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Legal Finance ABS for Institutional Investors: Market Securities Expands Offering

By Celso Filho |
April 9, 2026

Legal Finance ABS for Institutional Investors: Market Securities Expands Offering

The following article was contributed by Celso Filho, Global Head of Special Projects at Market Securities, and co-founder and CEO of Rachel AI.

Life insurers and other institutional investors face a structural allocation challenge: securing sufficient volumes of rated, long-duration, yield-bearing assets to match long-tail liabilities. Public investment-grade bond markets remain large, but they do not consistently provide the spread, structure, or customization required. As a result, insurers have steadily increased allocations to private placements, asset-backed securities, and other forms of private credit.

According to Milliman’s 2026 analysis of NAIC statutory filings, private bonds now account for approximately 46% of U.S. life insurers’ bond portfolios — up from 29% a decade ago — reflecting a sustained and accelerating shift toward alternative sources of yield and duration. The trend is sharpest among PE-owned life insurers, where structured securities account for approximately 49% of total bonds — underscoring how deeply the search for rated, yield-bearing paper has become embedded in the asset allocation strategies of the most capital-active players in the sector.

Market Securities is addressing that demand by bringing to market asset-backed securities backed by legal finance receivables, including pre-settlement plaintiff advances and receivables linked to contingent fee arrangements with law firms. These assets introduce a distinct return profile driven by legal case cash flows rather than traditional corporate credit cycles, and they can be structured into rated securitizations suitable for institutional portfolios.

The opportunity is crystallizing across three investor tiers — each approaching the asset class from a different angle, but converging on the same structure and, together, driving the institutionalization of legal finance.

  1. Insurers and other rated-mandate investors represent the largest pool of demand. Operating within strict capital and rating constraints, they allocate to investment-grade instruments at 125 to 200 basis points over Treasuries and can deploy hundreds of millions per transaction. Their participation defines the scale of the opportunity — and creates the demand for rated, structured exposure that legal finance ABS is uniquely positioned to meet.
  2. Private credit managers, sovereign wealth funds, and large family offices occupy the senior and mezzanine tranches, targeting enhanced yield with structural protections. Unlike insurers, these investors are not dependent on ratings and underwrite assets directly, focusing on risk-adjusted returns, structure, and downside protection. They provide the capital depth required to scale transactions and anchor issuance.
  3. Specialist legal finance investors sit in the junior and equity tranches, underwriting legal risk directly and targeting returns in excess of 25%. These investors take first-loss positions, pricing legal risk at the asset level — and for them, securitization offers a compelling strategic advantage: lower cost of capital and greater leverage availability than traditional fund formation, particularly relevant in today’s challenging fundraising environment.

These tiers are complementary rather than competitive. Rated investors bring scale and duration demand; private credit and sovereign capital provide flexible, non-rating-constrained liquidity; and specialist managers contribute underwriting expertise and first-loss alignment. Securitization is the architecture that aligns them — converting legal finance receivables into a format that institutional capital can size, rate, and deploy against.

Market Securities sees this convergence as structural rather than cyclical, and legal finance ABS as the mechanism through which it becomes permanent.

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Celso Filho, CFA, CAIA is Global Head of Special Projects at Market Securities, based in the Dubai International Financial Centre (DIFC). He is also co-founder and CEO of Rachel AI, a London-incorporated litigation finance technology and analytics platform. Celso began his career as a lawyer, practising for seven years before transitioning into investment banking and specialty finance, with prior roles at Citigroup and Credit Suisse. He holds an MBA from INSEAD.

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Celso Filho

Celso Filho

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Commercial

King’s Speech Omits PACCAR Fix, Funding Industry Voices “Deep Disappointment”

By John Freund |

The UK government's annual legislative agenda set out in the King's Speech this week made no mention of the long-promised litigation funding bill, leaving the industry's preferred reversal of the Supreme Court's 2023 PACCAR ruling unresolved. The omission comes despite a December commitment from ministers to legislate on PACCAR and introduce a new regulatory framework for funders, and it has drawn sharp rebukes from across the third-party funding sector.

As reported by Legal Futures, counsel and funders called the absence a setback for the competitiveness of England and Wales as a litigation hub. White & Case partner Robert Wheal said the government had "recognised that uncertainty caused by the PACCAR ruling risked undermining the competitiveness of England and Wales as a global hub for commercial litigation and arbitration," adding that it was "disappointing that time has not been found for the necessary legislation."

Jeremy Marshall, chief investment officer at Winward Litigation Finance, warned that the continuing ambiguity is eroding investor appetite. "Uncertainty is unhelpful for any investor and litigation funding is no different," he said, noting that the UK's premium standing in global legal services depends on credible funding rails for both consumer and commercial claims.

Trade bodies including the Association of Litigation Funders and the International Legal Finance Association voiced "deep disappointment" at the omission. The Ministry of Justice is reportedly waiting to attach the funding legislation to a suitable vehicle bill later in the parliamentary session.

Commercial

ITC Disclosure Proposal Would Force Litigation Funding Transparency in Section 337 Cases

By John Freund |

The U.S. International Trade Commission has proposed a rule that would require parties in Section 337 intellectual property investigations to disclose their litigation funding arrangements, including the identities of entities that hold financial interests in or exercise control over case strategy and settlement decisions. The stated objective is to surface potential conflicts of interest and bring greater clarity to a venue that has become a primary forum for patent enforcement against imports.

As reported by Winston & Strawn, partner Alexander Ott discussed the proposal with Law360 and framed the disclosure regime as a tool that supports the agency's statutory mandate. "The commission's goal is to defend U.S. domestic industry," Ott said, making it important for the ITC to know "all the parties with a financial stake."

Ott suggested that commissioners could use funding information to weigh exclusion-order remedies more carefully, evaluating "how their decision helps or hurts the domestic industry ultimately." The argument lands inside a broader U.S. policy debate over whether mandatory funding disclosure should be confined to specific dockets or extended across federal courts, an issue currently before the Advisory Committee on Civil Rules.

If adopted, the ITC rule would mark the first formal, agency-level disclosure mandate aimed squarely at funded patent cases, layering a transparency obligation that plaintiffs and funders have resisted in district court litigation. The proposal is expected to draw written comments from funders, the patent bar, and large importers before the commission finalizes any change.

Commercial

Burford Capital Shareholders Approve All AGM Resolutions, Back Dividend and Capital Authorities

By John Freund |

Burford Capital shareholders approved all 16 resolutions at the company's 2026 annual general meeting, ratifying the board's director slate, a final dividend, and a full suite of capital and share-issuance authorities. Roughly 70% of the company's outstanding shares were represented at the May 13 meeting, with every resolution clearing by a comfortable majority.

According to Burford's Form 8-K filing, shareholders re-elected all seven directors standing, with support ranging from 84.78% for John Sievwright to 96.90% for CEO Christopher Bogart. The board's $0.0625-per-share final dividend was approved with 96.73% support and is payable on June 12, 2026 to holders of record on May 22.

The advisory say-on-pay vote drew 72.92% backing, the lowest level of support among the governance items, while the reappointment of KPMG as auditor was nearly unanimous at 99.89%. Shareholders also authorized the board to issue ordinary shares for general corporate purposes (96.23%), conduct market repurchases (98.01%), and disapply pre-emption rights for both general share issuances (96.90%) and acquisitions (96.52%).

The vote arrives weeks after Burford's Q1 disclosures detailing a $2.4 billion YPF-related write-down and a strategic pivot toward a more diversified portfolio. Broad shareholder support for the capital framework gives management latitude to commit fresh capital, buy back stock, or finance acquisitions as it executes that repositioning.