Litigation Capital Management: Risk, optimism, required hit rates, and durations. Where it all went wrong.

Case Research argues that the collapse of Litigation Capital Management (LCM) into a managed run-off reflects a combination of poor investment performance, underestimated litigation risks, lengthening case durations, concentrated portfolio exposure and excessive leverage, with the funder's restructured Northleaf Capital debt facility, increased to US$125 million and extended to 2030 on significantly more onerous terms, leaving shareholders with little prospect of recovery and underscoring the dangers of relying on subjective fair-value assessments and optimistic case outcomes when financing illiquid litigation assets.

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