Capital Protection has Benefits for
Funders & Claimants
Overview
An Alternative to Diversification
Diversification is the standard tool for managing investment risk. In litigation, achieving sufficient diversification can require a significant commitment and take time.
Capital protection is an alternative to diversification or to subordinating other investors in the waterfall. It mitigates the historically binary outcomes associated with litigation funding.
ALP facilitates capital protection by coordinating protective structures with specialist partners, transferring defined downside scenarios away from investors.
Capital protection broadens the investor base and can reduce claimants’ cost of capital.
In summary
The Core Benefits
- Mitigates binary win-loss outcomes for investors
- Replaces need for diversification in concentrated portfolios
- Broadens the pool of eligible institutional investors
- Can reduce claimants' cost of capital
- Structures litigation finance within a standard credit framework
Dual Benefit
Protection Across the Transaction
For Investors & Funders
Capital protection enables institutional investors to participate in single claims or concentrated portfolios by providing contractual downside mitigation. This removes the requirement for extensive portfolio diversification, making the asset class accessible within standard credit mandates — including private credit, structured credit, and asset-backed finance frameworks.
Rather than relying on portfolio breadth to manage binary outcomes, investors can rely on structural protection mechanisms coordinated by ALP with specialist partners.
For Claimants & Law Firms
When capital protection is in place, a broader pool of investors — those who could not otherwise accept unprotected legal risk — becomes accessible. This increased competition for capital can reduce funding costs relative to traditional litigation finance arrangements.
For law firms and claim holders, protection-enabled structures provide access to institutional capital that has clear governance, defined information rights, and professional oversight.
How ALP Facilitates Protection
Coordinating the Structure
ALP does not provide protection directly. Instead, we coordinate with specialist protection partners who design and implement the relevant structures, integrating protection arrangements into the broader transaction framework.
01
Identify the appropriate structure
02
Coordinate with specialist partners
03
Transfer defined downside scenarios
04
Ongoing monitoring and reporting
Protection arrangements are monitored alongside the claim by specialist servicers, with reporting provided to investors as part of the overall governance framework.
Learn How Protection Can Work for You
Whether you are an investor or a claim holder, contact ALP to discuss how capital protection structures can be incorporated into your transaction.
Contact