Warehouse Facilities in Litigation Finance: How They Work

Revolving credit that lets funds deploy at deal pace before transferring positions to permanent capital.

A warehouse facility is a committed line of credit that allows a litigation finance fund or originator to finance case investments before those positions are funded by permanent capital or transferred into a long-term vehicle. The structure borrows directly from asset-backed finance, where mortgage originators warehouse loans before securitization. In litigation finance, the warehouse lets a fund commit capital to cases quickly, on the timelines that claimants and law firms require, without waiting for limited partner drawdowns to clear.

The economics turn on advance rates and seasoning. The warehouse provider advances a percentage of the committed capital across the funded portfolio, typically well below full value to maintain a cushion against adverse outcomes. As the fund builds and seasons the portfolio, demonstrating that the underlying cases are progressing as underwritten, it can transfer the positions into permanent capital and repay the warehouse, freeing capacity to originate again. The facility is revolving: the fund draws, repays, and redraws as it deploys and recycles capital.

Advance rates depend heavily on portfolio quality and diversification. A well-underwritten book spread across many uncorrelated matters supports a higher advance rate than a concentrated portfolio exposed to a single litigation, jurisdiction, or law firm. Warehouse providers apply concentration limits and require ongoing reporting, often quarterly docket reviews and material case update notices, with audit rights to verify that the portfolio matches the representations made at funding.

Pricing is structured as a spread over a benchmark rate, with commitment fees on the undrawn portion of the facility. The warehouse provider is taking financing risk on a portfolio it does not itself originate, so the quality of the originator's underwriting and track record is central to the terms. Facilities are negotiated bilaterally between sophisticated institutional counterparties; there are no standardized, off-the-shelf warehouse products in litigation finance.

Criterica Capital provides revolving warehouse facilities to litigation finance originators, applying outcome models trained on 106M+ court records to assess the expected recovery distribution of the portfolio being financed. This lets us set advance rates grounded in the observed economics of the underlying cases. Litigation finance funds and originators seeking warehouse capital can contact our institutional team to discuss facility terms.

Discuss your matter with our institutional team.