NAV Lending vs. Portfolio Finance

NAV lending suits an established litigation finance fund or law firm with a seasoned book of settled-but-unpaid judgments or late-stage cases whose value is largely de-risked, and that wants liquidity without selling any positions or disrupting relationships with the claimants or firms behind those matters. Funds at this stage often have exhausted simpler options for accessing the value already locked into their book.

Portfolio finance suits a firm or fund at an earlier stage — building or actively managing a live case inventory across a range of resolution stages, not just a book of already-resolved or late-stage matters — and that needs capital tied to the full arc of its docket rather than only its most mature positions. This describes the majority of funds and firms actively originating new matters at any given time.

The lender values the fund's or firm's net asset value — the estimated worth of settled judgments and late-stage cases net of any existing liabilities — and extends a credit facility sized to a conservative percentage of that NAV, secured against the underlying positions and revalued periodically as those positions move toward actual payment. Revaluation typically follows the same cadence as the fund's or firm's own reporting to its investors or partners.

The funder evaluates the full portfolio across every stage — new intake through late-stage resolution — and structures a revolving facility, purchase, or co-investment against the blended composition, accommodating a mix of case maturities rather than only the most de-risked positions, and adjusting availability as the composition shifts. This flexibility to accommodate a blended maturity profile is what distinguishes portfolio finance from the narrower, later-stage focus of NAV lending.

Because NAV lending is secured against positions that are largely resolved or highly advanced, with lower remaining uncertainty, it typically supports a higher advance rate and comparatively favorable pricing relative to earlier-stage portfolio structures, reflecting the lender's reduced exposure to merits-based litigation risk. The gap between NAV lending and portfolio finance pricing widens further for positions that are fully disbursement-ready versus still working through appeal.

Because portfolio finance spans the full range of case maturities, including earlier-stage matters with more resolution uncertainty, pricing and advance rates are set more conservatively to reflect the blended risk of the whole book, with earlier-stage cases contributing less to the borrowing base than seasoned ones. Pricing is periodically revisited as the portfolio matures and a greater share of its value shifts toward the more de-risked end of the spectrum.

Risk is concentrated in valuation accuracy — if the estimated NAV of settled-but-unpaid judgments or late-stage cases proves too optimistic, or payment is delayed, the advance-rate cushion absorbs some of that gap, but overvaluation is the central risk the lender manages rather than merits-based litigation risk. Because the underlying litigation risk has largely already resolved, NAV lending is closer in character to asset-based lending than to litigation risk underwriting.

Risk is distributed across the full maturity spectrum of the portfolio, including cases that could still be dismissed or resolve well below projection, which is why portfolio facilities are underwritten more conservatively than NAV-based structures and rely more heavily on diversification across many independent matters. This broader risk exposure is also what allows portfolio finance to support earlier-stage matters that would not yet qualify for NAV treatment at all.

NAV lending wins when a fund or firm has a substantial book of resolved-but-unpaid value and wants to monetize that near-certain value without waiting for actual payment or selling the positions outright, preserving the fund's or firm's ongoing relationship with each matter. It is often the natural next step once a fund's book has matured enough to generate a meaningful base of seasoned positions.

Portfolio finance wins when the capital need spans an entire active docket, including earlier-stage cases, rather than only the most resolved and de-risked positions, particularly for a fund or firm still building toward the scale where NAV lending becomes available.