Checkbook-Control Litigation Finance

Your self-directed retirement accountCheckbook IRA, Checkbook 401k, Checkbook HSA, or Checkbook DB Plan – can invest in lawsuits and other legal actions. If you’d like to set-up a Litigation Finance IRA, Litigation Finance Solo 401k, Litigation Finance Defined Benefit Plan, or Litigation Finance HSA – this page provides the instructions for doing so compliantly.

What is Litigation Finance?

Litigation finance, otherwise known as pre-settlement funding and legal finance, is one of the most rapidly growing sectors in finance. Investors provide non-recourse cash-advances to plaintiffs in exchange for a portion of settlement proceeds. Both commercial litigation finance and personal injury pre-settlement funding provide plaintiffs the ability to advance cases through the court system even when faced with a well-capitalized adversary. Such advances are not loans as investors are paid only from settlements or court awards. Returns on this alternative investment class have been far superior to returns in the traditional market.

Checkbook Litigation Finance Compliance

  • The investor is the Checkbook Retirement Account. All paperwork and documentation are done in the name of the investing entity, which may be your IRA-LLC, Solo 401k, or Defined Benefit Plan.
  • All expenses and revenue must flow through the Retirement Account. All investment-related expenses should be paid from retirement funds.
  • Be aware of prohibited transactions. Don’t purchase an interest in the lawsuits of family members that are disqualified persons as defined in Section 4975 of the Tax Code.
  • Be aware of state laws that impact litigation finance. Litigation finance is a great investment in most states. A handful of jurisdictions may apply laws governing usury and champerty &  maintenance to litigation finance agreements.