Transforming Legal Claims into Investable, Insurable Assets

Litigation finance is a high-return asset class, but it comes with binary risks and lumpy cash flows. Matrix helps Litigation Funds, Law Firms, and Corporate Claimants smooth these volatilities. By wrapping legal assets with insurance, we transform uncertain legal outcomes into insurable financial collateral.

We apply the same rigorous “NAV Wrapper” and “Principal Protection” concepts used in Private Credit to the legal finance sector, helping funds protect capital and attract institutional investors.

Core Insurance Solutions for Legal Finance

• Principal Protection (NAV Wrappers for Litigation):
  • The Mechanics: Just as we protect the Net Asset Value (NAV) of private credit funds, Matrix can structure wrappers for diversified litigation portfolios.
  • The Benefit: Guarantees that LPs will receive at least a portion of their invested capital back, even if the portfolio’s win-rate underperforms. This is critical for attracting risk-averse investors like pension funds and other institutional investors.
• Judgment Preservation Insurance (JPI):
  • The Mechanics: You’ve won the case, but the defendant has appealed. The payout is frozen, perhaps for years. JPI “locks in” the value of the court judgment.
  • The Benefit: This policy transforms a contingent asset into a fixed asset, allowing funds to monetize (borrow against) the win immediately rather than waiting for the appeal process to conclude.
• WIP Financing Wrappers for Law Firms:
  • The Mechanics: Credit insurance that wraps a law firm’s portfolio of contingency fee cases (Work-In-Progress).
  • The Benefit: Protects lenders against the risk of the firm failing to realize fees, enabling law firms to borrow at lower rates to fund operations and expansion.

The “Bankability” Advantage

Litigation assets are notoriously difficult for traditional banks to lend against due to their uncertain duration and binary nature.

• Credit Enhancement: By wrapping a portfolio of cases with Matrix insurance, we effectively “harden” the asset. Lenders can rely on the credit rating of the insurer (typically A or better) rather than the uncertain outcome of the court cases.
• Capital Efficiency: For funds using leverage, insurance can significantly reduce the cost of debt by mitigating the “loss given default” metrics used by lenders.

Ideal Client Profiles

• Litigation Funding Vehicles: Looking to raise Fund II or Fund III and needing a differentiator to attract institutional capital.
• Specialty Finance Lenders: Banks or funds lending to law firms who need additional collateral security.
• Corporate General Counsel: Large corporates with significant affirmative recovery claims who want to pursue litigation without impacting the company’s P&L volatility.

Frequently Asked Questions (FAQ)

Is this the same as “After-the-Event” (ATE) insurance?
Standard ATE covers adverse costs (paying the other side’s fees if you lose). While we offer ATE, our focus is on Capital Protection—insuring the investment principal itself and the value of the judgment, which is a financial guarantee rather than just a liability cover.

Can you insure a single case?
Yes, particularly for Judgment Preservation Insurance (JPI) where a judgment has already been rendered. However, for Principal Protection wrappers, we typically require a diversified portfolio of cases to spread the risk.

Does the insurer control the litigation strategy?
No. The insurer is a passive financial backer. However, they will require that the case is managed by top-tier counsel and that a rigorous due diligence process was followed before the case was funded.