Alternative investment platforms are increasingly opening the door to litigation finance for financial advisors, but the asset class remains a tough sell for many RIAs wary of tying client capital to courtroom verdicts rather than market fundamentals.
SEI announced earlier this year that its alternatives marketplace, SEI Access, now features a litigation finance offering from Pravati Capital, an Arizona-based firm that has deployed over $248 million to law firms and litigants since 2013. The global litigation funding market, valued at more than $20 billion in 2025, is projected to exceed $50 billion by 2036, according to Research Nester.
“Litigation finance in the U.S. hasn’t been as widely adopted as in Europe, and historically it was institutional,” said Kris Kjolberg, managing director at Pravati Capital. “Now advisors are looking at it, and platforms like SEI Access, CAIS, and iCapital provide the compliance, due diligence, and operational controls that wealth managers require.”
Pravati Capital primarily originates senior-secured loans to middle-market law firms, using portfolios of legal claims as collateral. Loans carry annualized interest rates between 19% and 27%, with an average duration of two to two-and-a-half years. Public data from Burford Capital, the largest U.S. litigation finance firm, shows a roughly 26% internal rate of return (IRR) on concluded investments and an 83% return on invested capital. Cases that settle before trial—about 78%—generate around 22% IRR, while those that go to trial and win can yield over 200%. However, roughly 8% of funded cases lose at trial, resulting in an average negative 87% return on invested capital.
“Returns can be 20% to 40% on successful funds, and they’re totally uncorrelated to economic conditions—in fact, bad economies often mean more litigation,” said Corey Kupfer, an attorney at Kupfer Law, which specializes in RIA M&A. He noted that litigation finance is more common in family office and multi-family office models than in mass-affluent client portfolios.
Not all large RIAs are convinced. Mercer Advisors, which manages nearly $100 billion in client assets including its Regis Group division for ultra-high-net-worth clients with $25 million or more, categorizes litigation finance as a “highly speculative investment.” David Krakauer, VP of portfolio management at Mercer Advisors, cited “a high risk of loss, very unpredictable outcomes, and potential conflicts of interest regarding who influences case outcomes.” He added, “With litigation finance, outcomes are so widespread it’s hard to peg it as delivering X returns over a certain period.”
Broader market developments could boost demand. A February U.S. Supreme Court decision striking down many Trump-era tariffs imposed under the International Emergency Economic Powers Act has triggered over 2,000 lawsuits seeking refunds on more than $130 billion in tariff payments, as reported by The Wall Street Journal in March. Companies like FedEx, Costco, Goodyear, and Barnes & Noble are among those pursuing refunds. “Analysts estimate $130 to $175 billion in refund claims,” said Kjolberg. “Large-scale commercial disputes show why advisors want exposures driven by legal processes, not economic cycles.”
Pravati Capital mainly finances contingency-fee personal-injury law firms, along with mass-tort, commercial, intellectual property, and whistleblower cases. It has also backed government litigation, including funding a firm representing individuals in the Camp Lejeune toxic-water cases, where settlements have totaled hundreds of millions of dollars since 2023.
New York has taken a regulatory lead, with Governor Kathy Hochul signing the New York Consumer Litigation Funding Act in December 2025, requiring funders to disclose key terms and increase transparency. As litigation finance edges into the wealth management mainstream, advisors face a choice between its non-correlated return potential and the stark risks of courtroom uncertainty.
