The secondary market for litigation finance assets is no longer a theoretical concept. In April 2025, Omni Bridgeway and Ares Management — the latter with over $525 billion under management — closed a landmark A$320 million transaction structured as a continuation fund, involving more than 150 investments across Asia Pacific, Europe, and the United States. It was described as the first of its kind for the legal finance industry. Whatever comes next, the Ares–Omni deal marks an inflection point: institutional secondary capital has arrived in litigation finance, and the market will never look quite the same.
But the arrival of deep-pocketed secondary buyers does not, by itself, constitute a mature market. Maturity requires infrastructure: price discovery, standardized valuation, and the kind of transparency that allows capital from outside the asset class to invest with confidence. On each of those dimensions, litigation finance secondaries remain a work in progress — and the gap between where the market is and where it needs to go is instructive.
The Three Hindrances: What Is Keeping the Secondary Market Small
Three structural problems explain why the secondary market for litigation finance assets has developed more slowly than the primary market, and why it remains largely inaccessible to investors who have not already developed deep, first-hand familiarity with the asset class.
1. The Opacity Problem: No Mark-to-Market, No Price Discovery
Every secondary transaction in litigation finance is a private negotiation. The portfolio content, the underwritten value of individual assets, the discount or premium to book, the deal economics — none of it is disclosed. There is no public registry of secondary transactions, no reported pricing, and no mechanism for a prospective buyer to benchmark a proposed price against comparable deals. In practical terms, this means there is no mark-to-market for litigation finance assets. Each secondary trade is priced in a vacuum, by parties who have access only to what the seller elects to share.
This information asymmetry is not purely a market failure — it reflects legitimate confidentiality concerns. Litigation assets are live legal proceedings. Disclosure of a funder’s position, or of the terms under which it was acquired, could affect the underlying litigation, create settlement leverage for the opposing party, or compromise attorney-client relationships. These concerns are real. But they also mean that the secondary market for litigation finance operates without the price discovery mechanism that every other functioning capital market takes for granted.
2. The Valuation Problem: No Apples-to-Apples
Even if pricing data were available, the secondary market faces a deeper challenge: there is no standardized methodology for valuing litigation assets. Unlike a commercial real estate portfolio, where cap rate and comparable sales give buyers a defensible basis for pricing, litigation assets resist apples-to-apples comparison. The relevant variables — jurisdiction, theory of liability, damages methodology, counsel quality, defendant financial condition, appellate risk, public perception — are specific to each case and interact in ways that defy formula.
Standardization is marginally more tractable in some sub-categories of the market. For commercial claims like antitrust opt-out cases, historical settlement data makes it possible to calculate the average percentage of single damages that similar cases have resolved for — a blunt but useful benchmark. In mass tort and personal injury portfolios, the law of large numbers allows for statistical valuation: if a portfolio contains thousands of claims across defined injury tiers, median valuations become meaningful and actuarially defensible.
But even within these relatively tractable categories, standardization breaks down at the individual case level. The quality and leverage of litigating counsel, the tier of injury asserted, the timing of claim assertion relative to the litigation calendar, and the particular facts of individual claimants all materially alter value. Until the market develops shared frameworks for capturing and weighting these variables, secondary pricing will remain more art than science — and the gap between specialist knowledge and generalist access will persist.
3. The Stigma Problem: Secondaries Are Not Distressed Sales
Perhaps the most persistent misconception about litigation finance secondaries is that they represent distressed-asset transactions — that a funder selling out of a position is doing so because something has gone wrong. This stigma, while understandable, is largely unwarranted, and it has meaningfully suppressed secondary market activity by creating a false signal of weakness.
The reality is considerably more nuanced, and the reasons funders participate in secondary transactions are varied and often entirely unrelated to asset quality. The import of credit terms into litigation finance agreements over the past decade has created a structural tension: non-recourse facilities and PIK structures carry maturity dates at which large payments become due, regardless of whether the underlying legal assets have resolved. Because litigation timelines are inherently uncertain, a mismatch between a portfolio’s maturity profile and its expected cash flows is not an exception — it is the rule. A funder selling secondary positions in advance of maturity is not necessarily flagging asset weakness; in many cases, the seller is simply managing a structural duration mismatch that is endemic to the asset class.
What MBS Teaches Us About Premature Institutionalization
The history of mortgage-backed securities offers a cautionary parallel. In the years leading up to the 2008 financial crisis, MBS markets expanded rapidly on the strength of standardized credit ratings, broad secondary participation, and securitization structures that promised diversification across underlying loans. The infrastructure looked mature. Then, in a short period, it became clear that the standardization had been built on assumptions that did not hold under stress, and the resulting crisis triggered the broadest financial contraction since the Great Depression.
MBS is the prime example of a financial product where the secondary market’s success and reach outpaced its own infrastructure. Securitization worked — until it didn’t, because the transparency and standardization that were supposed to underpin investor confidence had been substituted with rating agency designations that investors chose not to look behind. The lesson for litigation finance is direct: a secondary market that grows faster than its transparency and valuation infrastructure is not a sign of maturity. It is a sign of fragility.
What a Responsible Litigation Finance Secondary Market Requires
For litigation finance assets to trade responsibly in a broad, non-specialty secondary market, the market needs a public source of asset performance data — anonymized to protect privilege and confidentiality, but reported without adverse selection bias and verified through an objective third party. This does not mean case-level disclosure. It means aggregate data on portfolio composition, resolution rates, recovery multiples, and duration profiles, presented in a form that allows a sophisticated investor to build a defensible underwriting model without relying entirely on the seller’s representations.
The US Judicial Conference’s Advisory Committee on Civil Rules has already begun studying whether federal disclosure rules for litigation funding are warranted. The UK’s Civil Justice Council and the European Law Institute have both issued guidance recommending disclosure of funders’ identities and material funding terms. Regulatory momentum is building. The industry’s response to that momentum — whether it meets disclosure requirements proactively or resists them reactively — will shape the secondary market’s development for the next decade.
The Role of Rating Organizations: Promise and Peril
Rating organizations have already begun circling the litigation finance space. In early 2024, KBRA assigned preliminary ratings to PEAR 2024-1, LLC — a securitization collateralized primarily by litigation finance receivables originated by Golden Pear Funding, one of the industry’s more established consumer-facing litigation lenders. It was not the first rated litigation finance securitization, but it signaled accelerating activity.
The case for rating organizations in litigation finance securitization mirrors the arguments that drove their adoption in MBS. Ratings provide a standardized measure of credit risk that allows large institutional investors — pension funds, insurers, endowments — to participate in markets their investment policies might otherwise exclude. A higher rating reduces borrowing costs for issuers, broadens the investor base, and improves secondary market liquidity. Ratings reduce the need for individual investors to conduct full due diligence on complex, opaque underlying assets — which, in a market where specialist knowledge is scarce, substantially expands the addressable investor universe. They also inform credit enhancement decisions, helping issuers and investors calibrate the overcollateralization or subordination needed to achieve target risk profiles, and they support the kind of comparability across products that is a prerequisite for a liquid secondary market.
The risks are equally significant and are, again, instructive by analogy. Rating agencies are paid by issuers — a structural conflict of interest that has proved durable despite regulatory attention and periodic scandal. The 2008 financial crisis demonstrated, at catastrophic scale, that ratings can fail to capture the true risk of complex structured products; in the aftermath, the SEC charged multiple rating agencies with significant recordkeeping and methodology failures. Investors who substitute ratings for independent analysis expose themselves to overreliance risk — market, duration, interest rate, and legal risks that ratings are not designed to measure. And for assets as heterogeneous as litigation portfolios — where two deals in the same legal category can have dramatically different risk profiles based on jurisdiction, counsel, and evidence quality — the limited scope of standardized rating methodologies is a particular concern. A downgrade of a rated litigation finance securitization, when it comes, will not be a quiet event.
The Path Forward: Institutionalization Done Right
The secondary market for litigation finance is maturing, and the trajectory points clearly toward broader institutionalization. The question is not whether it will happen, but whether the infrastructure — transparency, valuation standards, credible third-party oversight — will be built before or after the capital arrives. The MBS analogy suggests the stakes of getting the sequencing wrong.
For allocators and asset managers navigating this evolution, the key is to develop the specialist knowledge required to evaluate litigation assets on the merits — not to substitute rating designations or seller representations for independent underwriting. The secondary market will reward that sophistication generously. The investors who build it now, before transparency and standardization have made the market efficient, will capture returns that later entrants, operating in a more crowded and better-understood space, will not.
Celsia Capital works with allocators at every stage of that process — from initial exposure to the asset class through portfolio construction, secondary market participation, and ongoing asset management. As the secondary market develops, so does the importance of having a partner with the underwriting depth to distinguish quality from noise. Let us help you build a litigation finance strategy that is positioned for the market that is coming, not just the one that exists today.