v3.25.1
Fair value of assets and liabilities
 3 Months Ended
Mar. 31, 2025
Fair Value Disclosures [Abstract]  
Fair value of assets and liabilities Fair value of assets and liabilities
The tables below set forth the fair value of financial instruments grouped by the fair value level as of the dates indicated.
March 31, 2025
($ in thousands)Level 1Level 2Level 3Total
Assets:
Capital provision assets
Derivative financial assets
Single case$— $— $756,442$756,442
Portfolio— — 3,099,8483,099,848
Portfolio with equity risk— — 74,22274,222
Legal risk management— — 7,1977,197
Non-derivative financial assets
Joint ventures and equity method investments— — 157,435157,435
Single case with equity risk6,136— — 6,136
Assets of consolidated investment companies
Core legal finance (BOF-C)6,386— 679,101 685,487
Core legal finance (EP Funds)— — 410,204 410,204
Lower risk legal finance (Advantage Fund)— — 108,050 108,050
Total capital provision assets12,522 — 5,292,499 5,305,021
Due from settlement of capital provision assets— — 102,648 102,648
Marketable securities
Government securities— 48,524 — 48,524
Corporate bonds— 19,155 — 19,155
Asset-backed securities— 1,536 — 1,536
Mutual funds8,298 — — 8,298
Certificates of deposit6,031 — — 6,031
Total assets26,85169,2155,395,1475,491,213
Liabilities:
Financial liabilities relating to third-party interests in capital provision assets— — 780,330780,330
Total liabilities— — 780,330780,330
Net total26,85169,2154,614,8174,710,883
December 31, 2024
($ in thousands)Level 1Level 2Level 3Total
Assets:
Capital provision assets
Derivative financial assets
Single case$— $— $1,052,519$1,052,519
Portfolio— — 3,053,8003,053,800
Portfolio with equity risk— — 65,04165,041
Legal risk management— — 6,4426,442
Non-derivative financial assets
Joint ventures and equity method investments— — 154,220154,220
Single case with equity risk8,711— — 8,711
Assets of consolidated investment companies
Core legal finance (BOF-C)8,581— 705,315713,896
Lower risk legal finance (Advantage Fund)— — 189,288189,288
Total capital provision assets17,292 — 5,226,625 5,243,917
Due from settlement of capital provision assets— — 183,858183,858
Marketable securities
Government securities— 40,405— 40,405
Corporate bonds— 20,077— 20,077
Asset-backed securities— 1,971— 1,971
Mutual funds10,654— — 10,654
Certificates of deposit5,913— — 5,913
Total assets33,85962,4535,410,4835,506,795
Liabilities:
Financial liabilities relating to third-party interests in capital provision assets— — 747,053747,053
Total liabilities— — 747,053747,053
Net total33,85962,4534,663,4304,759,742
The Group has elected the fair value option for the Group’s equity method investments, marketable securities, due from settlement of capital provision assets and financial liabilities relating to third-party interests in capital provision assets to provide a consistent fair value measurement approach for all capital provision related activity. Realized gains and losses, unrealized gains and losses and interest and dividend income on these assets are recognized as income/(loss) and presented in the unaudited condensed consolidated statements of operations when they are earned.
The key risk and sensitivity across all the capital provision assets relate to the underlying litigation associated with each case that is underwritten and financed. The sensitivity to this Level 3 input is therefore considered to be similar across the different types of capital provision assets and is expressed as a portfolio-wide stress.
Movements in Level 3 fair value assets and liabilities
The tables below set forth the analysis of the movements in the Level 3 financial assets and liabilities for the periods indicated.
Three months ended March 31, 2025
($ in thousands)Beginning
of period		Transfers
into Level 3		Transfers
between
types		DeploymentsRealizationsIncome/(loss)
for the
period		Foreign
exchange
gains/(losses)		End of
period
Single case$1,052,519 $— $(286,474)$62,060 $(97,636)$23,240 $2,733 $756,442
Portfolio3,053,800 — — 27,969 (49,548)65,763 1,864 3,099,848
Portfolio with equity risk65,041 — — 89 — 9,092 — 74,222
Legal risk management6,442 — — — — 477 278 7,197
Joint ventures and equity method investments154,220 — — — (585)1,142 2,658 157,435
Core legal finance (BOF-C)705,315 — — 10,550 (53,592)16,804 24 679,101
Core legal finance (EP Funds)1
— — 286,474 115,301 — 8,429 — 410,204
Lower risk legal finance (Advantage Fund)189,288 — — 507 (85,709)3,964 — 108,050
Total capital provision assets5,226,625 — — 216,476 (287,070)128,911 7,557 5,292,499
Due from settlement of capital provision assets183,858 — — 288,848 (371,054)652 344 102,648 
Total Level 3 assets5,410,483 — — 505,324 (658,124)129,563 7,901 5,395,147
Financial liabilities relating to third-party interests in capital provision assets747,053 — — 12,479 — 20,796 2 780,330 
Total Level 3 liabilities747,053 — — 12,479 — 20,796 2 780,330
1. The restructuring of the EP Funds resulted in the Group being required to consolidate the underlying assets and liabilities of the entities during the three months ended March 31, 2025 (see note 2, Summary of significant accounting policies for further details). Prior to consolidation, the Group had a ‘Single case’ capital provision asset with the EP Funds representing its Eton Park interest in the YPF-related assets. This asset is eliminated on consolidation and forms part of the additions to the ‘Core legal finance (EP Funds)’. Deployments to ‘Core legal finance (EP Funds)’ includes approximately $80.0 million of other additions which are offset by other third-party liabilities assumed on consolidation.
Three months ended March 31, 2024
($ in thousands)Beginning
of period		Transfers
into Level 3		Transfers
between
types		DeploymentsRealizationsIncome/(loss)
for the
period		Foreign
exchange
gains/(losses)		End of
period
Single case$934,131 $— $— $33,534 $(39,186)$6,336 $(1,677)$933,138 
Portfolio2,875,881 — — 24,695 (18,925)16,600 (2,122)2,896,129 
Portfolio with equity risk142,659 — — 90 — 18,433 — 161,182 
Legal risk management3,523 — — — — 2,374 (75)5,822 
Joint ventures and equity method investments178,628 — — — (488)(17,046)(777)160,317 
Core legal finance (BOF-C)705,092 — — 16,471 (45,594)11,097 — 687,066 
Lower risk legal finance (Advantage Fund)185,509 — — 50,613 (8,778)8,690 — 236,034 
Total capital provision assets5,025,423 — — 125,403 (112,971)46,484 (4,651)5,079,688 
Due from settlement of capital provision assets265,540 — — 112,971 (247,561)802 (64)131,688 
Total Level 3 assets5,290,963 — — 238,374 (360,532)47,286 (4,715)5,211,376 
Financial liabilities relating to third-party interests in capital provision assets704,196 — — 6 — 5,224 — 709,426 
Total Level 3 liabilities704,196 — — 6 — 5,224 — 709,426
All transfers into and out of Level 3 are recognized as if they have taken place as of the beginning of each reporting period. There were no transfers into or out of Level 3 during the three months ended March 31, 2025 and 2024.
Key unobservable inputs for Level 3 valuations
The Group’s valuation policy for capital provision assets provides for ranges of percentages to be applied against the risk-adjustment factor to more than 70 discrete objective litigation events across five principal different types of litigation in order to calculate the adjusted risk premium. The range for each event is ten percentage points. The Company typically marks assets at the middle of that range unless there are specific factors that cause the Group’s valuation committee to select a different point in the range and, on an exceptional basis, the Group’s valuation committee may also select a point outside the range. To decide which percentage to apply to a given asset, the Group’s valuation committee considers the kind and degree of legal, procedural or other investment-specific circumstances that may be present. See note 2 (Summary of significant accounting policies—Fair value of financial instruments) for additional information with respect to the Group’s valuation approach.
The tables below set forth each of the key unobservable inputs used to value the Group’s capital provision assets and the applicable ranges and weighted average by relative fair value for such inputs as of the dates indicated.
($ in thousands)March 31, 2025
Type:
Single case, Portfolio, Joint ventures and equity method investments, Legal risk management, Core legal finance (BOF-C)(1), Core legal finance (EP Funds), Financial liabilities relating to third party interests in capital provision assets
Principal value technique:Discounted cash flow
Unobservable input:CostUnrealizedFair valueMinimumMaximumWeighted average
Discount rate4.8%7.5%6.7%
Duration(2) (years)
0.213.82.9
Adjusted risk premium0.0%100.0%30.9%
Positive case milestone factor:
Significant ruling or other objective event prior to trial court judgment$181,740$113,443$295,1835.0%50.0%23.0%
Trial court judgment or tribunal award88,624100,061188,68525.0%60.0%53.6%
Appeal judgment61,95065,237127,18768.9%80.0%70.4%
Asset freeze2,4765653,0414.4%4.4%4.4%
Exhaustion of all appeals78,40066,985145,385100.0%100.0%100.0%
Settlement1,9615,0947,05540.0%80.0%59.7%
Portfolios with multiple factors518,750438,031956,7810.4%100.0%27.2%
Other309(163)146100.0%100.0%100.0%
Negative case milestone factor:
Significant ruling or other objective event prior to trial court judgment17,209(16,291)918(50.0)%(60.0)%(56.8)%
Trial court judgment or tribunal award45,011(24,058)20,953(10.0)%(60.0)%(57.3)%
Appeal judgment7,989(7,989)— (100.0)%(100.0)%(100.0)%
Portfolios with multiple factors60,540(33,992)26,548(2.4)%(60.0)%(43.0)%
No case milestone:912,68794,4011,007,088
YPF-related assets:105,6321,432,4501,538,082
2,083,2782,233,7744,317,052
Type:Lower risk legal finance (Advantage Fund)
Principal value technique:Discounted cash flow
Unobservable input:CostUnrealizedFair valueMinimumMaximumWeighted average
Discount rate92,65015,400108,05011.9%20.8%15.8%
Duration(2) (years)
0.06.82.1
Type:
Portfolio with equity risk, Core legal finance (BOF-C)(1)
Principal value technique:Discounted cash flow
Unobservable input:CostUnrealizedFair valueMinimumMaximumWeighted average
Discount rate45,74141,32687,06713.4 %13.4 %13.4 %
Resolution timing (years)0.53.51.2
Conversion ratio1.01.01.0
Type:Due from settlement of capital provision assets
Principal value technique:Discounted cash flow
Unobservable input:CostUnrealizedFair valueMinimumMaximumWeighted average
Discount rate102,419229 102,6486.6%6.6%6.6%
Collection risk0.0 %0.0 %0.0 %
Level 3 assets and liabilities, net2,324,0882,290,7294,614,817
1. Includes the proportional participation in these capital provision assets held by BOF-C.
2. Duration refers to the expected timing of a favorable outcome. See note 2 (Summary of significant accounting policies—Fair value of financial instruments) to the Group’s unaudited condensed consolidated financial statements for additional information with respect to the valuation methodology for Level 3 assets.
($ in thousands)December 31, 2024
Type:
Single case, Portfolio, Joint ventures and equity method investments, Legal risk management, Core legal finance (BOF-C)(1), Financial liabilities relating to third party interests in capital provision assets
Principal value technique:Discounted cash flow
Unobservable input:CostUnrealizedFair valueMinimumMaximumWeighted average
Discount rate4.8%7.6%6.9%
Duration(2) (years)
0.214.02.9
Adjusted risk premium0.0%100.0%31.4%
Positive case milestone factor:
Significant ruling or other objective event prior to trial court judgment$184,540$109,991$294,5315.0%50.0%23.0%
Trial court judgment or tribunal award86,88098,453185,33325.0%60.0%54.0%
Appeal judgment61,19267,177128,36969.0%80.0%70.0%
Asset freeze2,4015122,9134.0%4.0%4.0%
Exhaustion of all appeals78,09366,664144,757100.0%100.0%100.0%
Settlement1,9114,8896,80040.0%80.0%60.0%
Portfolios with multiple factors555,828424,005979,8330.0%100.0%23.0%
Other307(165)142100.0%100.0%100.0%
Negative case milestone factor:
Significant ruling or other objective event prior to trial court judgment17,209(16,343)866(50.0)%(60.0)%(57.0)%
Trial court judgment or tribunal award44,973(24,439)20,534(10.0)%(60.0)%(57.0)%
Appeal judgment11,825(11,506)319(80.0)%(100.0)%(80.0)%
Portfolios with multiple factors59,877(28,404)31,473(10.0)%(60.0)%(39.0)%
No case milestone:924,53028,112952,642
YPF-related assets:69,5761,395,8991,465,475
2,099,1422,114,8454,213,987
Type:Lower risk legal finance (Advantage Fund)
Principal value technique:Discounted cash flow
Unobservable input:CostUnrealizedFair valueMinimumMaximumWeighted average
Discount rate159,81629,472189,28812.1%21.0%17.2%
Duration(3) (years)
0.24.01.3
Type:
Portfolio with equity risk, Core legal finance (BOF-C)(2)
Principal value technique:Discounted cash flow
Unobservable input:CostUnrealizedFair valueMinimumMaximumWeighted average
Discount rate45,74130,556 76,29714.0%14.0%14.0%
Resolution timing (years)0.83.81.4
Conversion ratio1.01.01.0
Type:Due from settlement of capital provision assets
Principal value technique:Discounted cash flow
Unobservable input:CostUnrealizedFair valueMinimumMaximumWeighted average
Discount rate182,6571,201 183,8586.8%6.8%6.8%
Collection risk0.0%0.0%0.0%
Level 3 assets and liabilities, net2,487,3562,176,0744,663,430
1. Includes the proportional participation in these capital provision assets held by BOF-C.
2. Duration refers to the expected timing of a favorable outcome. See note 2 (Summary of significant accounting policies—Fair value of financial instruments) to the Group’s unaudited condensed consolidated financial statements for additional information with respect to the valuation methodology for Level 3 assets.
Sensitivity of Level 3 valuations
Following origination, the Group engages in a review of each capital provision asset’s fair value in connection with the preparation of the unaudited condensed consolidated financial statements. Should the prices of the Level 3 due from settlement of capital provision assets, capital provision assets and financial liabilities relating to third-party interests in capital provision assets have been 10% higher or lower, while all other variables remained constant, the Group’s consolidated income and net assets would have increased or decreased, respectively, by $461.5 million and $466.3 million as of March 31, 2025 and December 31, 2024, respectively.
In addition, as of March 31, 2025 and December 31, 2024, should interest rates have been 50 or 100 basis points lower or higher, as applicable, than the actual interest rates used in the fair value estimates, while all other variables remained constant, the Group’s consolidated income and net assets would have increased or decreased, respectively, by the following amounts.
($ in thousands)March 31, 2025December 31, 2024
+100 bps interest rates$(160,020)$(153,241)
+50 bps interest rates(81,092)(77,644)
-50 bps interest rates82,04378,514
-100 bps interest rates166,354159,169
Furthermore, as of March 31, 2025 and December 31, 2024, should duration have been six or 12 months shorter or longer, as applicable, than the actual durations used in the fair value estimates, while all other variables remained constant, the Group’s consolidated income and net assets would have decreased or increased, respectively, by the following amounts.
($ in thousands)March 31, 2025December 31, 2024
+12 months duration(1)
$(390,776)$(396,845)
+6 months duration(1)
(196,405)(200,908)
-6 months duration(1)
202,711196,721
-12 months duration(1)
417,624405,926
1. Duration refers to the expected timing of a favorable outcome. See note 2 (Summary of significant accounting policies—Fair value of financial instruments) to the Group’s unaudited condensed consolidated financial statements for additional information with respect to the valuation methodology for Level 3 assets.
The sensitivity impact has been provided on a pre-tax basis for both the Group’s consolidated income and net assets as the Group considers the fluctuation in its effective tax rate from period to period could indicate changes in sensitivity not driven by the valuation that are difficult to follow and detract from the comparability of this information.
Reasonably possible alternative assumptions
The determination of fair value for capital provision assets, due from settlement of capital provision assets and financial liabilities relating to third-party interests in capital provision assets, involves significant judgments and estimates. While the potential range of outcomes for the assets is wide, the Group’s fair value estimation is its best assessment of the current fair value of each asset or liability, as applicable. Such estimate is inherently subjective, being based largely on an assessment of how individual events have changed the possible outcomes of the asset or liability, as applicable, and their relative probabilities and hence the extent to which the fair value has altered. The aggregate of the fair values selected falls within a wide range of reasonably possible estimates. In the Group’s opinion, there is no useful alternative valuation that would better quantify the market risk inherent in the portfolio, and there are no inputs or variables to which the values of the assets are correlated other than interest rates that impact the discount rates applied.