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What to Expect After a Legal Finance Offering

July 17, 2018 • 2 min read

Over the lifetime of a Legal Finance investment, you may see money flowing back into your account not only in different dollar amounts but also at varying time intervals. As a point of reference, the day after your investment is marked active in your portfolio, it begins earning interest on a daily basis.

Legal finance offerings, sometimes referred to as litigation finance, typically have event-based payment schedules, meaning that investors receive payments following an event, or when individual cases within the underlying portfolio settle or are adjudicated. This is also called a “settlement event.” Those payment dates and amounts cannot be pre-determined because when the cases will settle, or been adjudicated, is unknown ahead of time.

Investors can expect to receive several different payments throughout the targeted length of the investment. Further, when an individual case within a portfolio settles, if the amount to be distributed to investors is greater than the total current interest outstanding, all outstanding interest will be distributed and a portion of outstanding principal will also be repaid.

It is important to note that even after some principal is returned, the remaining principal will continue to earn interest at the target annual yield. On the other hand, if the amount to be distributed from the settled case is less than the total current outstanding interest, then the distribution will go towards accrued interest only and the return of principal will occur at a later date.

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² Represents an net annualized return, using an internal rate of return (IRR) methodology, with respect to the matured investments shown in your Portfolio experience, utilizing the effective dates and amounts of subscriptions and distributions to and from the investments, net of management fees and all other expenses charged to the investments.[read more]

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