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An LFJ Conversation with Joshua Coleman‑Pecha, Senior Associate, Holman Fenwick Willan

By John Freund |

Joshua Coleman-Pecha is a senior international construction, infrastructure and technology dispute specialist working in the MENA region. He advises on construction and technology projects from inception to completion. Joshua is a qualified solicitor advocate, meaning he has rights of audience in the courts of England & Wales, and is a PRINCE 2 qualified project manager.

Joshua advises on all aspects of complex dispute avoidance and resolution. He has represented several clients in billion-dollar disputes before a variety of arbitral institutions including ICC, LCIA, UNCITRAL, DIAC, and SCCA. He has experience handling disputes under the governing laws of England & Wales, the UAE, Saudi, and Qatar.

Joshua’s recent significant work includes advising in relation to oil and gas processing facilities, drilling contracts (onshore and offshore), a water desalinisation plant, a battery energy storage park, the MENA region’s largest metro system, and a major railroad and metro project in the UAE and Saudi respectively. Joshua has experience of projects across the region having handled disputes in, for example, the UAE, Oman, Qatar, Saudi Arabia, Iraq, and Turkey. His clients include international oil & gas companies, refining and petrochemical companies, EPC contractors, oil & gas service companies, EPC employers, and international technology providers. Finally, he acts in a hybrid role as general counsel to a billion dollar pharmaceutical company based in the UAE.

Joshua was recently recognized as a ‘Key Lawyer’ in Oil, Gas and Natural Resources by Legal 500 2024. He is also a member of various construction industry associations and a contributing member of the Legal Funding Journal.

Below is our LFJ Conversation with Joshua Coleman‑Pecha:

The MENA region, and Saudi Arabia in particular, is a growing jurisdiction in the global legal funding market.  What has hindered funders from embracing this market in the past, and why the change–what has prompted more funders to take an interest in this part of the world? 

I think there have been a few factors that have limited funders’ interest in operating in the Saudi market, or, financing disputes that involve Saudi law and / or Saudi Courts.

First, the high-level point is that legal funding is not prohibited under Saudi law. However, until now, in Saudi and across the GCC, whilst the view has been that written laws do not prohibit legal funding, there has been a high degree of uncertainty as to how, in practice, the courts would treat parties backed by legal funders. Quite understandably, legal funders and litigants have been hesitant to be the ‘test cases’ on which this issue is examined. To some extent I think this hesitancy remains, though it is decreasing as GCC countries refine their laws and legal practice, and legal funders look to the growing markets across the GCC for new opportunities.

Second, for many years Sharia has been the dominant system of law in Saudi. Sharia law is a huge subject, and it is impossible to consider all the aspects of it here. However, in summary, it is a combination of several different texts and is subject to several schools of legal interpretation. As with other GCC countries, Saudi is a civil law system, and does not rely on binding precedent. It may be that legal funders have been hesitant to make investments in an environment that they don’t feel they fully understand. However, in recent times, Saudi has taken significant strides towards codifying its laws. All GCC countries are on this path to a greater or lesser extent, which helps provide certainty. In addition, with better recording and proliferation of court judgments and legal knowledge across the entire market, my sense is that international investors are becoming more confident in these surroundings.

Third, all GCC countries have been signatories to the New York Convention for some time. However, recent years have seen an acceleration of arbitration across the GCC, as recognition of the jurisdiction of arbitral tribunals and willingness to enforce arbitral awards increases. In Saudi, part of the country’s ‘Vision 2023’ is to have the leading arbitral institution in the Middle East, and be considered one of the leading arbitral institutions worldwide. Saudi has implemented a new Arbitration Law, and the Saudi Center for Commercial Arbitration (SCCA) has received significant investment, allowing it to hire globally recognised practitioners to join its senior ranks. Its rules are based on UNCITRAL rules and were updated in 2023 to reflect the most modern sets of arbitral rules globally.

Fourth, through discussion with various funders, my understanding of their view is that investing in Saudi is outside their commercial risk parameters. Factors such as uncertainty over duration of legal proceedings, lack of knowledge of Sharia, and questions over enforcement have made it difficult to determine likely ROI. Certainty over enforcement of arbitral awards in Saudi is increasing and the reasons for this are discussed below / later.

Finally, from the perspective of a funded party, and bearing in mind a lot of these parties are contractors in the construction industry, I think there is hesitancy to use legal funding as it can wipe out profit margins.

You deal with the Saudi construction claims sector specifically. What is the TAM of this market, and why should litigation funders take an interest here? 

The market is huge. Focusing just on the projects sector alone, there are approximately USD 1.8trn of projects planned or underway in Saudi (USD 330bn of which are already underway), making it the largest market in the MENA region. Over the last five years, the Saudi projects sector has, on average, awarded USD 60bn of projects a year, which looks set to grow year-on-year to around USD 80bn by 2028.

It is impossible to accurately estimate the number or value of disputes emanating from these projects. Of course, arbitration is private, but also many issues or disputes will not come to light due to being settled through commercial negotiations. We do know that right now approximately 440 projects in Saudi are identified as being ‘on hold’ (which means there is almost certainly going to be some form of dispute arising) with a combined value of USD 231bn. As the number and value of projects approaching completion or achieving completion increases, I expect to see these figures grow.

How do claimants and litigators on the ground feel about litigation funding? How do they look at the practice from both an economic and cultural perspective? 

For the reasons discussed above, legal funding has yet to proliferate in GCC countries. My experience is that, at best, many legal advisors (both in private practice and in-house) and potential litigants have limited knowledge about legal funding and are therefore sceptical of its merits. At worst, these parties may not know anything about legal funding at all, or, have a misunderstanding of what it is about and how it can help. I believe that education is needed before legal funding can be considered ‘mainstream’ in this region.

Where legal funding may be better known is amongst international entities (like international contractors) operating in Saudi or the wider GCC. However, even where there more understanding as regards the concept and a willingness to consider it as an option, barriers remain. For example, contractors are often put off legal funding when the cost is revealed.

Construction disputes are often fact heavy, require a significant amount of analysis before funders can begin to assess the merits, and, if they go to trial, will require lengthy investment periods. All this means that funder risk goes up, so the required returns go up, which can seriously damage contractor profits. There’s little point in a contractor taking funding if it’s going to wipe out the contractor’s profit margin on the underlying project.

My personal view is that discussion between contractors and funders can yield a solution. On the one hand contractors may be persuaded to take funding based on a holistic view of its financial benefits. Portfolio funding may make taking funding economically palatable to contractors. However, also in my view, the greatest opportunity for striking investment deals lies in the fact that both employers and contractors tend to want to settle disputes at the earliest opportunity. If legal funders are willing to take this into account, it may shift the investment metrics sufficiently to make legal funding attractive to all parties.

What about enforcement in Saudi Arabia? How much of a concern is this, and what steps should funders take to allay their concerns about enforcement over a specific claim? 

The laws

Saudi has been signatory to the New York convention since 1994. However, its arbitration friendliness has increased massively in the last few years, including the creation of the previously mentioned SCCA in 2016. In addition, two key rules have been promulgated:

In 2012, Saudi passed KSA Royal Decree M/34 concerning the approval of the Law of Arbitration (KSA Arbitration Law) (together with its Implementing Rules) and in 2013, Royal Decree M/53 (Enforcement Law). The KSA Arbitration law is modelled on the UNCITRAL model law, which is regarded as international best practice.

The KSA Arbitration Law curtailed the Saudi courts’ interventionist powers in relation to arbitrations seated in Saudi Arabia by recognizing for the first time the parties’ autonomy to tailor their arbitration procedure in certain important respects, including by explicitly recognizing the adoption of institutional arbitration rules. The KSA Arbitration Law also addressed a key concern under the old law – the power of the Saudi courts to reopen and effectively re-litigate awards on their merits.

The Enforcement Law has led to the creation of specialized enforcement courts, whose jurisdiction supersedes that of the Board of Grievances (the court previously competent to hear requests for enforcement of arbitral awards). This in turn has started to have a salutary effect on the enforcement of foreign arbitral awards, which until 2017 was an uncertain prospect. The Enforcement Law contains provisions that affect all aspects of enforcement of judgments and arbitral awards, both domestic and foreign. In practice, the Enforcement Law has resulted in the unprecedented enforcement of several foreign arbitral awards, which is welcome development. It is hoped that the Rules supplementing the KSA Arbitration Law will help to provide more certainty around how the courts will apply the KSA Arbitration Law, including with respect to enforcement of arbitral awards.

Domestic Arbitral Awards

Domestic arbitral awards must comply with the KSA Arbitration Law. The Enforcement Courts have jurisdiction to enforce domestic arbitral awards under article 9(2) of the Enforcement Law. For a domestic arbitral award, it must be declared as enforceable by the appeal court with initial jurisdiction over the dispute. Therefore, an application is needed to the relevant appeal court for a declaration that the award is enforceable by the party seeking enforcement. The declaration is normally represented by a court stamp, after which the request for enforcement can be registered with the Enforcement Court.

Domestic arbitral awards that are enforceable include:

  • monetary awards
  • specific performance
  • sale or delivery of tangible and intangible property

Article 55 of the KSA Arbitration Law outlines the procedural and substantive requirements of a valid arbitral award. Pursuant to this provision, the competent court must verify the following conditions to issue an order for enforcement:

  • The arbitral award must not contradict other court decisions or laws on the same subject in Saudi Arabia.
  • The loser has been duly notified of the arbitral award.
  • The arbitral award must not violate Saudi public policy (Sharia). My understanding is that where the Saudi Courts have been confronted with an award where part of it contradicts Sharia, in some instances, they have been willing to strike out the unenforceable part and enforce the remainder.

Furthermore, the arbitral award must comply with the formality requirements of the KSA Arbitration Law and be compliant with Sharia principles. Article 49 of the KSA Arbitration Law states that an arbitral award is not subject to appeal. However, under article 50(1), a party may apply to annul an arbitral award issued on the following grounds:

  • “if no arbitration agreement exists, or if such agreement is void, voidable, or terminated due to expiry of its term;
  • if either party, at the time of concluding the arbitration agreement, lacks legal capacity, pursuant to the law governing his capacity;
  • if either arbitration party fails to present his defence due to lack of proper notification of the appointment of an arbitrator or of the arbitration proceedings or for any other reason beyond his control;
  • if the arbitration award excludes the application of any rules which the parties to arbitration agree to apply to the subject matter of the dispute;
  • if the composition of the arbitration tribunal or the appointment of the arbitrators is carried out in a manner violating this Law or the agreement of the parties;
  • if the arbitration award rules on matters not included in the arbitration agreement; nevertheless, if parts of the award relating to matters subject to arbitration can be separated from those not subject there to, then nullification shall apply only to parts not subject to arbitration; and
  • If the arbitration tribunal fails to observe conditions required for the award in a manner affecting its substance, or if the award is based on void arbitration proceedings that affect it.”

Furthermore, under article 50(2) of the KSA Arbitration Law, the court may, on its own jurisdiction, nullify the arbitral award if:

  • it violates Sharia or Saudi public policy; or
  • the subject matter of the dispute was not arbitrable, e.g., not capable of being resolved by arbitration, under Saudi law.

The application for nullification of the arbitral award must be made 60 days after the nullifying party was notified of the award.

Foreign Arbitral Awards

Foreign awards must comply with the Enforcement Law as well as the New York Convention for enforcement of foreign arbitral awards. For a foreign arbitral award, a party does not need a declaration that it is enforceable from the relevant domestic appeal court. Instead, the party requesting enforcement can apply directly to the Enforcement Court, with no statute of limitations applicable.

For foreign arbitral awards to be enforceable they must meet the following criteria:

  • The award must be a final award and must not contradict another judgment or court order issued on the same subject in Saudi Arabia, or contradict the public policy of Saudi Arabia.
  • Reciprocity must be established between Saudi Arabia and the jurisdiction in which the award is issued. The burden on proving reciprocity is on the party requesting enforcement.
  • The award must have been issued by a tribunal with jurisdiction under the relevant foreign law, and the subject matter of the aware, should not be under mandatory jurisdiction of Saudi Arabia;
  • All parties must have conducted the proceedings with all procedural regularities in place, with due representation If the respondent to the proceedings was notified, but was not represented, and this can be evidenced, such an award is still enforceable.

The Enforcement Court has jurisdiction to enforce foreign arbitral awards in accordance with the requirements of the Enforcement Law:

  • Saudi courts must not have jurisdiction to decide the dispute.
  • The tribunal issuing the award must have had jurisdiction over the dispute.
  • The arbitral proceedings were conducted in accordance with due process, e.g., the parties had fair opportunities to present their cases.
  • The arbitral award is final and not subject to appeal under the law of the seat of arbitration.
  • The arbitral award must not contradict other court decisions or laws on the same subject in Saudi Arabia.
  • The arbitral award must not violate Saudi public policy.

The New York Convention is considered the foundation for enforcing arbitral awards in a state other than where the arbitral award was issued (i.e., foreign arbitral awards). All arbitral awards not issued under the KSA Arbitration Law are considered foreign arbitral awards. Contracting states to the New York Convention must recognise foreign arbitral awards as binding and enforce them under their rules of procedure, and without imposing “substantially more onerous conditions or higher fees or charges” for foreign arbitral awards than the State would impose on domestic arbitral awards.

Process for Enforcement of Arbitral Awards

To enforce an arbitration award the application for enforcement must include:

  • “the original award or an attested copy thereof;
  • a true copy of the arbitration agreement;
  • an Arabic translation of the arbitration award attested by an accredited authority, if the award is not issued in Arabic; and
  • a proof of the deposit of the award with the competent court, pursuant to article 44 of KSA Arbitration Law.”

Article 6 of the Enforcement Law addressing all judgments and awards, states that all judgments issued by an Enforcement Court are subject to appeal and the court of the KSA Arbitration Law appeal’s judgment would then be final. However, for arbitral awards issued under the KSA Arbitration Law, article 55(3) of the KSA Arbitration Law does not allow appeal of an order to enforce an arbitral award. By contrast, an order refusing enforcement is appealable.

The enforcement procedure is as follows:

  • An enforcement request is made through the Najiz application (the Ministry of Justice’s online portal) is made by the applicant.
  • The request is reviewed procedurally by the Enforcement Court, and is then referred to an enforcement judge. This will require up to three days.
  • If the enforcement judge is satisfied, an enforcement order will be issued (Article 34 decision), ordering one party to comply within five days of the notice.

The applicant must wait twenty days for the Enforcement Court to notify the relevant party of the Article 34 decision. If this is not done, the applicant may request for the notice to be served by publication in local press, by the Enforcement Court. Although the applicant will initially pay for the publication of the notice (three to five days are required for publication from payment), the costs are able to be reimbursed from the enforcement order.

If the Article 34 decision is not adhered to, within five days of notification, the enforcement judge may be requested to enforce sanctions against the non-complying party. Such measures, under Article 46 are issued up to ten days after the expiry of the Article 34 decision or from the date of applicant’s request to issue an Article 46 decision, provided that the request is made at least five days after the Article 34 decision is notified. All decisions by an enforcement judge are final, unless they relate to certain procedures or costs.

Other Considerations on Enforcing Arbitration Awards

The public policy exception to enforcing foreign arbitral awards has traditionally been very broad. An award that contradicts Sharia law or public policy will not be enforced by the Enforcement Court. However, if the part that contradicts public policy can be separated from the rest of the award, only that part should not be enforced.

The Enforcement Law sets out that the enforcement judge cannot enforce a foreign arbitral award if it includes what is contradictory to public policy. The implementing regulations of the Enforcement Law defines “public policy” as the Islamic Sharia. Saudi Arabia Royal Decree No. 44682/1443 dated 28 August 2021 limits the definition of public policy to general rules of Islamic law based on the Quran and the Sunnah. Recently successful grounds were:

  • Late payment charges were found to amount to usury.
  • Compensation for holding back money was found to amount to usury.
  • The award involved the sale of property which the purported seller did not own.

Public policy is not limited to procedural deficiencies. The Saudi court can, of its own volition, refuse to enforce an award that contradicts Sharia, including any of the evidence relied on by the tribunal that is not acceptable under Sharia (for example, if the tribunal relied on the testimony of a person with a mental impairment). The court could also refuse enforcement if the award itself contradicts Sharia (for example, an award of interest).

Other Enforcement Mechanisms

Saudi Arabia is also party to Riyadh Arab Agreement for Judicial Co-operation and the GCC Agreement for the Enforcement of Judgments, Rogatory, and Judicial Publication.

One of the benefits of a more mature market is the presence of consultants, advisors and experts whom funders can rely on. How prevalent are such experts within the Saudi legal / litigation funding market?  What can funders do to ensure they are receiving reliable, actionable advice? 

Until recently, to participate in the Saudi market, international firms had to enter an alliance with a local partner firm. With the change of laws in this area, several international firms have now opened their own Saudi office, and HFW (the firm I work at) is one of those. This divergence perhaps causes some difficulty for clients seeking joined-up legal advice. Naturally, high quality Saudi firms focus on work in the local courts, where they have rights of audience. International firms are more likely to focus on international clients, working with contracts under foreign laws, with arbitration as a dispute resolution mechanism. In both cases, the proliferation of work requires additional legal practitioners, and this growth potentially comes at the cost of quality legal advice or, at least, relevant experience.

Of course, it is tempting for me to say that HFW should be every funder’s first call for Saudi related advice! The reality, as everyone knows, is that every dispute is different and requires different skill sets, sector knowledge, legal qualification(s), and price point. I’m sure it doesn’t really need to be said, as legal funders know their jobs better than I do, but I would always suggest seeking advice from firms and individuals who have wide experience in the jurisdiction, have advised on disputes in the relevant sector in that jurisdiction previously, and understand what legal funders need and want to be able to make their investment decision.

About the author

John Freund

John Freund

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LFJ Conversation

An LFJ Conversation with Stephen Kyriacou, Head of Litigation and Contingent Risk at WTW

By John Freund |
Stephen is a seasoned litigation and contingent risk insurance broker and former practicing complex commercial litigator who joined WTW in February 2025 as Head of Litigation and Contingent Risk Insurance.  In his role, Stephen evaluates litigation-related risks and structures bespoke litigation and contingent risk insurance policies for litigation finance, hedge fund, law firm, private equity, and corporate clients.  Prior to joining WTW, Stephen was a Managing Director and Senior Lawyer in Aon's Litigation Risk Group.  Stephen joined Aon in 2019, and was the first insurance industry professional dedicated solely to the litigation and contingent risk insurance market, leading the Litigation Risk Group's origination and business development work, in-house legal diligence, efforts to advocate for coverage with underwriters, and negotiation and structuring of insurance policies.  During his time at Aon, Stephen was a three-time Risk and Insurance Magazine “Power Broker” (2022, 2023, 2024); spearheaded the development of judgment preservation insurance and insurance-backed judgment monetization as well as the synergy of litigation and contingent risk insurance with litigation finance; and was responsible for placing billions of dollars in total coverage limits – including the largest ever litigation and contingent risk insurance policy, and several policies that each provided over $500 million in coverage limits – and delivering hundreds of millions of dollars in premium to insurers.  Stephen additionally provided consulting and broking services on litigation-driven, insurance capital-based investment opportunities and sales of litigation claims, insurance claims, and subrogation rights as part of the Aon Special Opportunities Group. Prior to joining the insurance industry, Stephen was a complex commercial litigator in the New York City office of Boies, Schiller & Flexner from 2011 to 2019.  While at BSF, Stephen amassed significant trial, appellate, and arbitration experience representing both plaintiffs and defendants in the U.S. and abroad across a wide array of practice areas, including securities, antitrust, constitutional, insurance, first amendment, employment, government contracting, and criminal law, as well as in multidistrict and class action litigation.  Stephen's clients included banks and other major financial institutions, private equity firms, technology companies, foreign sovereigns, professional sports teams, television networks, insurance companies, corporate executives, and other high-net-worth individuals.   Stephen earned his J.D. from the New York University School of Law in 2010, and is a member of the New York State Bar.  He also clerked for the Honorable Tanya S. Chutkan in the United States District Court for the District of Columbia. Below is our LFJ Conversation with Stephen Kyriacou:

We’ve seen increased interest in portfolio-based insurance solutions, particularly as the judgment preservation market has tightened.  What’s driving this shift, and how are clients adjusting their risk strategies in response?

When I first joined the insurance industry back in 2019, after about a decade as a trial and appellate lawyer at Boies Schiller, we were primarily insuring single-case defense-side risks with what we now call adverse judgment insurance or “AJI” policies.  Shortly after I started, the focus shifted to the plaintiff side, though most insurers still preferred insuring single cases with what came to be called judgment preservation insurance or “JPI” policies.  These policies protected plaintiffs who had already won at trial or on summary judgment against appellate risk, effectively guaranteeing a minimum recovery from their trial court judgments no matter what happened on appeal.

JPI was the driving force behind the explosive growth in the litigation and contingent risk insurance market for several years, in large part because these policies allowed plaintiffs to monetize judgments more cost-effectively than they could without insurance.  And as the market grew, so did the size of the judgments that were being insured and the amount of coverage limits that insurers were putting up, both individually and collectively, on these policies.  It got to the point where policies providing over $100 million in coverage for multi-hundred-million-dollar judgments became commonplace, and several policies were written that provided more than $500 million in coverage on billion-dollar-plus judgments.  Individual insurers were also sometimes betting tens of millions of dollars on the outcome of a single case as part of some of these JPI larger policies.

Unfortunately, while more modestly sized JPI policies on smaller judgments have generally performed as expected, with insurers not having to pay many claims, some of these larger, more high-profile JPI policies have run into significant challenges on appeal, on remand, and in places like the Patent Trial and Appeal Board.  And the nature of this insurance is such that one big loss on a multi-hundred-million-dollar policy can more than wipe out the premium gains for insurers on several smaller policies.

The JPI losses that insurers have already incurred, and those they look likely to incur in the near term, have understandably caused many of them to reassess their approach to litigation and contingent risk insurance more broadly.  For some insurers, that has meant pulling back from the space or taking a “back to basics” approach and returning to a focus on defense-side risk.  But for many insurers, it has meant mirroring the pivot that much of the litigation finance industry made several years ago away from single cases – where financial outcomes can hinge entirely on one jury, one trial court judge, or one panel of appellate court judges – and toward a portfolio-focused approach that better spreads risk across multiple diverse cases or litigation-related investments, loans, or other assets.  In fact, the insurers who have come into the market following the JPI boom, and who therefore have no exposure to any of the large JPI policies of recent years, are generally focused, at least for the time being, exclusively on providing this sort of portfolio-based coverage.

Our clients at WTW are embracing this new paradigm.  Where a client may previously have sought to insure a single large patent infringement judgment with a similarly large JPI policy, they might now seek a portfolio-based policy that guarantees a minimum recovery from the combination of that judgment, several other earlier-stage cases that are pending in different trial courts, and numerous other patents they may seek to enforce through litigation in the future.  We’re also working with litigation funders who may previously have sought to insure individual investments on a piecemeal basis once they reached the judgment stage to instead insure portfolios of diversified investments throughout all stages of the litigation lifecycle, including in some cases entire funds or designated sleeves of funds.  Patent and mass tort case aggregators are also increasingly looking to avail themselves of portfolio-based insurance solutions that can be tailored to the unique risk profiles of their businesses and used as a financial tool to spur growth and increase profitability.

Law firms are getting in on the action, as well.  We are seeing tremendous interest in “work-in-progress” or “WIP” wrappers that insure, on a cross-collateralized basis, a law firm’s anticipated contingency fee recovery across a portfolio of cases.  Many of the recent WIP insurance placements that we’ve worked on recently have involved patent infringement cases and IP litigation boutiques, but we are also seeing interest from mass tort, personal injury, and product liability law firms, as well as among AmLaw 200 firms that focus on many different categories of high-value, capital- and labor-intensive plaintiff-side commercial litigation.

Can you walk us through what a portfolio-based insurance wrapper actually looks like – both for a litigation funder and for a law firm? How do the structures differ, and what risks are typically covered?

The basic structure of a portfolio-based insurance wrapper is very straightforward.  Essentially, an insured purchases a policy with a specific amount of coverage limits that guarantees the insured will recover an amount equivalent to those coverage limits from the cases or litigation-related investments, loans, or other assets that comprise the portfolio that’s being insured.  If, at the end of the policy term – or if the policy doesn’t have a specific term, once the last of the covered cases or investments has ended – the insured’s recovery is less than the limits on the policy, the insurers will pay out a “loss” on the policy that effectively trues the insured up to policy limits.

Recovery against the policy limits is measured differently depending on who the insured is:  for litigants insuring pools of plaintiff-side litigation, insurers look to any amounts the litigant earns through damage awards and settlements on those cases; for litigation funders, hedge funds, or others insuring investments in litigation-related assets, insurers look to their returns on those investments; for lenders insuring loans to law firms or other participants in the plaintiff-side litigation ecosystem, insurers look to the amount of principal plus interest repaid on those loans; and for law firms insuring their work-in-process or “WIP”  on a group of cases, insurers look to the contingency fees that the law firm collects on those cases.

For a litigation funder, it’s as simple as identifying a set of investments, loans, or other assets to go into the portfolio, identifying the amount the funder has invested in whatever it is that collateralizes the portfolio, and then insuring a minimum recovery that is some significant percentage of the funder’s overall investment.  And as I mentioned earlier, these policies can insure an entire fund, a designated portion of a fund, a specific LP within a fund, or even a more bespoke portfolio comprised of select investments from within a given fund or from a cross-section of different funds.

As with portfolio policies for litigation funders, WIP policies can be placed on a programmatic basis across a firm’s entire contingency fee case book or on a more selective basis across certain specifically identified cases.  Here’s an example of how a WIP policy might work:  Imagine that a law firm was litigating ten cases on contingency, with an anticipated recovery of more than $100 million in contingency fees and expected WIP of $50 million across the portfolio of cases.  The firm could potentially purchase a WIP policy with a $40 million limit, equal to 80% of its expected WIP, which would provide coverage if, over what is typically a five- to seven-year policy term, the ten cases in the portfolio collectively earn the firm less than $40 million in total contingency fees.  If, at the end of the policy term, the firm had only recovered $20 million in total contingency fees, the policy would cover the $20 million shortfall against the $40 million in policy limits.

WIP policies are often used as a mechanism to attract litigation funding at a much lower cost of capital than otherwise would be available without insurance, including from sources of capital that don’t typically invest in litigation-related assets because of the high risk involved.  There are dozens of different capital sources beyond traditional litigation funders – including hedge funds, family offices, private equity firms, private credit lenders, and other alternative sources of capital – who are keenly interested in lending against WIP policies, as well as against other portfolio-based and single-case insurance policies.

WIP insurance can also be a very useful tool for lawyers within firms where the billable hour is king to get approval from executive or contingency fee committees, or from the broader partnership, to bring high-value contingency fee cases.  These policies provide the firm with a guaranteed minimum recovery from contingency fee litigation by the end of the policy’s term such that, if the cases don’t ultimately work out as planned, the financial result to the firm will be the same as if the lawyers on those cases had spent several years simply billing their time on non-contingency fee matters for clients who received a small discount on those lawyers’ hourly rates.

I should also note that, for any portfolio-based policy, as with some of the more traditional single-case policies like judgment preservation and adverse judgment insurance, premiums are generally in the form of one-time upfront payments.  But for portfolio policies more than single-case policies, there are also mechanisms like deferred and contingent or “D&C” premiums that insurers are increasingly willing to employ to bring down the upfront premium cost in exchange for a modest piece of the recovery waterfall if the cases or investments that comprise the insured portfolio are highly successful.

How are insurers underwriting these portfolio-based structures differently than single-case policies?  Are there specific underwriting thresholds, case mix requirements, or expected returns that make a portfolio “insurable”?

Most insurers define a “portfolio policy” as one that is insuring at least three to five cases, and the more the merrier.  These cases should be uncorrelated, such that they should not all rise and fall together, and the more diversity that can be introduced into the portfolio – with regard to identity of plaintiffs, identity of defendants, specific causes of action, subject matter of the litigation, etc. – the better, as well.

That being said, it is common for an insured portfolio to be comprised of cases from a single plaintiff or representing only a single subject matter area from a litigation funder, law firm, or group of lawyers within a law firm who specialize in that subject matter area – think patent infringement, antitrust, or mass tort litigation.  And of course, insurers are highly vigilant about adverse selection, and will not insure portfolios that they suspect to be comprised of a prospective insured’s cherrypicked worst or riskiest cases or investments.  The easiest way to mitigate this suspicion as a prospective insured is to insure a “complete set” – whether the entirety of a given fund from a litigation funder, a law firm’s entire contingency fee case book, a patentholder’s entire patent portfolio, or a litigant’s entire portfolio of plaintiff-side cases.

Underwriting one of these portfolios is a very different exercise than underwriting a JPI or AJI policy.  Rather than a single case with an extensive, well-developed record (including, as was often the case with JPI placements, the exact appellate record that would be put before an appellate court when they are asked to decide the case), insurers are often faced with a high number of cases and less detailed and voluminous information about each individual case.  Often, cases that are already underway will have a limited history of case filings and unfiled cases will have only a preliminary case description and damages evaluation.  Accordingly, while the number of cases increases substantially, having less information per case can result in the amount of underwriting time, and associated underwriting fees, being relatively similar to a JPI or AJI policy.

In terms of the actual underwriting process, it’s important to keep in mind that insurers do not need to put all their eggs in a single basket on portfolio polices like they do for a JPI or AJI policy.  Instead, they determine the likelihood of success for each case in the portfolio and then assign an expected return to that case.  Then, using a weighted average of all the cases, the insurer determines exactly how likely it is that the portfolio will collectively return an amount that exceeds the limits being purchased.  Insurers are also looking at other things, as well, like a law firm or litigation funder’s track record on similar cases or investments, the underwriting guidelines being used to select cases or investments, the bona fides of the key individuals involved, case budgets, and the judgment collection and enforcement risk presented by the relevant defendants.

It's also important to keep in mind that the structure of portfolio-based insurance policies makes it much less likely that a policy could suffer a full limit loss given the number of cases or investments that would need to go poorly in order for that to happen.  This is another key differentiator from JPI, where a single adverse appellate court decision or bad remand outcome can sometimes cause a full limit loss.

Lastly, as I noted earlier, insurers will often look to include a deferred and contingent or “D&C” premium in portfolio-based policies, which allow the insurer to participate in the upside of a portfolio of cases or litigation-related investments if the portfolio turns out to be highly successful.  Since a D&C premium only kicks in after the insured has recovered an amount in excess of coverage limits, underwriters of portfolio-based policies with a D&C component will also evaluate the probability that a portfolio brings in proceeds well in excess of limits, thus entitling them to that additional backend premium.

For litigation funders raising capital or structuring new vehicles, how critical is it to have an insurance solution baked in from day one? Are LPs demanding it, or is it still seen as an optional enhancement?

It ultimately depends on the type of investment capital that a funder is looking to attract.  Traditional litigation finance LPs, who seek to make high-risk, high-reward investments, often view insurance as antithetical to why they are investing in litigation finance in the first place, because the premium costs – whether upfront or D&C – cut into their returns.  These investors, and those funders who follow the same ethos, are generally not interested in wrapping their funds with any form of principal protection insurance coverage because they don’t want to forfeit any of their upside in order to do so.

On the other hand, a litigation funder who wraps a new fund with principal protection insurance can attract an entirely new class of investors that typically does not invest in litigation finance – investors who don’t need to understand litigation funding, or even litigation itself, in order to invest.  These LPs may invest in an insurance-wrapped fund precisely because their downside is de minimus or, depending on the limits of the relevant policy, essentially zero, but with a high potential upside – albeit, not as high as the upside would be without insurance.  This makes insurance-wrapped funds an ideal target for certain investment banking, pension fund, private equity, private credit, university endowment, sovereign wealth, family office, and other investors who will happily accept lower returns in exchange for lower – or, again, depending on the specific policy structure, potentially zero – risk.

So based on that, I see insurance coverage on a fund-wide basis as an optional enhancement that is very funder- and LP-dependent.  But it’s important to remember that we have a significant amount of flexibility in how we can structure these policies to best achieve our clients’ financial and risk management goals.  To give one example, there was a deal I worked on that involved a loan that a funder made to a law firm where the funds for the loan came from multiple different LPs, some of which needed principal protection coverage and some of which did not.  We were able to structure an insurance policy that only insured the portion of the loan attributable to the LPs who needed insurance coverage and effectively treated the portion of loan funds that came from the other LPs as co-insurance on the policy.  The significant co-insurance piece brought the cost of coverage down from where it would have been had we insured the entirety of the loan or a high percentage of the loan funds coming from all LPs.  So even in situations where there are distinct or even polar opposite LP needs on a single investment, loan, or other transaction, we can often create an insurance-based solution that works to deliver an optimal balance of risk and reward for everyone, enabling deals to get done that just would not have happened without insurance.

LFJ Conversation

An LFJ Conversation with Sam Ward, Director, Sentinel Legal

By John Freund |
Sam Ward is the Director of Sentinel Legal, the UK’s leading firm specialising in motor finance mis-selling claims, having successfully managed thousands of claims and recovered substantial compensation for consumers who have been mis-sold car finance nationwide.
Sam has taken an unorthodox and bold approach to transparency and marketing. Through engaging video content, insightful podcasts, and candid posts on platforms like LinkedIn, Sam and the entire Sentinel Legal team openly call out unfair practices and share their views and findings publicly, actively redefining what it means to be a consumer champion law firm.
A respected and trusted voice within the industry, Sam regularly provides expert commentary and insightful analysis across major TV Networks and News platforms.
Below is our LFJ Conversation with Sam Ward:
You've been closely involved in the motor finance claim issues in the UK, and attended last week's Supreme Court hearings. Can you describe the atmosphere? What stood out to you most about being there in person? There was clear apprehension at the start of Day 1. We arrived at the court around 9:15 am and faced a huge queue, filled with trolleys stacked with lever arch folders and boxes overflowing with documents for the hearings, it was quite a sight. It probably took us 30 minutes just to get inside. The security checks, complete with metal detectors and X-ray machines, set a very serious and somewhat ominous tone, highlighting the significance of the Supreme Court. Entering the courtroom itself, which was like stepping into an old classroom from Hogwarts, really amplified the gravity of the proceedings. What stood out most was the overwhelming presence of the banks' lawyers. Once seated, the consumer representatives, only about 10 out of the 60-70 people present, felt significantly outnumbered. It really was like a David and Goliath. How engaged did the Lords seem with the arguments being presented? Were there particular lines of questioning that surprised or impressed you? The Lords demonstrated extraordinary engagement. Their probing questions seemed driven by a genuine desire to thoroughly understand the complex issues leading up to the Supreme Court hearing. I was particularly impressed by their rigorous exploration of fiduciary duty and what constitutes genuine consumer consent. The questioning was relentless at times, with periodic interruptions from the Lords where exchanges could last 20 to 30 minutes before returning to the oral submissions. A memorable moment for me was Lord Briggs’ pointed comment to Mr Weir KC: "I don’t think you shrink from the implications that probably for the last 75 years, anything up to half the lenders have been acting dishonestly," with Mr Weir KC confidently responding, "My Lord, I do not shy away from that in the slightest." I couldn’t help but quietly fist pump from my uncomfortable wooden mahogany chair that I had now been sat in for 3 days. I understand the courtroom was packed with lenders and their solicitors, with relatively few consumer representatives present. Why the imbalance? And how did that impact your experience?  The imbalance was striking. The courtroom was predominantly occupied by car finance lenders and their legal teams, clearly illustrating the magnitude and resources invested by the car finance lenders. Consumers were nearly shoehorned into corners, highlighting just how crucial consumer advocacy is. The sheer number of bank representatives frantically typing away on laptops almost drowned out the Lords’ voices at times. For me it wasn’t a good look for the car finance lenders, they all seemed full of anxiety and under strict instructions on what to do and when to do it. The collective daily rate of these solicitors must have been staggering across all three days. Especially when they could have listened to it online….. What key takeaways should the legal funding and claimant communities understand about the hearing?  The core takeaway is the strong emphasis on transparency and fairness in financial transactions. The Lords well articulated questions to both appellant and respondent representatives highlighted their genuine want of understanding as to what has actually gone on here and how they might remedy it. If the Supreme Court upholds the Court of Appeal's unanimous October 2024 judgment, significant shifts in handling undisclosed commissions and conflicts of interest will follow, marking this case as one of the most influential consumer cases in British legal history. This could present substantial opportunities for litigation funders looking for an uncorrelated market to invest in and claimants seeking compensation for mis-sold financial products. How are you and others in the claimant community preparing for what comes next once the judgment is handed down? Sentinel Legal has been one of the leading firms in this space, handling thousands of motor finance claims and recovering over £500,000 in compensation for clients so far, all in the county courts, with no court of appeal or Supreme Court judgement to help us. Currently, we have around 700 claims stayed in UK courts, eagerly awaiting the Supreme Court's judgment to progress accordingly. Our systems are robust, tested through extensive litigation, and fully prepared to handle large scale claimant onboarding effectively. We continue actively onboarding new clients who feel they may have been mis-sold their car finance agreement. We are primed and ready to go should the Supreme Court uphold the Court of Appeals 2024 Judgement.  Sentinel Legal is the largest and most technologically advanced firm in the motor finance claims sector. We've achieved these results entirely in the county courts, without relying on precedent from the Court of Appeal or Supreme Court. Our custom built AI models and proprietary claims handling  systems have been built in house and rigorously battle tested through extensive litigation, positioning us uniquely to manage large scale claimant onboarding seamlessly and efficiently. Sam posts debrief videos of his days at court.  You can view the Day 1 video here.
LFJ Conversation

An LFJ Conversation with Louisa Klouda, Founder and CEO of Fenchurch Legal

By John Freund |

As the Founder and CEO of Fenchurch Legal, Louisa is responsible for overseeing all business operations, including fundraising, and ensuring the business’s overall success.

Louisa founded Fenchurch Legal in 2020 after an interest in the litigation finance market sparked an idea to apply a secured lending model to litigation finance. She discovered a market largely dominated by funders focusing on high-value, complex cases such as class actions, however, there was a lack of support for smaller claims. This insight led to the creation of Fenchurch Legal.

Before launching Fenchurch Legal, Louisa operated the broking and dealing desk for a corporate brokerage and finance firm in London. In this role, she gained extensive experience in mergers and acquisitions, corporate finance, and investment product structuring. Her role involved daily interactions with both retail and professional investors, as well as corporate clients.

Below is our LFJ Conversation with Louisa Klouda: How does Fenchurch Legal differentiate itself from traditional litigation funders? 

Fenchurch Legal operates differently from traditional litigation funders in several ways. Firstly, we focus on high-volume, low-value, process-driven consumer cases such as housing disrepair and financial mis-selling, where there is strong legal precedent supporting the claim type. Whereas larger litigation funders typically invest in high-stakes commercial disputes or class actions with multimillion-pound claims.

Secondly, the way we structure our lending is different. Traditional funders invest in cases on an outcome basis, taking equity-style positions – meaning they only receive a return if the case is successful, so they bear the risk of loss if the case is unsuccessful. In contrast, Fenchurch Legal operates as a direct lender, providing secured revolving credit facilities to law firms to draw down against costs and disbursements are repaid regardless of case outcomes. This structured lending model offers stability for both law firms and investors, ensuring predictable outcomes and controlled risk.

The key differentiation is that traditional funders invest in cases, whereas we provide loans.

Why doesn't Fenchurch have in-house lawyers, and how do you obtain legal expertise on the cases you originate? 

That’s a great question and one we often get asked. The answer is simple: Fenchurch Legal is a lending business, not a law firm.

Operating within the private debt sector, we provide business loans specifically for consumer legal case costs and disbursements with minimal litigation. Our expertise lies in secured lending, structuring loans and managing financial risk – not litigating cases.

We partner with law firms by providing them with the financial resources they need to run cases efficiently, while we focus on risk management, due diligence, and loan security.

Before entering a specific case type, we work with legal advisors to obtain counsel’s opinion and review case law and outcomes to assess viability and risk.

As part of our underwriting process, we outsource legal expertise where needed to assess a law firm's legal procedures, compliance with SRA regulations, as well as case viability. Additionally, we continuously audit and monitor the firms we fund, ensuring they meet strict legal and regulatory requirements, both internally by our team and by outsourcing to specialist legal professionals.

Unlike traditional litigation funders who take an active role in case strategy, our role is purely financial. We lend, monitor, and safeguard investor capital, ensuring that the law firms we fund have the financial resources and oversight needed to handle legal claims successfully.

Fenchurch focuses on small-ticket claims. What opportunities and challenges does a focus on that end of the market bring? 

One of the biggest opportunities the small-ticket claim market brings is the ability to fund cases with a clear legal precedent against highly liquid defendants, such as government bodies, banks, or insurers. This ensures that we have no risk of non-payment of damages and costs.

Another advantage is the scalability of our model. By funding high volumes of claims, we can diversify risk across multiple law firms and case types. To date, we have funded over 15,000 small consumer claims. Out of the 6,145 loans that have been repaid, 92% were successful. For the 8% that were unsuccessful, ATE insurance provided the necessary coverage, reinforcing our robust risk management framework.

One of the challenges of funding smaller cases is the operational complexity of managing a high volume of claims efficiently. However, we have developed strong due diligence, auditing, and monitoring systems that allow us to track performance and mitigate potential risks. We also have our own loan management software which provides a complete overview of our loan book and how our law firms are performing.

How does Fenchurch handle security and risk management concerns? 

At Fenchurch Legal, security and risk management are at the core of our lending model. As a direct lender, we structure loans to safeguard investor capital while ensuring law firms can operate effectively. Our key risk management strategies include:

  • Secured Lending Structure – Loans are backed by ATE Insurance, case proceeds, debentures and personal guarantees, ensuring capital protection.
  • Comprehensive Due Diligence – Before lending, we assess law firms’ track records, financial health, and case viability to ensure they meet our lending criteria.
  • Legal Precedent & Expert Review – We consult with barristers, law firms, and experts to evaluate claim types and expected outcomes.
  • Ongoing Monitoring & Auditing – We track performance, flag risks early, and ensure compliance with agreed terms.
  • Diversification – We fund a high volume of small, process-driven cases to spread risk across multiple firms and claims.

How do investors benefit from Fenchurch Legal's differentiated approach to the market? 

Investors choose Fenchurch Legal because they like our approach, which provides a predictable and secure investment opportunity. We operate as a direct lender offering structured loan facilities, meaning our investors benefit from a more stable, fixed-income-like investment model.

Our secured lending structure, combined with unique features such as risk management and diversification across a high volume of cases, provides investors with lower risk exposure and predictable returns.

As I often say, I come from a secured lending background, not a legal one. You wouldn’t ask us to stand up in court and argue a case, but you can trust us to look after investor money by structuring loans and managing risk effectively – that’s what we are good at.