Lien Resolution

Lien resolution refers to the process of identifying, negotiating, and satisfying third-party claims against a plaintiff's settlement proceeds — including Medicare and Medicaid reimbursement demands, private health insurer subrogation claims, workers' compensation liens, and litigation funding repayment obligations. In large MDLs, lien resolution is typically outsourced to specialized administrators and can take 12–24 months after settlement funds are deposited, creating material delay between gross settlement and net distribution to plaintiffs and their attorneys. For funders, unresolved or unexpectedly large liens are a recovery impairment risk — a plaintiff who settles for $500,000 may net substantially less after lien satisfaction, reducing the proceeds available to repay litigation funding advances. Funder due diligence should assess the anticipated lien profile of the funded plaintiff cohort before committing capital.

Funders account for lien resolution timelines of 12–24 months post-settlement as a distinct component of expected time-to-repayment, separate from the settlement date itself, because gross settlement and net distributable proceeds can differ substantially once liens are satisfied. A funded plaintiff cohort with an unusually high-cost injury profile — meaning larger anticipated Medicare, Medicaid, or private payor liens — is underwritten with a wider gap between gross settlement value and expected funder repayment.