Non-Recourse Capital

Funding provided on the condition that repayment is owed only if the funded claim succeeds — the claimant has no personal or corporate liability to repay the funder if the case is lost or produces no recovery. This structure distinguishes litigation finance from conventional debt financing and is the foundational commercial premise of the industry. Non-recourse capital allows claimants to pursue meritorious claims without balance sheet exposure, while funders price the heightened risk into their return multiples and due diligence rigor. The non-recourse nature also has favorable accounting treatment for many institutional claimants.

The non-recourse feature is what allows litigation finance proceeds to sit off a claimant's balance sheet as a contingent asset rather than a liability, which is a meaningful accounting and disclosure consideration for corporate claimants and law firms alike. Funders price this feature into the return multiple precisely because they cannot fall back on the claimant's general assets if the case fails, which is why underwriting rigor substitutes for the credit analysis a recourse lender would otherwise perform.