Legal claims: A value driver for private equity

April 28, 2026

Kanika Shah

Summary

Private equity faces a prolonged liquidity crunch, with slower exits and reduced distributions pressuring returns. As traditional value creation levers tighten, legal claims are emerging as overlooked assets. With legal finance, firms can unlock immediate capital, improve cash flow, and reduce risk—turning dormant claims into a strategic advantage in a challenging market.

At a recent gathering of private equity leaders, the Women’s Private Equity Summit, all eyes were on value creation given the liquidity crunch facing PE.

It’s a significant challenge. Cuts to portfolio distributions and a 20-year low for IPOs mean investors have less capital for the next investment and exits are taking longer. The resultant liquidity crunch affects the entire ecosystem.

Portfolio companies, GPs and LPs are focused on operational performance, cash flow and realizable value to improve results and recapture liquidity.

In the hunt for value creation, take a close look at your legal claims.

Most PE portfolio companies have potential affirmative litigation claims that could yield material returns. Often overlooked, legal claims can deliver significant value—particularly with an assist from legal finance.

With external capital from a legal finance provider, you can:

Boost performance.
Offloading legal fees and expenses from operating budgets improves the bottom line—while also removing the unpredictability and risk that accompanies lengthy litigation.
Create more predictable cash flows.
By monetizing litigation claims, awards and judgments, portfolio companies can access upfront capital and offload legal risk and duration. Faster access to proceeds can help portfolio companies accomplish business and financial goals.
Access non-recourse capital.
Many portfolio companies are sitting on strong claims (antitrust, contractual breaches or intellectual property) but may be reluctant to pursue them given the cost of litigation. Legal finance allows a portfolio company to capture additional income while removing downside risk and cost. Sponsors share in the upside if a case succeeds, but have no repayment obligation if it does not.

For LPs looking to exit and recapture liquidity, legal finance can enhance exit valuations with cleaner earnings and external validation of potential recoveries. As my colleague Evan Meyerson noted in a recent article for The European Financial Review, legal costs weigh on margins and depress valuations, while buyers rarely assign value to the potential upside of unresolved claims.

Legal assets are a valuable strategic weapon in the fight for performance and liquidity. Using them to secure capital can improve a fund’s expense profile and cash flow while reducing risk—ultimately affecting liquidity throughout the ecosystem.

Make sure you’re not leaving value on the table. Get in touch to learn more or discuss your options.

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Legal claims: A value driver for private equity

Summary

In the hunt for value creation, take a close look at your legal claims.

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