MDL Financing Structure

MDL financing structure refers to the architecture of litigation capital deployed across a multi-district litigation docket, which typically operates on at least two distinct levels: PSC or common benefit financing, which funds the shared costs of discovery, experts, and case development, and individual claim financing, which advances working capital to law firms or plaintiffs against anticipated individual recoveries. Some large MDL financings also include a mezzanine layer that funds the lead firm's overhead and client acquisition costs, creating a three-tranche capital stack with different seniority, return profiles, and event triggers. Because common benefit costs are incurred years before any settlement, and individual claim proceeds are only realized at the end of a 5–10 year docket lifecycle, MDL financing structures must be designed with long duration tolerance, milestone-based funding tranches, and clear waterfall provisions that address the interaction between common benefit assessments, lien satisfaction, and funder repayment. This complexity makes MDL financing one of the most sophisticated and high-value segments of the litigation finance market.

Because common benefit costs are incurred years before any settlement while individual claim proceeds are realized only at the docket's end, funders structure MDL capital across distinct tranches with different seniority and event triggers rather than as a single facility — a design choice that lets the funder match capital risk to where the docket actually is in its five-to-ten-year lifecycle. Waterfall provisions addressing the interaction between common benefit assessments, lien satisfaction, and funder repayment are negotiated with particular care in this structure, since ambiguity there creates disputes precisely when proceeds finally become available.