Diversifying a portfolio of funded cases.

Diversifying a portfolio of funded cases reduces the risk when the cases are independent: losing one does not bring down the others. The probability that they are all lost then falls quickly as their number grows. A series of similar cases, however, shares the same law, and a reversal of case law can hit it all at once. Diversification limits the risk without removing it.

The risk of one case and the risk of a portfolio.

A funded case can be lost. The funder then recovers nothing on that case, and the principle of non‑recourse prevents it from claiming anything from the client.

Diversifying a portfolio means spreading the capital across many cases. The effect of this spread depends on how independent the cases are. Two cases are independent when the outcome of one says nothing about the outcome of the other.

Decorrelation, described in our article on litigation assets, compares the result of a case with the financial markets. Diversification concerns the links between the cases of a single portfolio.

A theoretical example of probabilities.

Take cases that each have one chance in two of being lost. This assumption serves the calculation, and it describes no real case.

If the cases are independent, the probability of losing them all is the product of the probabilities of each one. For two cases, it equals one half times one half, or one quarter. Each independent case added halves it again.

If the cases all depend on the same law, a single question decides their fate. They are won together or lost together, and the probability of losing everything stays at one in two, however many there are.

Probability of losing every case when each has one chance in two of being lost. A theoretical example, unrelated to any real case, calculated by Hello Justice.

In both columns, half the cases are lost on average, or three in a portfolio of six. Diversification leaves this average unchanged and acts on the extreme outcome, the one where everything is lost at the same time. With independent cases, that situation becomes rare.

Real cases sit between the two columns, because they share some factors and keep others of their own. The example only shows the direction of the calculation: the more closely cases are linked, the less their number reduces the probability of losing everything.

What makes cases independent.

Four factors separate the fate of two cases.

• Different opposing parties. A favourable judgment brings in nothing if the losing party cannot pay. When each case targets a different defendant, the insolvency of one spares the others.
• Different courts. The judge decides on the documents in the case and the applicable law. Cases heard by different courts are not bound to the assessment or the timetable of a single court.
• Distinct legal questions. Disputes with distinct legal bases fall under different case law, and a reversal on one question only affects the cases that raise it.
• Outcomes spread over time. A case often lasts two to four years, sometimes longer. Cases whose outcomes come at different times do not depend on a single moment. Monitoring them shows, at each decision, what it changes for the other cases.

The figures that listed funders publish cover varied portfolios. Those of Omni Bridgeway, present in 15 countries, aggregate very different countries and types of dispute Source [1]. The portfolio of Burford Capital brings together large commercial litigation and international arbitration, on cases of at least $5 million Source [2]. These third‑party figures describe only the business of those two companies, and our article on their accounts explains how to read them.

What ties cases together.

Other factors link the fate of several cases, whatever their number.

• The same statute and the same case law. Serial litigation groups near‑identical disputes arising from the same triggering event, such as one contract applied to all of a business’s customers. Its cases share the same arguments and standard documents, and a reversal of case law can affect them together.
• The same defendant. Cases brought against the same party all depend on its ability to pay. An economic crisis can also weaken several debtors at once, so the lack of correlation is not complete.
• The same law firm. Cases run by the same law firm hinge on its continuity and on its capacity to handle their number.
• The same people. A programme that relies on its founders depends on their continued involvement.

Finally, the law that applies to funders covers all of their cases. In France, the funding agreement for an individual case rests on freedom of contract and on the lawyer’s professional rules. The Versailles Court of Appeal recognised its validity on 1 June 2006 Source [3]. The Act of 30 April 2025 refers to third‑party funding only for group actions Source [4]. New legislation, in France or in the European Union, could change the terms that apply to individual cases. In the United Kingdom, the PACCAR ruling, handed down by the Supreme Court on 26 July 2023, called into question the form of agreements linked to the sums recovered Source [5]. That risk lay in the funding agreement, and the variety of the disputes funded offered no protection against it.

The example of Swiss franc loans.

Swiss franc mortgages make up the first programme of the fund that Hello Justice manages. It is a series of similar cases: each case remains individual, with its own lawyer and its own terms, and shares the same standard documents with the others.

These cases depend in particular on the Cour de cassation rulings of 9 July 2025, recent case law, liable to change Source [6]. One, no. 24-19.647, opens unfair‑terms protection to borrowers whose income is paid in Swiss francs. The other, no. 24-18.018, dismisses a borrower’s appeal and upholds the clause, because the bank had informed the borrower clearly.

The cases in the series therefore share the same law. Their outcome also depends on what each borrower actually received: the offer and its appendices, the signed notices, the simulations and the dates. A specialised partner lawyer reviews each case on its documents before the agreement. The series thus combines a shared law with facts that vary from one matter to the next.

Insurance and the secondary market.

The market has other tools, which our glossary defines.

Capital protection insurance repays a funder, or its investors, all or part of the capital committed to a portfolio of cases, if those cases do not return it. It thus makes an insurer bear a share of the loss, and the outcome of the cases stays the same.

The secondary market is the resale, before they conclude, of rights in a funded case or portfolio of cases, from one funder to another or to an investor. It allows a holder to sell an exposure without waiting for the proceedings to end.

Hello Justice Capital 1 units have no secondary market, and a transfer must be approved under the articles of association. Redemptions are locked for ten years, and distributions are paid as cases conclude.

How a fund describes its concentration.

The risks page of Hello Justice Capital 1 sorts the risks into two families: some lie in each case, others in the fund itself and its first programme. Among the latter, it names:

• Concentration. The fund’s first programme covers a single type of dispute, Swiss franc mortgages.
• A single law firm. ACTIVE AVOCATS, a firm of the COGEP AVOCATS group, conducts all the proceedings in the programme, and the programme depends on its continuity.
• Key people. The programme relies on the founders of Hello Justice, and the way it is run depends on their continued involvement.

The same page describes the fund’s response: selection, the written review of each case, follow‑up and the members’ vote reduce the risk without removing it.

The articles of association and the presentation of Hello Justice Capital 1 set out these risks in detail. The manager provides this documentation to the investor once their eligibility has been verified, and the access process presents its steps. The fund is offered as a private placement (article L. 411-2 of the French Monetary and Financial Code), from €100,000.

Frequently asked questions.

Does diversification remove the risk?

It limits the risk without removing it. Each case remains individual, and losing one does not bring down the others. A reversal of case law can however affect several cases at once, especially within a series of similar cases, which share the same law.

Is a larger portfolio always less risky?

No. It is when the cases added are independent of the others. In the theoretical example, every further independent case halves the probability of losing everything, while a case that depends on the same law leaves it unchanged.

Does the probability in the example apply to a real case?

No. The one chance in two is an assumption for the calculation, unrelated to any real case. For each case, a specialised partner lawyer analyses eligibility: the features of the dispute, the limitation period, the completeness of the documents, reasonable prospects of success. Not every case is accepted.

Is the first programme of Hello Justice Capital 1 diversified?

This programme covers a single type of dispute, Swiss franc mortgages, where each case keeps its own lawyer, agreement and documents. The fund spreads its capital across many cases, and the same change in case law can nonetheless affect them together.