A concentration limit is a cap on how much of a pool or portfolio may sit in a single matter, firm, venue, judge, defendant or legal theory. It limits the damage any one failure or common driver can cause.
Limits turn the concentration analysis into a rule. They appear in facility documents, eligibility criteria and fund guidelines, and they are tested whenever the pool changes or a matter is re-scored.
Legal assets concentrate along axes that conventional credit frameworks do not watch: the same plaintiff's counsel, the same court calendar, the same doctrine, the same multidistrict proceeding. The limits have to name those axes.
A concentration limit is not a diversification guarantee. It bounds exposure along the axes named, and an unnamed axis can still carry risk.
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