Co-Investment in Litigation Portfolios: Deal-Level and Vehicle-Level Structures

How co-investors participate alongside funders, and the rights and structures involved.

Co-investment allows institutional investors to participate in litigation finance alongside an established funder, either in specific cases or in a defined portfolio vehicle. Deal-level co-investment has the co-investor and the funder fund a specific matter or group of matters side by side, typically on pari passu economic terms, sharing costs and recovery pro rata according to each party's commitment. This structure is common for large single-case investments where position-size management matters to both parties.

Vehicle-level co-investment instead gives the co-investor an interest in a defined portfolio or sub-fund managed by the funder. This suits institutions seeking diversified exposure to litigation finance without the burden of evaluating and selecting individual deals. The co-investor relies on the funder's underwriting and origination, receiving limited-partner-style reporting on the portfolio rather than deal-by-deal decision rights. The choice between deal-level and vehicle-level co-investment reflects how much selection control the investor wants versus how much diversification.

Co-investor rights are negotiated and documented. Deal-level co-investors typically receive information rights, including periodic case updates and milestone notifications, consultation rights to discuss material developments before settlement, and anti-dilution provisions that prevent the lead funder from increasing its own commitment without offering the co-investor a proportional increase. Crucially, co-investors do not direct case strategy, which remains with the law firm and its retained counsel consistent with professional responsibility rules.

For funders, co-investment is a means of managing position size and expanding capacity. A single matter may be too large for the funder to hold alone within its concentration limits, so bringing in a co-investor lets the funder participate in oversized opportunities while maintaining portfolio discipline. For the co-investor, deal-level participation offers targeted exposure to specific litigation risk factors, while vehicle-level participation offers diversified exposure managed by an experienced team.

Criterica Capital offers both deal-level and vehicle-level co-investment, with underwriting on every position informed by outcome models trained on 106M+ court records. This gives co-investors transparency into how each matter was evaluated and priced. Institutions seeking co-investment exposure to litigation finance can contact our institutional team to discuss structures and terms.

Discuss your matter with our institutional team.