LexFin’s Investment Protection Policies and Safeguards

At LexFin, we implement robust protections and strategic safeguards to ensure that our litigation funding investments are well-managed, risk-mitigated, and positioned for success. Our approach is designed to balance financial prudence with legal strategy, ensuring claimants receive the necessary funding while protecting our investments. Here’s how we safeguard our interests and those of our clients.

LexFin’s investment protection policies ensure that every funded case is carefully selected, strategically managed, and financially safeguarded. By combining rigorous due diligence, structured agreements, risk mitigation strategies, and enforcement planning, we ensure that both claimants and investors can pursue legal claims with confidence and security.

Insurance is a key pillar of LexFin’s risk management strategy, ensuring that claimants, legal teams, and funders are protected from the financial uncertainties associated with litigation and enforcement. By leveraging ATE insurance, enforcement protection, security for costs solutions, and portfolio insurance, we provide a robust, risk-mitigated path to legal success.

Insurance Protections at LexFin

A Comprehensive Safety Net for Legal Funding

Insurance plays a critical role in mitigating risks and safeguarding financial commitments in litigation funding. Legal proceedings whether in litigation, arbitration, or enforcement carry inherent uncertainties, including adverse cost orders, unexpected legal setbacks, and enforcement challenges. At LexFin, we incorporate strategic insurance solutions to ensure both our funding and our clients are protected from financial exposure. These insurance mechanisms provide certainty, security, and financial resilience throughout the legal process.

At LexFin, we collaborate with top-tier insurers to structure bespoke insurance-backed litigation funding solutions. Below are the key insurance mechanisms we utilise to protect our funding commitments and ensure successful outcomes for claimants.

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1. Thorough Due Diligence & Case Assessment

Before committing funding, we conduct a rigorous evaluation of each case to assess its legal merits, enforceability, and potential recovery. This includes:

Legal Merits Review: Analysis of the strength of claims, supporting evidence, and applicable laws.
Defendant Solvency Assessment: Ensuring the defendant has the financial capacity to satisfy a judgment or settlement.
Jurisdictional & Enforcement Risks: Evaluating legal frameworks in relevant jurisdictions to confirm enforceability.
Case Economics: Analysing the potential damages award versus legal costs to ensure a favourable risk-reward balance.

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2. Structured Funding Agreements

LexFin structures funding agreements with clear terms and risk controls, ensuring transparency and alignment of interests. Key elements include:

Non-Recourse Financing: Our funding is provided on a non-recourse basis, meaning LexFin only recovers its investment if the claim is successful.
Defined Budget Allocation: Funds are released in tranches based on case progress to maintain financial discipline.
Proportional Recovery Terms: Agreements are structured to ensure a fair distribution of recovered amounts, balancing claimant interests with our risk exposure.

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3. Active Case Monitoring & Strategic Support

While we do not interfere with legal strategy, LexFin actively monitors case progress and provides strategic insights where appropriate, ensuring optimal case management. Our approach includes:

Regular Progress Reviews: Periodic assessments with legal teams to evaluate case developments.
Risk Mitigation Strategies: Addressing procedural risks, adverse cost exposure, or potential settlement opportunities.
Third-Party Expert Support: Leveraging industry specialists, forensic accountants, and enforcement experts when needed.

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4. Risk Mitigation Through Portfolio Diversification

To protect against concentrated exposure, LexFin follows a portfolio funding approach, distributing risk across multiple cases and legal jurisdictions. This ensures that any single case outcome does not significantly impact overall investment performance.

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5. Adverse Costs and ATE (After-the-Event) Insurance

In jurisdictions where adverse cost liability is a concern, we help structure cases with:

After-the-Event (ATE) Insurance: Protecting claimants and LexFin against potential cost orders in case of an adverse ruling.
Security for Costs Mechanisms: Providing funding solutions to meet court-ordered cost security requirements.

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6. Enforcement and Judgment Recovery Strategies

Winning a case is only part of the process—securing financial recovery is crucial. LexFin employs:

Asset Tracing & Recovery Experts: Ensuring judgments can be enforced effectively.
Multi-Jurisdictional Enforcement Strategies: Pursuing assets across global jurisdictions if necessary.
Contingency Planning for Non-Payment: Engaging legal and financial mechanisms to pressure non-compliant judgment debtors.

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7. Compliance & Ethical Governance

LexFin adheres to strict regulatory, legal, and ethical standards to ensure transparency and fairness. This includes:

Compliance with Local and International Legal Frameworks
Ethical Litigation Funding Practices
Data Security and Confidentiality Protections

1. After-the-Event (ATE) Insurance Purpose:

ATE insurance is taken out after a dispute has arisen to protect claimants (and funders) from financial liability if the case is unsuccessful. This type of insurance is widely used in litigation and arbitration to mitigate financial exposure to adverse costs and legal expenses.

Coverage:

✔ Adverse Cost Orders – Covers the opposing party’s legal costs if the claim is unsuccessful.

✔ Own Legal Costs – Some ATE policies cover a portion of the claimant’s own legal fees.

✔ Security for Costs Protection – Courts may require claimants to provide security for costs; ATE insurance can serve as collateral.

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2. Contingent Legal Risk Insurance Purpose:

2. Contingent Legal Risk Insurance

Purpose:

This type of insurance covers specific legal risks that may arise before, during, or after a legal dispute. It is designed for cases where an uncertain legal outcome could impact financial recovery.

Coverage:

✔ Appeal Risk Coverage – Protects against losses if a favorable judgment is overturned.

✔ Legal Interpretation Risks – Covers financial losses related to unexpected judicial rulings.

✔ Settlement Default Protection – Ensures compensation is received if the opposing party defaults on a settlement agreement.

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3. Judgment Preservation & Enforcement Insurance

Winning a case is often only half the battle. Securing actual financial recovery is the real challenge. Many defendants, including corporations, sovereign states, and individuals, attempt to evade or delay payment of judgments and awards. This insurance protects against non-payment risks and strengthens enforcement efforts.

Coverage:

✔ Debtor Insolvency Protection – Covers financial loss if the losing party cannot pay the judgment.

✔ Asset Tracing & Recovery – Supports efforts to locate and seize assets for enforcement.

✔ Multi-Jurisdictional Enforcement – Covers legal costs for enforcing awards across borders.

✔ Fraudulent Transfers & Evasion Risks – Provides protection against debtors attempting to hide or transfer assets.

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4. Security for Costs Insurance

In some cases, courts and arbitration tribunals require claimants to provide security for costs—a financial guarantee ensuring that if the claim fails, the opposing party’s costs will be covered. Security for costs insurance allows claimants to satisfy these requirements without tying up significant capital.

Coverage:

✔ Satisfies Court-Ordered Security Requirements – Acts as a financial guarantee for claimants.

✔ Preserves Liquidity – Prevents businesses from diverting funds away from core operations.

✔ Strengthens Claimant’s Position – Demonstrates financial backing, discouraging opponents from using cost orders as a litigation tactic.

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5. Portfolio Litigation Insurance

For law firms, litigation funders, and businesses managing multiple disputes, portfolio insurance spreads risk across multiple cases, providing financial protection against adverse outcomes in one or more claims.

Coverage:

✔ Adverse Legal Outcomes in a Portfolio of Cases – Protects against unexpected case losses.

✔ Cost Overruns and Additional Legal Expenses – Covers unforeseen increases in litigation costs.

✔ Capital Efficiency – Enables law firms and corporations to pursue multiple claims without overexposure.

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6. Arbitration Award Default Insurance

Arbitration awards are legally binding, but enforcement can be difficult. Especially against sovereign states or financially distressed defendants. Arbitration award default insurance protects claimants from non-payment risks associated with arbitral awards.

Coverage:

✔ Non-Payment of Arbitration Awards – Ensures claimants recover awarded amounts.

✔ Cross-Border Enforcement Support – Covers legal costs for recognition and enforcement proceedings.

✔ Protection Against Sovereign State Defaults – Provides security when enforcing awards against state-owned entities.

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The Result

By leveraging insurance-backed litigation funding, LexFin removes financial barriers and reduces risk exposure for claimants, legal teams, and funders. With a strategic combination of ATE insurance, judgment enforcement protection, security for costs solutions, and arbitration award default coverage, we ensure our clients have a clear, financially secure path to justice.