Litigation Insurance

Litigation Insurance is a bespoke solution that shifts an identified legal exposure—whether a threatened claim, active lawsuit, or final judgment on appeal—from the balance sheet of a company, fund, deal party, or litigation financier to an A-rated insurer, converting an open-ended liability into a fixed, one-time premium. …Depending on structure (before-the-event (BTE), after-the-event (ATE), Contingent Risk, Adverse Judgment, Judgment Preservation, or Capital Protection), the policy can be structured to reimburse an insured for adverse damages, settlements, defense costs, or the loss of a favorable award, and may serve as collateral for funding or acquisition financing. In M&A transactions, where the buyer has concerns regarding pending or threatened litigation, Litigation Insurance can serve as an effective tool to remove these risks from the negotiating table. This not only facilitates deal execution but also helps maximize proceeds to the sellers by eliminating the need for a special indemnity or escrow holdback. For lenders and investors, it protects IRRs and covenant compliance. For plaintiffs, it monetizes claims without ceding control. Coverage limits can range from $10 million to $500+ million and, although priced higher than other transactional risk insurance coverages, Litigation Insurance typically costs as little as high single to low double-digit percentage points of the amount insured.