Definitions
A short glossary.
The terms below appear in HLC's standard form documentation and across this site. Stated plainly, for the careful reader and for counsel new to the asset class.
- Champerty
- The historical doctrine prohibiting third parties from financing litigation in exchange for a share of recovery. Modern jurisdictions vary; HLC conducts a champerty and maintenance analysis in every jurisdiction prior to commitment.
- Common Interest Doctrine
- A privilege framework under which separately represented parties with a shared legal interest may exchange privileged materials without waiver. HLC and funded claimants invoke this doctrine from the moment of submission.
- Investment Committee (IC)
- The supreme governance body within HLC. The IC reviews every memorandum in full and holds non-delegable authority over commitment, decline, and post-commitment material decisions.
- IC Memorandum
- The standardised document presented to the Investment Committee for each candidate matter. Includes merits, quantum, recoverability, counsel quality, timeline, and three stress scenarios.
- Maintenance
- The historical doctrine prohibiting officious intermeddling in another's lawsuit. Treated together with champerty in HLC's pre-commitment legal review.
- MOIC
- Multiple on Invested Capital. The undiscounted ratio of total cash returned to total cash deployed. Reported gross of HLC's internal cost of capital.
- Non-Recourse
- A capital structure in which repayment is contingent solely on a recovery event. If the matter fails to recover, HLC bears the loss without claim against the claimant's other assets.
- Recovery Event
- The defined trigger under HLC's standard form documentation that obligates distribution: settlement, judgment, arbitral award, or sale of the underlying claim.
- Recovery Waterfall
- The order of distributions following a recovery event: counsel fees and disbursements paid first, HLC capital and return next, claimant residual final. Defined precisely at commitment, not renegotiated.
- Single-Matter SPV
- A Special Purpose Vehicle established for a single funded matter. Insulates each commitment from cross-default with any other HLC position.
- Stress Scenario
- The three-case analysis required for every IC memorandum: base case, fifty-percent reduced recovery, and zero recovery. No commitment is made without it.