case in any one quarter.
How a portfolio facility is structured
The commitment
The funder commits a maximum facility (for example £5m, £20m or £50m) that can be drawn against over an agreed availability period. Fees and interest are only charged on capital actually deployed.
Cross-collateralisation
Proceeds from successful cases in the portfolio can be used to repay capital deployed across the whole pool. This is what makes portfolio pricing keener than single-case pricing — but it also means individual clients' cases are linked to the performance of others.
The recovery waterfall
When a case in the portfolio resolves, proceeds typically flow in a fixed order: legal costs first, then the funder's deployed capital, then the funder's agreed return, and finally the remainder to the client. The exact waterfall is negotiated in the facility agreement.
What makes a portfolio fundable
Funders assess portfolios on five main criteria:
- Diversification. A mix of case types, defendants and jurisdictions reduces correlated risk.
- Aggregate quality. The overall merits of the pool matter more than any single case; weaker cases can sit alongside stronger ones.
- Scale. Combined claim values large enough to justify the diligence effort — usually £10–20m+ in aggregate.
- A credible team. An experienced litigation team with a track record in the relevant case types.
- Realistic budgets. Cost budgets and timelines that reflect the reality of contested litigation rather than best-case scenarios.
The process, from term sheet to facility
- 1Initial discussion and NDA. We understand the shape of your book and the type of facility that would suit it.
- 2Portfolio overview. A summary of the cases you would put into the facility, including claim values, expected timelines and cost budgets.
- 3Indicative term sheet. A short-form set of terms — facility size, pricing, waterfall — from one or more funders.
- 4Due diligence. The chosen funder reviews the underlying cases, the legal team and the budgets in detail.
- 5Facility agreement. The definitive documents are negotiated and executed.
- 6Drawdown. Capital is drawn as needed against the agreed budget for each case.
Risks and how they are managed
Litigation is inherently uncertain. Even a well-diversified portfolio can underperform, and capital committed to funded cases can be lost in whole or in part. Portfolio funding does not remove that risk — it manages it.
- Diversification across case types and jurisdictions reduces the impact of any single loss.
- Robust due diligence at facility inception and on each material draw.
- ATE or capital protection insurance can address adverse-costs risk on individual matters.
- Regular reporting and portfolio reviews with the funder throughout the life of the facility.
None of these measures guarantees a return. Outcomes depend on the underlying cases.
How Audley Capital helps
Audley Capital is a litigation finance adviser and arranger, not a funder. We work with law firms and businesses to shape a portfolio that funders will price competitively, run a structured process across our network of capital partners, and negotiate the facility agreement.
Funding decisions rest with the third-party funder in every case. We do not guarantee that a facility will be offered or that any particular terms will be available.
Ready to explore a portfolio facility?
Speak to Audley Capital about structuring a facility that fits your book. Advice and arrangement only; funding decisions rest with third-party capital partners.
