Borrowing Base

A borrowing base structure, familiar from conventional asset-based lending, extends to legal receivables, litigation finance advances, law firm fee receivables, and judgment positions, with modifications specific to how that collateral behaves. Eligible collateral needs its own exclusion criteria: matters past a defined procedural age without material movement, matters concentrated past a threshold in a single defendant, judge, or legal theory, and matters whose underlying claim is independently disputed should be excluded or haircut more aggressively than the standard pool. The advance rate should be applied against a stated percentile of the collateral's settlement or award distribution, not against a point estimate, because advancing against the mean of a distribution with a long right tail systematically overstates what the borrowing base can reliably realize. Because legal receivables have no fixed maturity and are frequently non-recourse, a borrowing base certificate cannot remain static between reporting periods the way a certificate for ordinary trade receivables often can; a judge assignment or a dispositive motion ruling can shift the underlying distribution before the next scheduled certificate is due. Model-driven re-scoring, rather than periodic manual review, is what closes the gap between a procedural event and the borrowing base's next certification date, and concentration limits along legal-specific axes, defendant, judge, legal theory, belong inside the borrowing base agreement itself, not only in a separate portfolio review.