Note: This list will grow until the model contract is complete. Terms already in the list but lacking visible definitions will have those definitions added in the relatively near term, as we post the contract terms using them.
[Acceleration Event: The balance of the Litigation Account falls below [$ ] and the Litigation Counsel in good faith reasonably believes the amount remaining in the Litigation Account is insufficient to finance the conduct of the Claim through to the Milestone Event marking the next Closing. [Despite such certification, an Acceleration Event has not occurred if the Plaintiff and [Funder/Funders holding a majority of issued Litigation Proceed Rights] agree the funding shortfall is due to Attorney Waste, as defined in the retainer agreement. In such case, the related provisions in the retainer agreement shall apply.]]
Award: the total monetary amount owed Plaintiff on account of or as a direct or indirect result of the Claim, whether by negotiation, arbitration, mediation, lawsuit, settlement or otherwise. For the avoidance of doubt, “Award” includes both cash and the monetary value of non-cash assets at the time the Award is paid, and excludes the value of injunctive, declaratory or other non-monetary relief.
Claim: the lawsuit [filed by Plaintiff/Plaintiff will file] against [name] arising from [name’s] breach of [specify], including any refiling, counterclaim, appeal, settlement, enforcement action, arbitration or other action or process related to the lawsuit, whether primary, ancillary or parallel.
Committed Capital: [$ ], the total amount pledged to finance the conduct of the entire Claim through to the Conclusion of the Claim [as set forth on Exhibit [ ]].
Common Interest Material: Any discussion, evaluation, negotiation, and any other communication and exchanges of information relating to the Claim in any way, whether written or oral, between or among the Plaintiff, Litigation Counsel, the Funder, and/or the Funder’s Representatives; provided that such communication would be protected by attorney-client privilege, work product doctrine or other discovery protection if not disclosed to a third party lacking a common legal interest.
Conclusion of the Claim: the final resolution of the Claim, whether by settlement, the entry of a non-appealable final judgment against the Plaintiff, or the enforcement of a final, non-appealable judgment in favor of the Plaintiff.
Confidential Information shall mean:
(i) the Common Interest Material;
[(ii) discussions and negotiations related to this Agreement, including drafts of this Agreement;]
[ALTERNATE: (ii) this Agreement, including: (a) its existence and the existence of the financing it provides; (b) its terms; (c) the parties to it; and (d) any discussions and negotiations related to this Agreement, including drafts of this Agreement;]
(iii) to the extent not already covered as Common Interest Material, the Claim, including: (a) information of any type relevant to understanding the Claim; (b) the parties’, Litigation Counsel’s or Funder’s Representatives’ strategies, tactics, analyses or expectations regarding the Claim or Award; and (c) any professional work product relating to the Claim or the Award, whether prepared for Plaintiff, Litigation Counsel, Funder or Funder’s Representatives.
Costs: the Costs are the expenses incurred by or on behalf of the Plaintiff for conducting the Claim and complying with the terms of this Agreement, and include: professional fees, whether for attorneys, advisors, experts or witnesses; and procedural fees relating to court or arbitration or other process, including filing and arbitrator fees; provided that the amounts in each case are approved by Litigation Counsel.
Funding Shortfall: The balance of the Litigation Account falls below [$ ] and the Litigation Counsel in good faith reasonably believes the amount remaining in the Litigation Account is insufficient to finance the conduct of the Claim through to the Milestone Event marking the next Closing.
Independent Counsel: [counsel name] and any successor or supplementary counsel retained by the Plaintiff to advise on this contract’s terms, amendments and assignments, on settlement proposals, and on privilege issues. Such counsel has and shall have no direct or indirect economic relationship with Funder prior to the Conclusion of the Claim.
Initial Claim Value: [$xxxxx]
Litigation Account: [identify bank account]. The Litigation Account is subject to the Escrow Agreement. Pursuant to the Escrow Agreement, the Escrow Agent shall use the funds in the Litigation Account to pay the Costs and its fee.
Litigation Proceed Right Certificate: a document in the form of Exhibit [ ] (i) reflecting ownership of a certain number of Litigation Proceed Rights; (ii) bearing a legend stating that the certificate and the rights it represents may not be transferred without the express, written consent of the Plaintiff and then only if the transferee becomes a party to this Agreement; (iii) acknowledging the rights and obligations created by Section 5.6 of this Agreement; and (iv) certifying the existence of a perfected senior security interest in the Proceeds Account [and in the Claim.]
Litigation Proceed Right Purchase Price: Each Litigation Proceed Right purchased at a Closing shall cost an amount equal to one percent of the Initial Claim Value multiplied by the relevant Risk Discount Factor.
Milestone Events: The following events: a) Completion of Discovery, [and] b) [Motion To Dismiss Milestone, c) Summary Judgment Milestone and d)] Judgment Milestone.
[Motion to Dismiss Milestone: The entry of an order resolving a motion to dismiss against the Plaintiff.]
[Summary Judgment Milestone: The entry of an order resolving a summary judgment motion against the plaintiff, provided that the motion is dispositive of [the entire Claim]/[identify material issues/causes of action].]
Proceeds: (i) Any and all value received to satisfy the Award, if the Award results from settlement or other agreement negotiated by the parties, and (ii) any and all value received to satisfy the Award, less any state, federal or international taxes owed on such value, if the Award is a judgment, order, or other determination by an independent party such as a court or arbitrator.
Proceeds Account:[specify account.]
Qualified Replacement Funder: A funder which (a) agrees to become a party to this Agreement; and (b) commits at least as much capital to financing the Claim as the Exiting Funder is withdrawing by exiting.
Re-pricing Milestone: The following are the re-pricing milestones: (1) A proposed settlement that has a value less than the Initial Claim Valuation by at least [33%], and (2) the Judgment Milestone, if the Judgment has a value less than the Initial Claim Valuation by at least [33%].
Discovery Closing Risk Discount Factor: [0.40] OR [a number to be negotiated in the  days prior to the Discovery Milestone]
Initial Closing Risk Discount Factor: [0.20]
Supplemental Investment Event: A Supplemental Investment Event occurs when the balance of the Litigation Account has fallen below [$ ], all Committed Capital investments have been made, and the Litigation Counsel in good faith reasonably believes the amount remaining in the Litigation Account is insufficient to finance the conduct of the Claim through to the next Milestone Event linked to a Closing or the Conclusion of the Claim, whichever comes soonest. [Despite such certification, a Supplemental Investment Event has not occurred if the Plaintiff and Funder agree the funding shortfall is due to Attorney Waste, as defined in the retainer agreement. In such case, the related provisions in the retainer agreement shall apply.]