Severe Revenue And Margin DeteriorationA near 60% revenue collapse and negative gross profit signal structural weaknesses in case outcomes, pricing or origination quality. Persistent revenue and margin declines erode underwriting economics and ROE, undermining the firm's capacity to generate durable, repeatable profits absent material operational or sourcing improvements.
Negative Operating And Free Cash FlowsSustained negative operating and free cash flows reduce liquidity and force reliance on external funding to originate cases. Over the medium term, weak cash generation constrains growth, elevates refinancing risk, and limits the company's ability to capitalize on attractive opportunities or absorb adverse legal outcomes.
Rising Leverage And Balance Sheet PressureAn increasing debt load amid falling profitability raises solvency and funding‑cost risks. Higher leverage reduces financial flexibility to hold longer‑dated cases, increases interest burdens, and amplifies downside in poor litigation outcomes, particularly problematic given inconsistent cash flows and shrinking equity returns.