Types of financing available

Traditional single case arbitration funding

Recovery Financing

Financing of cost of the enforcement effort
Funders can provide just the capital or a combination of capital and enforcement expertise with their own asset tracing capabilities
The return is often calculated as a percentage of the recovery

Other type of Transactions

Claimholders and award creditors may be able to use the claim or award to raise working capital
Claimholders and award creditors may be able to monetize the claim or award through assignment
Funders can take a share in the equity of the company

Award monetization: example

US$ 400m investment
Non-recourse
US$ 2bn award
Return:
Interest % on investment, plus
Multiple of investment, plus
Percentage of recovery
The client retains the option of early repayment and settlement above a minimum return

Claim monetization: example

US$ 190m investment
Upfront claim purchase
US$ 1.2 billion
The client’s priority was to sell the claim to avoid having to prosecute a claim against the Respondent

Recourse/Non-recourse Financing

Traditional lending can be mixed with non-recourse elements to lower the lending cost
Funders may offer a loan at a lower rate than traditional lenders in return for success-based upside

Claim as collateral: example

Portfolio finance

Funding of portfolios of cases, either for law firms or corporates
The portfolio distributes risk across multiple claims and allows the funder to offer better pricing and quicker decisions
Provided to corporates and law firm
Size can range from US$ 10m to 80m
Non-recourse
Selection of cases by lender or law firm
Law firm provides claimant with alternative fee arrangement (25-70% discount)
Repaid out of success fees earned on portfolio of cases
Cost dependent on cases in portfolio

What type of financing is available?