Capital Call

A formal notice issued by a fund manager to limited partners requiring payment of a portion of their previously committed capital, typically triggered by an upcoming investment opportunity or an operating expense obligation, under the drawdown mechanics specified in the fund's governing documents. Litigation finance funds generally call capital incrementally over an investment period rather than requiring the full commitment upfront, both because case-by-case deployment timing is inherently uncertain and because calling capital only as needed improves the fund's overall return by minimizing the period during which committed but undeployed capital sits uninvested. Failure by a limited partner to fund a capital call on time typically triggers default remedies specified in the fund agreement, which can include dilution of the defaulting investor's interest or forfeiture of prior distributions, reflecting the operational importance of reliable capital availability to a fund actively underwriting and deploying against time-sensitive case opportunities.

Because litigation finance deployment opportunities can arise on relatively short timelines tied to a case's procedural posture, funds in this asset class often negotiate shorter capital call notice periods than are typical in other private fund categories, and they evaluate a limited partner's payment reliability history as part of admitting new investors to future vintages. A fund manager's capital call discipline — calling only what is genuinely needed for near-term deployment rather than holding excess cash — is itself a factor sophisticated limited partners assess when evaluating a manager's overall operational quality.