0001193125-22-295487 | S-1 | XBRL Viewer

Property, plant and equipment, net

32,660

^[1]

13,304

^[1]

Total current assets

820,157

19,038

16,804

2,480

750

612

Deferred tax asset

857

Intangible assets, net

2,077,571

84,218

427

Investment in rights to claim recovery cash flows

3,673,610

Total assets

6,574,675

104,006

17,843

Current liabilities:

Accounts payable

32,468

4,609

398

Affiliate payable

19,822

^[1]

45,252

^[1],[2]

39,027

^[2]

Obligation to provide securities

1,577

Commission payable

540

465

448

Deferred service fee income

249

Derivative Liability

10,065

Warrant Liability

4,700

Guaranty obligation

^[1]

752,510

Other current liabilities

62,638

3,489

426

Total current liabilities

882,992

54,064

42,125

Claims financing obligation & notes payable

170,844

^[1]

106,805

^[1],[2]

24,043

^[2]

Loan from related parties

^[1]

125,759

Interest payable

1,471

94,545

67,522

Total liabilities

1,181,066

255,414

133,690

Commitments and Contingencies

Class A common stock subject to possible redemption, 1,129,589 shares at redemption value as of September 30, 2022.

1,356

Stockholders Equity Abstract

Additional paid-in capital

201,656

Members' deficit

(155,756)

(120,179)

Accumulated deficit

(23,537)

Total Stockholders' Equity (Deficit)

178,441

(155,756)

Non-controlling interest

5,213,812

4,348

4,332

Total equity

5,392,253

(151,408)

(115,847)

Total liabilities and equity

6,574,675

$ 104,006

$ 17,843

Stockholders Equity Abstract

Common stock

Common Class V [Member]

Stockholders Equity Abstract

Common stock

$ 315

[1]

As of September 30, 2022 and December 31, 2021, the total affiliate receivable, indemnification asset, affiliate payable, guaranty obligation and loan from related parties balances are with related parties. In addition, the prepaid expenses and other current assets and claims financings obligation and notes payable includes balances with related parties. See Note 13, Related Party, for further details.

[2]

As of December 31, 2021 and December 31, 2020, the total affiliate receivable and affiliate payable balances are with related parties. In addition, the claims financings obligation & notes payable includes balances with related parties. See Note 11, Related Party, for further details.

Condensed Combined And Consolidated Balance Sheets (Parenthetical)	Sep. 30, 2022 $ / shares shares
Class A common stock subject to possible redemption, shares	1,129,589
Common Class A [Member]
Common stock, par value \| $ / shares	$ 0.0001
Common stock, shares authorized	5,500,000,000
Common stock, shares issued	72,909,609
Common stock, shares outstanding	72,909,609
Common Class V [Member]
Common stock, par value \| $ / shares	$ 0.0001
Common stock, shares authorized	3,250,000,000
Common stock, shares issued	3,148,720,212
Common stock, shares outstanding	3,148,720,212

Condensed Combined and Consolidated Statements of Operations - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2022

Sep. 30, 2021

Sep. 30, 2022

Sep. 30, 2021

Dec. 31, 2021

Dec. 31, 2020

Claims recovery income

$ 2,571

$ 48

$ 3,999

$ 63

$ 126

$ 255

Claims amortization expense

5,748

^[1]

2,439

^[1]

17,795

^[1]

9,213

^[1]

14,500

^[2]

13,632

^[2]

Total Claims Recovery

8,319

2,487

21,794

9,276

14,626

13,887

Operating expenses

Cost of claim recoveries

1,160

^[3]

1,861

^[3]

190

172

66,331

92,866

114

General and administrative

6,621

^[4]

2,871

^[4]

17,049

^[4]

8,207

^[4]

12,761

^[5]

14,598

^[5]

Professional fees

5,875

2,539

10,931

5,606

8,502

2,211

Professional fees - legal

^[6]

8,014

34,251

Depreciation and amortization

103

254

256

343

235

Total operating expenses

88,104

5,587

157,212

14,262

21,796

17,216

Operating Loss

(79,785)

(3,100)

(135,418)

(4,986)

(7,170)

(3,329)

Interest expense

(13,083)

(6,990)

(34,475)

(19,579)

(27,046)

(20,886)

Other (expense) income, net

63,138

(169)

63,175

1,154

1,139

(51)

Change in fair value of warrant and derivative liabilities

2,670

(11,683)

Net loss before provision for income taxes

(27,060)

(10,259)

(118,401)

(23,411)

Provision for income tax benefit (expense)

326

Net loss

(27,060)

(10,259)

(118,075)

^[7]

(23,411)

^[7]

(33,077)

(24,266)

Less: Net (income) loss attributable to non-controlling members

26,597

(16)

116,324

(16)

Net loss attributable to controlling members

$ (463)

$ (10,275)

$ (1,751)

$ (23,427)

$ (33,093)

$ (24,248)

Weighted average shares outstanding, diluted

^[8]

69,036,899

53,138,474

Weighted average shares outstanding, basic

Operating expenses

^[8]

69,036,899

53,138,474

Weighted average shares outstanding, diluted

69,036,899

53,138,474

Basic net income per common share

^[8]

$ (0.01)

$ (0.03)

Diluted net income per common share

^[8]

$ (0.01)

$ (0.03)

[1]	For the three and nine months ended September 30, 2022 and 2021, claims recovery service income included $0 million and $10.6 million, respectively, and $1.7 million and $7.0 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM MSP”). See Note 13, Related Party, for further details.
[2]	For the years ended December 31, 2021 and 2020, claims recovery service income included $11.5 million and $13.1 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM”). See Note 11, Related Party, for further details.
[3]	For the three and nine months ended September 30, 2022, cost of claim recoveries included $0 and $271 thousand, respectively, of related party expenses. This relates to contingent legal expenses earned from claims recovery income pursuant to legal service agreements with the La Ley con John H. Ruiz P.A., d/b/a MSP Recovery Law Firm (the “Law Firm”). See Note 13, Related Party, for further details. For the three and nine months ended September 30, 2021, there were no expenses related to contingent legal expenses.
[4]	For the three and nine months ended September 30, 2022 and 2021, general and administrative expenses included $150 thousand and $400 thousand, respectively, and $20 thousand and $39 thousand, respectively, of related party expenses. See Note 13, Related Party, for further details.
[5]	For the years ended December 31, 2021 and 2020, general and administrative expenses included $111 thousand and $773 thousand, respectively, of related party expenses. This includes legal expenses to the La Ley con John H. Ruiz P.A., d/b/a MSP Recovery Law Firm (the “Law Firm”) of $26 thousand and $– thousand, respectively. See Note 11, Related Party, for further details.
[6]	For the three and nine months ended September 30, 2022 and 2021, professional fees - legal included $4.6 million and $5.0 million, respectively, $0 thousand and $8 thousand, respectively, of related party expenses related to the Law Firm. See Note 13, Related Party, for further details.
[7]	Balances include related party transactions. See Note 13, Related Party, for further details.
[8]	Earnings per share information has not been presented for periods prior to the Business Combination (as defined in Note 1, Description of Business), as it resulted in values that would not be meaningful to the users of these unaudited condensed consolidated financial statements. Refer to Note 15, Net Loss Per Common Share for further information.

Condensed Combined and Consolidated Statements of Operations (Parenthetical) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2022

Sep. 30, 2021

Sep. 30, 2022

Sep. 30, 2021

Dec. 31, 2021

Dec. 31, 2020

Related party legal expense

$ 5,748

^[1]

$ 2,439

^[1]

$ 17,795

^[1]

$ 9,213

^[1]

$ 14,500

^[2]

$ 13,632

^[2]

General and Administrative Expense [Member]

150

400

111

773

VRM [Member]

MSP Recovery Law Firm [Member]

1,700

10,600

7,000

$ 11,500

$ 13,100

MSP Recovery Law Firm [Member] | Professional Fees Legal [Member]

271

Balance at beginning of period at Dec. 31, 2019

$ 4,600

$ 0

$ 5,000

$ 8

[1]	For the three and nine months ended September 30, 2022 and 2021, claims recovery service income included $0 million and $10.6 million, respectively, and $1.7 million and $7.0 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM MSP”). See Note 13, Related Party, for further details.
[2]	For the years ended December 31, 2021 and 2020, claims recovery service income included $11.5 million and $13.1 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM”). See Note 11, Related Party, for further details.

Combined and Consolidated Statements of Changes in Equity - USD ($)
$ in Thousands

Total

Additional Paid-in Capital [Member]

Members' Deficit [Member]

Accumulated Deficit [Member]

Non-Controlling Interests [Member]

Common Class A [Member]

Common Stock [Member]

Common Class V [Member]

Common Stock [Member]

Recapitalization Transaction [Member]

Additional Paid-in Capital [Member]

Recapitalization Transaction [Member]

Members' Deficit [Member]

Recapitalization Transaction [Member]

Non-Controlling Interests [Member]

Recapitalization Transaction [Member]

Common Class A [Member]

Common Stock [Member]

Recapitalization Transaction [Member]

Common Class V [Member]

Common Stock [Member]

$ 4,350

Balance at beginning of period at Dec. 31, 2019

$ (100,105)

$ (104,455)

8,524

Balance at end of period at Dec. 31, 2020

(24,266)

(24,248)

(18)

4,332

Balance at end of period at Dec. 31, 2020

(115,847)

(120,179)

227

(2,639)

(23,411)

^[1]

(23,427)

4,348

Balance at beginning of period at Dec. 31, 2020

(141,670)

(146,018)

4,332

Balance at beginning of period at Dec. 31, 2020

(115,847)

(120,179)

227

(2,711)

Balance at end of period at Dec. 31, 2021

(33,077)

(33,093)

(155,756)

4,348

Balance at end of period, shares at Dec. 31, 2021

7,582,668

3,154,473,292

Balance at end of period at Dec. 31, 2021

(151,408)

(155,756)

4,348

$ 5,640,352

$ 48,773

$ 184,528

$ 5,406,736

$ 315

Balance at beginning of period at Jun. 30, 2021

4,332

Balance at beginning of period at Jun. 30, 2021

(129,302)

(133,634)

(2,109)

(10,259)

(10,275)

4,348

Balance at beginning of period at Dec. 31, 2021

(141,670)

(146,018)

(155,756)

4,348

Balance at beginning of period at Dec. 31, 2021

(151,408)

(155,756)

4,348

$ 5,640,352

$ 48,773

$ 184,528

$ 5,406,736

$ 315

Net loss prior to recapitalization transaction

(147)

(28,640)

$ (28,640)

Opening net assets of Lionheart II Holdings, LLC acquired

^[1]

(118,075)

(21,786)

$ (21,786)

Adjustment for value of derivative on temporary equity

10,065

$ 10,065

Conversion of Warrants, shares

7,908,198

Conversion of Warrants

9,452

22,895

(13,444)

$ 1

Class A Issuances, shares

57,418,743

(5,753,080)

Class A Issuances

23,785

119,923

(96,144)

$ 6

Net loss

(89,435)

(1,751)

(87,684)

Balance at end of period, shares at Sep. 30, 2022

178,441

72,909,609

3,148,720,212

Balance at beginning of period, shares at Jun. 30, 2022

5,392,253

201,656

(23,537)

5,213,812

$ 7

$ 315

66,051,029

3,154,473,292

Balance at beginning of period at Jun. 30, 2022

5,416,354

187,269

(23,074)

5,251,837

$ 7

$ 315

Adjustment for value of derivative on temporary equity

(27,060)

1,062

Conversion of Warrants, shares

706,176

Conversion of Warrants

1,277

2,433

(1,156)

Class A Issuances, shares

6,152,404

(5,753,080)

Class A Issuances

620

10,892

(10,272)

Net loss

(27,060)

(463)

(26,597)

Balance at end of period, shares at Sep. 30, 2022

178,441

72,909,609

3,148,720,212

Cash flows from operating activities:

$ 5,392,253

$ 201,656

$ (23,537)

$ 5,213,812

$ 7

$ 315

[1]	Balances include related party transactions. See Note 13, Related Party, for further details.

Condensed Combined and Consolidated Statements of Cash Flows - USD ($)
$ in Thousands

9 Months Ended

12 Months Ended

Sep. 30, 2022

Sep. 30, 2021

Dec. 31, 2021

Dec. 31, 2020

Net loss (1)

$ (118,075)

^[1]

$ (23,411)

^[1]

$ (33,077)

$ (24,266)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

254

256

343

235

Amortization included in cost of claim recoveries

164

125

Claims amortization expense

92,866

114

Paid in kind interest

34,475

19,557

27,023

20,843

Change in fair value of derivatives

10,065

Deferred income taxes

(857)

Share based compensation

20,055

Change in fair value of warrant liability

1,619

PPP loan forgiveness

(1,043)

(44)

Realized gain on equity securities

(201)

(18)

Unrealized losses on investments—short position

279

Gain on debt extinguishment

(63,367)

Change in operating assets and liabilities:

Accounts receivable

(7,525)

Affiliate receivable

2,296

^[1]

755

^[1]

801

^[2]

(3,346)

^[2]

Affiliate payable

(25,430)

^[1]

1,868

^[1]

6,225

^[2]

5,670

^[2]

Prepaid expenses and other assets

(32,609)

(6,999)

(9)

Commission payable

Accounts payable and accrued liabilities

15,394

2,848

2,013

268

Deferred service fee income

249

Net cash provided by (used in) operating activities

(70,764)

(6,256)

2,249

(14)

Cash flows from investing activities:

Additions to property, plant, and equipment

(1,863)

(481)

(330)

Additions to intangible assets

(2,700)

(150)

Proceeds from sale of short positions

1,298

Purchases of equity securities

(4,056)

(1,255)

Proceeds from sale of equity securities

4,450

1,273

Purchase of securities to cover short position

(1,770)

Net cash used in investing activities

(4,563)

(1,857)

(2,007)

986

Cash flows from financing activities:

Proceeds from debt financing

1,086

Additions to deferred transaction costs

(7,973)

Proceeds from Business Combination

12,009

Transaction costs incurred for the Business Combination

(49,638)

Proceeds from related party loan

^[1]

125,759

Issuance of common stock

8,804

Issuance of temporary equity

2,417

Contributions from members

227

8,524

Distributions to members

(2,639)

(2,711)

Net cash used in financing activities

99,351

(2,412)

(10,457)

9,610

Increase (decrease) in cash and cash equivalents

24,024

(10,525)

(10,215)

10,582

Cash and cash equivalents at beginning of year

1,664

11,879

1,297

Cash and cash equivalents at end of year

25,688

1,354

1,664

11,879

Supplemental disclosure of non-cash investing and financing activities:

Purchase of intangible asset financed by note payable

500

83,805

Purchase of intangible asset through issuance of Class A common stock

10,000

Purchase of intangible asset in accrued expenses

48,167

Payment of professional fees through issuance of Class A common stock

1,326

Transaction costs incurred included in accounts payable and accrued liabilities

$ 29,692

Cash paid during the period for:

Interest

$ 22

$ 23

$ 43

[1]	Balances include related party transactions. See Note 13, Related Party, for further details.
[2]	Balances include related party transactions. See Note 11, Related Party, for further details.

Description of Business

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Description of Business

Note 1. DESCRIPTION OF BUSINESS

On May 23, 2022 (the “Closing Date”), MSP Recovery, Inc., a Delaware corporation (formerly known as Lionheart Acquisition Corporation II (“LCAP,” the “Company,” or “MSP”) consummated the previously announced business combination pursuant to that certain Membership Interest Purchase Agreement, dated as of July 11, 2021 (as amended, the “MIPA”), by and among the Company, Lionheart II Holdings, LLC, a wholly owned subsidiary of the Company, MSP Recovery, LLC and combined and consolidated subsidiaries (“Legacy MSP”), the members of Legacy MSP (the “Members”), and John H. Ruiz, in his capacity as the representative of the Members (the “Members’ Representative”). Pursuant to the MIPA, the Members sold and assigned all of their membership interests in Legacy MSP to the Company in exchange for

non-economic

voting shares of Class V common stock, par value $0.0001, of the Company (“Class V Common Stock”) and

non-voting

economic Class B Units of the Company (“Class B Units,” and each pair consisting of one share of Class V Common Stock and one Class B Unit, an

“Up-C

Unit”) (such transaction, the “Business Combination”). The

Up-C

Units are convertible into Class A Common Stock of the Company at the discretion of holder of the

Up-C

Unit. See Note 3,

Business Combination

for details. Subsequent to the Closing Date, the Company’s sole asset is its equity interest in MSP Recovery, LLC. The Company is the managing member and therefore consolidates Legacy MSP.

Legacy MSP was organized in 2014 as a Medicaid and Medicare Secondary Pay Act recovery specialist. The Company utilizes its proprietary internal data analytics platform to review health claims assigned by secondary payers such as Health Plans, Management Service Organizations (“MSO”), providers of medical services and Independent Physicians Associations. This platform allows the Company to identify claims cost recovery rights with potential recovery paths where claims either should not have been paid by the secondary payers or should have been reimbursed by third-party entities.

MSP seeks the assignment of recovery rights from secondary payers by acquiring the recovery rights to claims from secondary payers via Claims Cost Recovery Agreements (“CCRAs”). Prior to executing a CCRA, the Company utilizes its proprietary internal data analytics platform to review the set of claims and identify claims with probable recovery paths. MSP’s assets are these irrevocable assignments of health claims recovery rights that are automatic,

all-encompassing

and superior to other interests supported by Federal and State laws and regulations. MSP’s operations are primarily conducted in the U.S. and Puerto Rico.

Investment Capacity Agreement

On September 27, 2021, the Company entered into an Investment Capacity Agreement (the “ICA”) providing for potential future transactions regarding select healthcare claims recovery interests with its investment partner, Virage Capital Management LP (“Virage”), which transactions may include the sale of claims by MSP. The ICA provides that the maximum value of such claims will be $3 billion.

When the Company takes an assignment, the Company takes an assignment of the entire recovery but often has a contractual obligation to pay the assignor 50% of any recoveries. This 50% interest typically is retained by the assignor (the “Retained Interest”), although in some cases, the Company has acquired all of the recoveries, and the applicable assignor has not kept any Retained Interest. The Retained Interest is not an asset of the Company, but an obligation to pay these assignors, with the Company keeping the other 50% interest of any recoveries. Virage’s funding in connection with future transactions generally will be used to purchase Retained Interests from existing assignors or new MSP assignors, although its funds can also be used to buy 50% of the recoveries from the Company, in the event the applicable assignor did not retain any Retained Interest. In connection with transactions consummated under the ICA, the Company may receive certain fees, including a finder’s fee for identifying the recoveries and a servicing fee for servicing the claims.

Pursuant to the ICA, the Company will assist Virage in acquiring these Retained Interests for a cash price. Virage will be paid the recovery generated from the purchased Retained Interests when received through litigation or settlements. The ICA is separate and distinct from the equity investment in the Company by VRM MSP (an affiliate of Virage).

LifeWallet

On January 10, 2022, the Company announced the launch of LifeWallet, LLC (“LifeWallet”). LifeWallet is being designed to help first responders and healthcare providers quickly and easily access patient medical histories. LifeWallet is part of MSP Recovery’s Chase to Pay platform, providing real-time analytics at the point of care, helping identify the primary insurer, assisting providers in receiving reasonable and customary rates for accident-related treatment, shortening the Company’s collection time frame, and increasing revenue visibility and predictability. The Company absorbed part of the technology behind LifeWallet through an employment agreement with the developer of the technology. As such as of September 30, 2022, the Company’s investment related to LifeWallet included in the condensed consolidated balance sheets was limited to activity and expenses incurred during the nine months ended September 30, 2022. Through the date the financial statements were issued, LifeWallet has committed to advertising costs within the next 12 months of approximately $1.7 million.

Committed Equity Facility

On May 17, 2022, the Company entered into a Company Common Stock Purchase Agreement (the “Purchase Agreement”) with an affiliate of Cantor Fitzgerald (“CF”). Pursuant to the Purchase Agreement, after the closing of the Business Combination, the Company will have the right to sell to CF from time to time at its option up to $1 billion in Class A common stock shares, subject to the terms, conditions and limitations set forth in the Purchase Agreement.

Sales of the shares of the Company’s common stock to CF under the Purchase Agreement, and the timing of any such sales, will be determined by the Company from time to time in its sole discretion and will depend on a variety of factors, including, among other things, market conditions, the trading price of the common stock, as well as determinations by the Company about the use of proceeds of such common stock sales. The net proceeds from any such sales under the Purchase Agreement will depend on the frequency with, and the price at, which the shares of common stock are sold to CF.

Upon the initial satisfaction of the conditions to CF’s obligation to purchase shares of common stock set forth under the Purchase Agreement, including the completion of due diligence activities and registering shares through an

S-1

filing, the Company will have the right, but not the obligation, from time to time, at its sole discretion and on the terms and subject to the limitations contained in the Purchase Agreement, until no later than the first day of the month following the 36 month anniversary of the date that the registration statement of the shares is declared effective, to direct CF to purchase up to a specified maximum amount of common stock as set forth in the Purchase Agreement by delivering written notice to CF prior to the commencement of trading on any trading day. The purchase price of the common stock that the Company elects to sell to CF pursuant to the Purchase Agreement will be 98% of the volume-weighted average price of the common stock during the applicable purchase date on which the Company has timely delivered a written notice to CF, directing it to purchase common stock under the Purchase Agreement.

Assignment and Sale of Proceeds Agreement

On June 30, 2022, the Company entered into an Assignment and Sale of Proceeds Agreement (the “Assignment Agreement”) and a Recovery Services Agreement (the “Services Agreement” and collectively, the “Agreements”) with the Prudent Group (“Prudent”) in order to monetize up to $250 million of the value of the Company’s net recovery interest in claim demand letters that the Company has commenced sending to insurers who admitted they had primary payer responsibility for the underlying accidents to the federal government (“MSPR’s Net Recovery Proceeds”).

Pursuant to the Agreements, at the Company’s sole and absolute discretion, the Company has the right to direct Prudent to acquire, on a

non-recourse

basis, a percentage of MSPR’s Net Recovery Proceeds, up to an aggregate of $250 million, at a purchase price of 90% of MSPR’s Net Recovery Proceeds of such claim.

Under the Services Agreement, the Company will service and recover on the demand letters and will retain any revenues generated in excess of the amount received from Prudent, plus up to an 18% annual return on the amount Prudent paid for MSPR’s Net Recovery Proceeds. Prudent may terminate the Services Agreement upon sixty (60) days prior written notice to the Company.

The Company plans to utilize the Assignment Agreement as funding is needed.

Liquidity

As an early-stage growth company, the Company has incurred substantial net losses since inception. Our liquidity will depend on our ability to generate substantial claims recovery income and claims recovery services income in the near future. Our principal liquidity needs have been, and will continue to be, capital expenditures, working capital and claims financing obligation. Our capital expenditures support investments in our underlying infrastructure to enhance our solutions and technology for future growth. We expect our capital expenditures to increase primarily due to investments in our technology stack. Our strategy includes the expansion of our existing solutions and the development of new solutions, which will require cash expenditures over the next several years and the Company anticipates that it will be funded primarily by cash provided by operating activities and financing activities through resources noted below. We also expect our operating expenses to increase as we hire additional employees to support to the claim recovery team. We expect these investments to be a key driver of our long-term growth and competitiveness but to negatively impact our free cash flow.

The Company anticipates funding to be available from the CF Purchase Agreement, Prudent Assignment Agreement and the ICA, as noted above. Additionally, on June 16, 2022, the Company executed a promissory note with John H. Ruiz and Frank C. Quesada, the Company’s Chief Executive Officer and director and Chief Legal Officer and director, respectively, to provide operating cash to the Company. The aggregate principal amount was $112.8 million and bears interest at an annual rate of 4%, which is payable in kind. The promissory note matures on the four year anniversary of issuance. A portion of the proceeds under the MSP Principal Promissory Note in an amount equal to $36.5 million was advanced to MSP Recovery Law Firm, an affiliate of certain Members (the “Law Firm”) for certain operating expenses as contemplated by the Legal Services Agreement. The MSP Principals Promissory Note contains customary events of default that would allow the MSP Principals to declare the MSP Principals Promissory Note immediately due and payable or the MSP Principals Promissory Note will immediately and automatically become due and payable without notice, presentment, demand, protest or other request of any kind. There were no events of default during the nine months ended September 30, 2022. This amount is reflected in prepaid expenses and other current assets within the condensed consolidated balance sheets and had a balance of $31.9 million as of September 30, 2022. Actual results, including sources and uses of cash, may differ from our current estimates due to the inherent uncertainty involved in making those estimates and any such differences may impact the Company’s ability to continue as a going concern in the future.

Note 1. DESCRIPTION OF BUSINESS

MSP Recovery, LLC (“MSPR”) was organized as a limited liability company on July 8, 2014 as a Medicaid and Medicare Secondary Pay Act recovery specialist. Additional limited liability companies related to MSPR through common ownership were subsequently organized to facilitate MSPR’s operational or financial needs. These financial statements were prepared on a combined and consolidated basis as described in Note 2 below and include the following entities (collectively “MSP”, “MSP Recovery” or the “Company”):


Entity Name		Method

MSP Recovery of Puerto Rico LLC (Puerto Rico)		Combined

MDA Series, LLC		Combined

MSP Recovery, LLC		Combined

MAO-MSO Recovery LLC Series FHCP		Consolidated (non-wholly owned)

MSP Recovery Services, LLC		Combined

MSPA Claims 1, LLC		Consolidated (wholly owned)

MSP National, LLC		Consolidated (wholly owned)

MSP Recovery Claims Prov Series LLC		Combined

MSP Recovery Claims CAID Series LLC		Combined

MSP WB LLC		Combined

MSP Recovery Claims HOSP Series LLC		Combined

MSP Productions, LLC		Combined

MSP Recovery Claims HP, Series LLC		Combined

MSP Recovery Claims COM, Series LLC		Combined

MSP utilizes its proprietary internal data analytics platform to review health claims assigned by secondary payers such as Health Plans, Management Service Organizations (“MSO”), providers of medical services and Independent Physicians Associations. This platform allows MSP to identify claims cost recovery rights with potential recovery paths where claims either should not have been paid by the secondary payers or should have been reimbursed by third-party entities.

MSP seeks assignment of recovery rights from secondary payers by acquiring the recovery rights to claims from secondary payers via Claims Cost Recovery Agreements (“CCRA”). Prior to executing a CCRA, MSP utilizes its proprietary internal data analytics platform to review the set of claims and identify claims with probable recovery paths. MSP’s assets are these irrevocable assignments of health claims recovery rights that are automatic,

all-encompassing

and superior to other interests supported by Federal and State laws and regulations. MSP’s operations are primarily conducted in the U.S. and Puerto Rico.

Purchase Agreement

On July 11, 2021, MSP entered into a Membership Interest Purchase Agreement (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “MIPA”) by and among MSP, Lionheart Acquisition Corporation II, a Delaware corporation (“Lionheart”), Lionheart II Holdings, LLC, a Delaware corporation and a wholly owned subsidiary of Lionheart (“Opco”), the members of the MSP Purchased Companies (the “Members”), and John H. Ruiz, in his capacity as the representative of the Members (the “Members’ Representative”).

Pursuant to the MIPA, the Members will sell and assign all of their membership interests in the MSP Purchased Companies to Opco in exchange for

non-economic

voting shares of Class V common stock, par value $0.0001, of Lionheart (“Class V Common Stock”) and

non-voting

economic Class B Units of Opco (“Class B Units,” and each pair consisting of one share of Class V Common Stock and one Class B Unit, an

“Up-C

Unit”) (such transaction, the “Business Combination”).

Following the closing of the Business Combination (the “Closing”), Lionheart will be organized in an

“Up-C”

structure in which the business of MSP and its subsidiaries will be held directly or indirectly by Opco, and Lionheart will own all of the voting economic Class A Units of Opco and the Members or their designees will own all of the

non-voting

economic Class B Units in accordance with the terms of the first amended and restated limited liability company agreement of Opco to be entered into at Closing (the “LLC Agreement”). Each

Up-C

Unit may be exchanged for either, at the Company’s option, (a) cash or (b) one share of Class A common stock, par value $0.0001, of the Company (“Class A Common Stock”), subject to the provisions set forth in the LLC Agreement.

Subject to the terms and conditions set forth in the MIPA, the aggregate consideration to be paid to the Members (or their designees) will consist of (i) 3,250,000,000

Up-C

Units and (ii) rights to receive payments under the tax receivable agreement to be entered into at the Closing. Of the

Up-C

Units to be issued to certain Members at Closing, 6,000,000 (the “Escrow Units”) will be deposited into an escrow account with Continental Stock Transfer and Trust Company to satisfy any indemnification claims that may be brought pursuant to the MIPA.

Lionheart intends to apply to continue the listing of its publicly traded Class A Common Stock on the Nasdaq Capital Market (“Nasdaq”) under the new ticker symbol “MSPR” upon the closing of the Business Combination.

In conjunction with the purchase agreement, during the year ended December 31, 2021, the Company incurred direct and incremental transaction costs related to the Business Combination. These costs incurred by the Company will be offset against Lionheart’s cash proceeds and deducted from the combined company’s additional

paid-in

capital rather than expensed as incurred. As of December 31, 2021, the Company had a balance of $13.3 million for deferred transaction costs, which was included in the combined and consolidated balance sheets in Prepaid expenses and other current assets.

Investment Capacity Agreement

On September 27, 2021, the Company entered into an Investment Capacity Agreement (the “ICA”) providing for potential future transactions regarding select healthcare claims recovery interests with its investment partner, Virage Capital Management LP (“Virage”), which transactions may include the sale of claims by MSP. The ICA provides the maximum value of such claims would be $3 billion.

When the Company takes an assignment, the Company takes an assignment of the entire recovery but often they have a contractual obligation to pay the assignor 50% of any recoveries. This 50% interest typically is retained by the assignor (the “Retained Interest”), although in some cases, the Company has acquired all of the recoveries, and the applicable assignor has not kept any Retained Interest. The Retained Interest is not an asset of the Company, but an obligation to pay these assignors, with the Company keeping the other 50% interest of any recoveries. Virage’s funding in connection with future transactions generally will be used to purchase Retained Interests from existing assignors or new MSP assignors, although its funds can also be used to buy 50% of the recoveries from the Company, in the event the applicable assignor did not retain any Retained Interest. In connection with transactions consummated under the ICA, the Company may receive certain fees, including a finders fee for identifying the recoveries and a servicing fee for servicing the claims.

Pursuant to the ICA, the Company will assist Virage in acquiring these Retained Interests for a cash price. Virage will be paid the recovery generated from the purchased Retained Interests when received through litigation or settlements. The ICA is separate and distinct from Virage’s equity investment in the Company. The first purchase under the ICA is expected to occur before the end of the second quarter of 2022.

Liquidity

The Company’s operations are primarily funded by claims recovery service income related to a servicing agreement with VRM MSP Recovery Partners LLC (“VRM”), which was originally entered into on March 27, 2018, and amended on August 1, 2020 (the “Agreement”). As part of Virage Recovery Master LP’s investment in VRM, funds are set aside to pay service fees to the Company. Under the terms of the Agreement, VRM pays service fees to the Company, commensurate with the operational expenses and costs of the Company. As of December 31, 2021, VRM had $30.7 million reserved for the payment of services fees.

On July 11, 2021, MSP entered into a Membership Interest Purchase Agreement (as it may be amended, supplemented or otherwise modified from time to time in accordance with its terms, the “MIPA”), See above for further details on the transaction. The Company plans on raising funds through the planned transaction. However, there is currently no public market for the Company’s common stock, and there can be no assurances that the transaction will be completed. As part of the transaction, the Company anticipates incurring additional costs, which are expected to be in excess of cash from claims recovery service income. The Company will, therefore, require additional financing to fund its operations for the next twelve months, including funding of transaction related costs.

As such, if the transaction is not consummated, VRM has agreed to provide additional funding to cover transaction related costs in order to support the operations of the Company through twelve months following the issuance of the financial statements.

Basis of Presentaton and Summary of Significant Accounting Policies

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Accounting Policies [Abstract]

BASIS OF PRESENTATON AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Note 2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

Basis of presentation

These statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and, in accordance with those rules and regulations do not include all information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). In the opinion of management, the unaudited condensed consolidated interim financial statements (the “Financial Statements”) reflect all adjustments, which consist only of normal recurring adjustments, necessary to state fairly the results of operations, financial condition and cash flows for the interim periods presented herein. Prior to the Business Combination, the unaudited condensed consolidated interim financial statements reflect Legacy MSP.

These Financial Statements should be read in conjunction with the combined and consolidated financial statements and notes thereto included in Legacy MSP’s 2021 and 2020 combined and consolidated financial statements. The

year-end

consolidated balance sheet data was derived from the audited financial statements but does not include all disclosures required by GAAP. The results of operations for any interim period are not necessarily indicative of the results of operations to be expected for the full year.

All intercompany transactions and balances are eliminated from the condensed consolidated financial statements.

Principles of consolidation

The Company consolidates all entities that it controls through a majority voting interest or otherwise and the accompanying condensed consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries and these entities for which the Company has a controlling interest in. The Company also consolidates all entities that it controls as the primary beneficiary of a variable interest entity (“VIE”). Under the VIE model, management first assesses whether the Company has a variable interest in an entity, which would include an equity interest. If the Company has a variable interest in an entity, management further assesses whether that entity is a VIE, and if so, whether the Company is the primary beneficiary under the VIE model. Generally, entities that are organized similar to a limited partnership, in which a general partner (or managing member) make the most relevant decisions that affect the entity’s economic performance, are considered to be VIEs which would require consolidation, unless the limited partners have substantive kickout or participating rights. Entities that do not qualify as VIEs are assessed for consolidation under the voting interest model.

Under the VIE model, an entity is deemed to be the primary beneficiary of a VIE if it holds a controlling financial interest. A controlling financial interest is defined as (a) the power to direct the activities of a VIE that most significantly affect the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. Management determines whether the Company is the primary beneficiary of a VIE at the time it becomes involved with a VIE and reconsiders that conclusion at each reporting date. This analysis includes an evaluation of the Company’s control rights, as well as the economic interests that the Company holds in the VIE, including indirectly through related parties. As a result of the Business Combination, the Company consolidates MSP Recovery, LLC under the VIE model.

Estimates and Assumptions

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the Company’s estimates. Estimates are periodically reviewed considering changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Significant estimates and assumptions reflected in these condensed consolidated financial statements include but are not limited to claims recovery income and claims recovery service income recognition, recoverability of long-lived assets and cost of claims recoveries.

Segments

Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the chief operating decision maker (“CODM”). The Company manages its operations as a single segment for the purposes of assessing performance and making decisions. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates in one operating segment and one reportable segment, as the CODM reviews financial information presented on a consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. In addition, all of the Company’s revenues and long-lived assets are attributable primarily to operations in the United States and Puerto Rico for all periods presented.

COVID-19

Impact

The

COVID-19

pandemic has resulted, and could continue to result, in significant economic disruption. Federal, state and local governments mobilized to implement containment mechanisms to minimize impacts to their populations and economies. Various containment measures, which include the quarantining of cities, regions and countries, while aiding in the prevention of further outbreak, have resulted in a severe drop in general economic activity. In addition, the global economy has experienced a significant disruption to global supply chains. The extent of the impact of

COVID-19

on the Company’s operational and financial performance will depend on certain developments, including the duration and spread of the outbreak. As of September 30, 2022,

COVID-19

has not had a significant impact on the Company.

Concentration of credit risk and

Off-Balance

Sheet Risk

Cash and cash equivalents and affiliate receivable are financial instruments that are potentially subject to concentrations of credit risk. See Note 13,

Related Party

, for disclosure of affiliate receivables. The Company’s cash and cash equivalents and restricted cash are deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company has no other financial instruments with

off-balance-sheet

risk of loss.

Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted Cash consists of cash held in escrow related to the Prepaid Forward Agreement with CF. See Note 16,

Derivative Liability

, for more information on the Prepaid Forward Agreement.

Fair Value Measurements

The Company applies the provisions of Accounting Standards Codification (“ASC”) 820,

Fair Value Measurements

, for fair value measurements of financial assets and financial liabilities and for fair value measurements of

non-financial

items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company also applied the provisions of the subtopic to fair value measurements of

non-financial

assets and

non-financial

liabilities that are recognized or disclosed at fair value in the financial statements on a

non-recurring

basis. The subtopic defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The subtopic also establishes a framework for measuring fair value and expands disclosures about fair value measurements. The fair value framework requires the Company to categorize certain assets and liabilities into three levels, based upon the assumptions used to price those assets or liabilities. The three levels are defined as follows:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Quoted prices for similar assets and liabilities in active markets or inputs that are observable.

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

The Company has determined the estimated fair value of its financial instruments based on appropriate valuation methodologies; however, for Level 2 and Level 3 inputs considerable judgment is required to develop these estimates. Accordingly, these estimated fair values are not necessarily indicative of the amounts the Company could realize in a current market exchange. The estimated fair values can be materially affected by using different assumptions or methodologies. The methods and assumptions used in estimating the fair values of financial instruments are based on carrying values and future cash flows. As of September 30, 2022 and December 31, 2021, the Company did not hold any Level 2 or Level 3 assets or liabilities.

Cash and cash equivalents and restricted cash are stated at cost, which approximates their fair value. The carrying amounts reported in the balance sheets for affiliate receivable, accounts payable, affiliate payable and accrued liabilities approximate fair value, due to their short-term maturities.

The Company’s investments in rights to claim recovery cash flows are carried at cost as noted in Note 4,

Asset Acquisitions.

Outstanding borrowings that qualify as financial instruments are carried at cost, which approximates their fair value as of September 30, 2022 and December 31, 2021.

Equity Method Investments

Equity investments that are not consolidated, but over which the Company exercises significant influence, are accounted for in accordance with ASC 323, “Investments—Equity Method and Joint Ventures” (“ASC 323”). Whether or not the Company exercises significant influence with respect to an investee company depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level. An entity is presumptively assumed to have significant influence in a corporation when it holds 20% or more of the voting stock of the investee company, or at a lower level (e.g., 3% to 5%) for entities that track separate members capital accounts.

Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s condensed consolidated balance sheets and statements of operations; however, the Company’s share of the earnings or losses of the investee company is reflected in the caption “Other income” in the condensed consolidated statements of operations. The Company’s carrying value in equity method investee companies is not reflected in the Company’s condensed consolidated balance sheets as of September 30, 2022 or December 31, 2021 as the carrying value is zero. When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s condensed consolidated financial statements unless the Company has guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

Property, Plant and Equipment

Property and equipment are stated at historical cost less accumulated depreciation and accumulated impairment losses, if any. Major expenditures for property and equipment and those that substantially increase useful lives are capitalized. When assets are sold or otherwise disposed of, costs and related accumulated depreciation are removed from the financial statements and any resulting gains or losses are included in general and administrative expenses within our condensed consolidated statements of operations.

The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows:


Office and Computer Equipment		3 years
Furniture and Fixtures		3 years
Leasehold Improvements		Lesser of lease term or estimated life

Internal Use Software

Internal-use

software development costs incurred in the preliminary project stage are expensed as incurred; costs incurred in the application and development stage, which meet the capitalization criteria, are capitalized and amortized on a straight-line basis over the estimated useful life of the asset and costs incurred in the post-implementation/operations stage are expensed as incurred. Further, internal and external costs incurred in connection with upgrades or enhancements are also evaluated for capitalization. If the software upgrade results in an additional functionality, costs are capitalized; if the upgrade only extends the useful life, it is expensed as occurred.

Intangible assets

In certain of its CCRAs, the Company makes upfront payments to acquire claims recovery rights from secondary payers, such as health plans, managed service organizations, providers or medical services and independent physicians associations. The Company recognizes intangible assets for costs incurred up front to acquire claims recovery rights from various assignors.

The Company amortizes capitalized costs associated with CCRAs over 8 years, based on the typical expected timing to pursue recovery through litigation, including through potential appeals.

Investment in rights to claim recovery cash flows

As part of the Business Combination, the Company acquired rights to claims recovery cash flows. These assets were determined to be financial instruments under ASC 825. These assets are held at cost. As cash flows are received the Company evaluates, based on the projected cash flows, whether there was an excess of proceeds received (or receivable) over the portion of the financial asset deemed to be recovered. In the case of excess, the Company would recognize the excess as income in the same period and the remainder would reduce the asset value. In addition, the Company evaluates these assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset group are less than the carrying value, a write-down would be recorded to reduce the related asset group to its estimated fair value. There were no impairment indicators in the nine months ended September 30, 2022 and 2021.

Leases

Leases entered into by the Company, in which substantially all the benefits and risk of ownership are transferred to the Company, are recorded as obligations under capital leases. Obligations under capital leases, if any, reflect the present value of future lease payments, discounted at an appropriate interest rate, and are reduced by rental payments, net of imputed interest. Assets under capital leases are amortized based on the useful lives of the assets. All other leases are classified as operating leases, and leasing costs, including any rent holidays, leasehold incentives and rent concessions, are recorded on a straight-line basis over the lease term under general and administrative expense in the condensed consolidated statements of operations. See Note 8,

Operating Leases

, for more information.

Non-controlling

Interests

As part of the Business Combination and described in Note 1,

Description of Business

, the Company became the managing member of MSP Recovery, LLC, which is consolidated as the Company controls the operating decisions of MSP Recovery, LLC. The

non-controlling

interest relates to the

Up-C

Units that are convertible into Class A Common Stock of the Company at the discretion of the holder of the

Up-C

Unit. The

Up-C

Unit holders retained approximately 99.76% of the economic ownership percentage of the Company as of the Closing Date. The

non-controlling

interest is classified as permanent equity within the unaudited condensed consolidated balance sheet of the Company. As of September 30, 2022, based on the Class A common stock issuances during the period, the

non-controlling

interest of Class V shareholders was 97.70%.

Changes in the Company’s ownership interest in MSP Recovery, LLC, due to Class V shareholders converting their shares to Class A, are accounted for as equity transactions. Each issuance of the Company’s Class A Common Stock requires a corresponding issuance of MSP Recovery, LLC units to the Company. The issuance would result in a change in ownership and would reduce the balance of

non-controlling

interest and increase the balance of additional

paid-in

capital.

Impairment of Long-Lived Assets

The Company evaluates long-lived assets, such as property and equipment, including capitalized software costs, and finite-lived intangibles such as claims recovery rights, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset group are less than the carrying value, a write-down would be recorded to reduce the related asset group to its estimated fair value. There were no impairment indicators in the nine months ended September 30, 2022 and 2021.

Claims Recovery

The Company’s primary income-producing activities are associated with the pursuit and recovery of proceeds related to claims recovery rights that the Company obtains through CCRAs, in which it becomes the owner of those rights. As a result, such income is not generated from the transfer of control of goods or services to customers, but from the proceeds realized from perfection of claims recoveries from rights the Company holds outright. The Company also generates revenue by providing claims recovery services to other entities outside of the Company.

Claims recovery income

The Company recognizes claims recovery income based on a gain contingency model – that is, when the amounts are reasonably certain of collection. This typically occurs upon reaching a binding settlement or arbitration with the counterparty or when the legal proceedings, including any appellate process, are resolved.

In some cases, the Company owes an additional payment to the original assignor in connection with the realized value of the recovery right. Claims recovery income is recognized on a gross basis, as the Company is entitled to the full value of proceeds, and makes a payment to the original assignor similar to a royalty arrangement. Such payments to prior owners are recognized as cost of claims recovery in the same period the claims recovery income is recognized.

When the Company becomes entitled to proceeds from the settlement of a claim recovery pursuit or proceeding, it recognizes the amount in accounts receivable.

Claims recovery service income, ASC 606, Revenue from Contracts with Customers

The guidance under ASC 606, Revenue from Contracts with Customers, provides that an entity should apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation.

The Company derives revenues from contracts with customers primarily from claims recovery services arrangements (“claims recovery services”). Claims recovery services include services to related parties or third parties to assist those entities with pursuit of claims recovery rights. The Company has determined it has a single performance obligation for the series of daily activities that comprise claims recovery services, which are recognized over time using a time-based progress measure and are typically based on (1) budgeted expenses for the current month with an adjustment for the variance between budget and actual expenses from the prior month or (2) on a contingent basis dependent on actual settlements or resolved litigation. Amounts estimated and recognized, but not yet fully settled or resolved as part of litigation are recognized as contract assets. There were no contract assets at September 30, 2022 or December 31, 2021, as amounts associated with unresolved litigation were fully constrained.

Claims recovery services are generally paid in advance on a monthly basis. The Company did not recognize any material revenue for the nine months ended September 30, 2022 and 2021 for performance obligations that were fully satisfied in previous periods.

For the nine months ended September 30, 2022 and 2021, the majority of the Company’s claims recovery service income was related to a servicing agreement with VRM MSP, which was entered into on March 27, 2018. As part of the Business Combination, the Company acquired rights to cash flows in the assets, after certain required returns to VRM MSP, that had been part of the servicing agreement. As part of this acquisition, the Company no longer receives service income from this agreement and instead recognizes revenue and reductions in the asset when cash flows are received as outlined in Note 4,

Asset Acquisitions

. For the three months ended September 30, 2022, the Company also recognized $5.0 million of servicing income related to a specific contract where the performance obligations were completed during the quarter.

The Company does not have material unfulfilled performance obligation balances for contracts with an original length greater than one year in any years presented. Additionally, the Company does not have material costs related to obtaining a claims recovery service contract with amortization periods greater than one year for any period presented.

The Company applies ASC 606 utilizing the following allowable exemptions or practical expedients:

•

Exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less.

•

Practical expedient to recognize the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that the entity otherwise would have recognized is one year or less.

•

Election to present revenue net of sales taxes and other similar taxes, if any.

•

Practical expedient not requiring the entity to adjust the promised amount of consideration for the effects of a significant financing component if the entity expects, at contract inception, that the period between when the entity transfers a promised good or service to a customer and when the customer pays for that good or service will be one year or less.

Transfers of Claims Cost Recovery Rights to Others

In some cases, the Company has entered into arrangements to transfer CCRAs or rights to proceeds from CCRAs to other parties. The Company evaluates whether such transfers are sales of nonfinancial assets, sales of future revenues treated as debt,

in-kind

contributions to equity method investees, or other types of arrangements.

When they are treated as sales of nonfinancial assets, the Company recognizes a gain on the sale when control transfers to the counterparty based on the difference between the fair value of consideration (including cash) received and the recognized carrying value of the CCRAs. In some cases, such sales include variable consideration in the form of payments that will be made only upon achievement of certain recoveries, or based on a percentage of actual recoveries. The Company estimates and constrains the amounts that will ultimately be realized based on these variable payment terms and includes those amounts in the determination of gain or loss; the gain or loss is subsequently updated based on changes in those estimates.

In other cases, such transfers are considered to be sales of future revenue that are debt-like in nature. These arrangements are recognized as debt based on the proceeds received, and are imputed an interest rate based on the expected timing and amount of payments to achieve contractual hurdles. These are subject to revisions of estimates of that timing and amount based on the contractual provisions and the Company’s assumptions from changes in facts and circumstances. Such changes are reflected through revision of the imputed interest rate on a cumulative catch up basis.

Cost of Claims Recoveries

Claims amortization expense

Claims amortization expense includes amortization of CCRAs acquired as part of the business combination, shown as Intangibles, net in the condensed consolidated balance sheets, and CCRA intangible assets for which the Company made upfront payments for claims recovery rights. For further details on CCRAs see Note 7

, Intangible Assets, Net

Income Taxes

Our income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. As a result of the Business Combination, the Company became the sole managing member of MSP Recovery, LLC, which is treated as a partnership for U.S. federal, state and local income tax purposes. As a partnership, MSP Recovery, LLC is not subject to U.S. federal and certain state and local income taxes. Any taxable income or loss generated by MSP Recovery, LLC is passed through to and included in the taxable income or loss of its partners, including MSP Recovery, Inc. The Company is subject to U.S. federal income taxes, in addition to state and local income taxes, with respect to the Company’s allocable share of income of MSP Recovery, LLC.

The Company’s deferred tax balances reflect the impact of temporary differences between the carrying amount of assets and liabilities and the Company’s tax basis. The balances are stated at the tax rates in effect when the temporary differences are expected to be recovered or settled. The Company reviewed the anticipated future realization of the tax benefit of the Company’s existing deferred tax assets and concluded that it is more likely than not that all of the deferred tax assets will not be realized in the future.

Recent Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

ASU

2019-12,

Simplifying the Accounting for Income Taxes (Topic 740)

. In December 2019, the FASB issued ASU

2019-12,

Simplifying the Accounting for Income Taxes (Topic 740)

. This standard simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a

step-up

in the tax basis of goodwill. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. The Company adopted this guidance on January 1, 2022 and it had no material impact on our condensed consolidated financial statements.

ASU

2020-04,

Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

. In March 2020, the FASB issued ASU

2020-04,

Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

. The amendments in this Update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This standard is effective for all entities as of March 12, 2020 through December 31, 2022. Early adoption is permitted. The Company adopted this guidance on January 1, 2022 and it had no material impact on our condensed consolidated financial statements.

ASU

2020-06,

Debt — Debt With Conversion and Other Options (Subtopic

470-20)

and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic

815-

40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

. On August 5, 2020, the FASB issued ASU

2020-06,

Debt — Debt with Conversion and Other Options (Subtopic

470-20)

and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic

815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

December 15, 2021

. Early adoption is permitted. The Company adopted this guidance on January 1, 2022 and it had no material impact on our condensed consolidated financial statements.

ASU

2022-03,

Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

. On June 30, 2022, the FASB issued ASU

2022-03,

Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

. The amendment clarifies that contractual sale restrictions should not be considered when measuring the equity security’s fair value and prohibits an entity from recognizing a contractual sale restriction as a separate unit of account. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2024. Early adoption is permitted. The Company adopted this guidance in

June 2022

, which resulted in the Company recognizing the assets acquired as part of the Business Combination at values that were not discounted for contractual sale restrictions, which had a material impact on the Company’s condensed consolidated financial statements in relation to the asset acquisitions as noted in Note 4,

Asset Acquisitions

New Accounting Pronouncements Issued but Not Yet Adopted

In February 2016, the FASB issued ASU

2016-02,

Leases

, to increase transparency and comparability among organizations by recognizing right of use assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. In July 2018, ASU

2018-10

, Codification Improvements to ASC

2016-02

Leases

, was issued to provide more detailed guidance and additional clarification for implementing ASU

2016-02.

Furthermore, in July 2018, the FASB issued ASU

2018-11,

Leases: Targeted Improvements

, which provides an optional transition method in addition to the existing modified retrospective transition method by allowing a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. Furthermore, in March 2020, ASU

2020-03,

Codification Improvements to Financial Instruments, Leases

, was issued to provide more detailed guidance and additional clarification for implementing ASU

2016-02.

Additionally, on June 3, 2020, the FASB deferred by one year the effective date of the new leases standard for private companies, private

not-for-profits

and public

not-for-profits

that have not yet issued (or made available for issuance) financial statements reflecting the new standard. Furthermore, in June 2020, ASU

2020-05,

Revenue from Contracts with Customers and Leases

While the Company does not anticipate the implementation would have a material effect on the Company’s condensed consolidated operating results, cash flows, financial condition and related disclosures, the Company is currently evaluating the effect that implementation of this standard will have.

ASU

2016-13,

Financial Instruments –

Credit Losses (Topic 326): Measurement of Credit Losses

. In 2016 and subsequently, the FASB issued ASU

2016-13,

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments including subsequent amendments to the initial guidance

: ASU

2019-04,

Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825. Financial Instruments, ASU

2019-05,

Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief,

ASU

2019-11,

Codification Improvements to Topic 326, Financial Instruments - Credit Losses

. ASU 326, and ASU

2022-02,

Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

and related amendments require credit losses on financial instruments measured at amortized cost basis to be presented at the net amount expected to be collected, replacing the current incurred loss approach with an expected loss methodology that is referred to as CECL. This ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years.

Note 2. BASIS OF PRESENTATON AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Combination and Consolidation

Basis of presentation

The accompanying combined and consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). All intercompany transactions and balances are eliminated from the combined and consolidated financial statements.

The Company consolidates all entities that it controls through a majority voting interest or otherwise and the accompanying combined and consolidated financial statements include the accounts of the Company’s wholly owned subsidiaries and these entities for which the Company has a controlling interest in.

Principles of combination and consolidation

The combined and consolidated financial statements (the “Financial Statements”) have been prepared on a stand-alone basis and include the accounts of MSPR, entities in which MSP has a controlling financial interest, and certain entities under common control (see Note 1).

The Company also combines all entities that it controls through a majority voting interest or as the primary beneficiary of a variable interest entity (“VIE”). Under the VIE model, management first assesses whether the Company has a variable interest in an entity, which would include an equity interest. If the Company has a variable interest in an entity, management further assesses whether that entity is a VIE, and if so, whether the Company is the primary beneficiary under the VIE model. Generally, entities that are organized similar to a limited partnership, in which a general partner (or managing member) make the most relevant decisions that affect the entity’s economic performance, are considered to be VIEs which would require consolidation, unless the limited partners have substantive kickout or participating rights. Entities that do not qualify as VIEs are assessed for consolidation under the voting interest model.

Entities that comprise the Company are under common control. When an entity within the structure controls another entity, it is presented on a consolidated basis. When the common control owner is outside of the Company, the entities are presented on a combined basis. The inclusion of entities on a combined or consolidated basis is depicted in Note 1.

Non-Controlling

interest

For entities that are consolidated, but not 100% owned, a portion of the income or loss and corresponding equity is allocated to the other owners based on the distribution requirements in each entity’s operating agreement. The aggregate of the income or loss and corresponding equity that is not allocated to MSP is included in

non-controlling

interest.

Non-controlling

interest is presented as a separate component of equity on the Company’s combined and consolidated balance sheets and combined and consolidated statements of changes in equity. Net income or loss includes the net income or loss attributed to the

non-controlling

interest holders on the Company’s combined statements of operations. See Note 9, “Members’ Equity and

Non-Controlling

Interests,” for more information on ownership interests in the Company.

Estimates and Assumptions

The preparation of combined and consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. Actual results could differ from the Company’s estimates. Estimates are periodically reviewed considering changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become known. Significant estimates and assumptions reflected in these combined and consolidated financial statements include but are not limited to claims recovery income and claims recovery service income recognition, recoverability of long-lived assets and cost of claims recoveries.

Segments

Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the chief operating decision maker (“CODM”). The Company manages its operations as a single segment for the purposes of assessing performance and making decisions. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates in one operating segment and one reportable segment, as the CODM reviews financial information presented on a combined and consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. In addition, all the Company’s revenues and long-lived assets are attributable primarily to operations in the United States and Puerto Rico for all periods presented.

COVID-19

Impact

During the years ended December 31, 2021 and 2020, an outbreak of the novel coronavirus

(“COVID-19”)

had spread across the globe and had been declared a public health emergency by the World Health Organization and a National Emergency by the President of the United States. The

COVID-19

on the Company’s operational and financial performance will depend on certain developments,

including

the duration and spread of the outbreak. As of December 31, 2021,

COVID-19

has not had a significant impact on the Company.

Concentration of credit risk and

Off-Balance

Sheet Risk

Cash and cash equivalents and affiliate receivable are financial instruments that are potentially subject to concentrations of credit risk. See Note 11,

Related Party

, for disclosure of affiliate receivables. The Company’s cash and cash equivalents are deposited in accounts at large financial institutions, and amounts may exceed federally insured limits. The Company believes it is not exposed to significant credit risk due to the financial strength of the depository institutions in which the cash and cash equivalents are held. The Company has no other financial instruments with

off-balance-sheet

risk of loss.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Fair Value Measurements

The Company applies the provisions of ASC 820,

Fair Value Measurements

, for fair value measurements of financial assets and financial liabilities and for fair value measurements of

non-financial

items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company also applied the provisions of the subtopic to fair value measurements of

non-financial

assets and

non-financial

liabilities that are recognized or disclosed at fair value in the financial statements on a

non-recurring

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Quoted prices for similar assets and liabilities in active markets or inputs that are observable.

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

The Company has determined the estimated fair value of its financial instruments based on appropriate valuation methodologies; however, for level 2 and level 3 inputs considerable judgment is required to develop these estimates. Accordingly, these estimated fair values are not necessarily indicative of the amounts the Company could realize in a current market exchange. The estimated fair values can be materially affected by using different assumptions or methodologies. The methods and assumptions used in estimating the fair values of financial instruments are based on carrying values and future cash flows. As of December 31, 2021 and 2020, the Company did not hold any level 2 or level 3 assets or liabilities.

Cash and cash equivalents are stated at cost, which approximates their fair value. The carrying amounts reported in the balance sheets for affiliate receivable, accounts payable, affiliate payable and accrued liabilities approximate fair value, due to their short-term maturities.

The carrying amounts of the Company’s outstanding borrowings that qualify as financial instruments are carried at cost, which approximates their fair value as of December 31, 2021 and 2020.

The Company had an outstanding obligation to provide equity securities (a “short position”) as of December 31, 2020. The short position was classified as a liability,

marked-to-market

and was evaluated at Level 1 for fair value as disclosed in Note 12,

Investments in Equity Securities and Obligations to Deliver Securities.

Equity Method Investments

Equity investments that are not consolidated, but over which the Company exercises significant influence, are accounted for in accordance with ASC Topic 323, “Investments—Equity Method and Joint Ventures” (“ASC 323”). Whether or not the Company exercises significant influence with respect to an investee company depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level. An entity is presumptively assumed to have significant influence in a corporation when it holds 20% or more of the voting stock of the investee company, or at a lower level (e.g., 3% to 5%) for entities that track separate members capital accounts.

Under the equity method of accounting, an investee company’s accounts are not reflected within the Company’s combined and consolidated balance sheets and statements of operations; however, the Company’s share of the earnings or losses of the investee company is reflected in the caption “Other income” in the combined and consolidated statements of operations. The Company’s carrying value in an equity method investee company is not reflected in the Company’s combined and consolidated balance sheets as of December 31, 2021 or December 31, 2020 as the carrying value is zero. When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s combined and consolidated financial statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

Property, Plant and Equipment

The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows:


Office and Computer Equipment		3 years
Furniture and Fixtures		3 years
Leasehold Improvements		Lesser of lease term or estimated life

Internal Use Software

Internal-use

Intangible assets (CCRAs)

The Company amortizes capitalized costs associated with CCRAs over 8 years, based on the typical expected timing to pursue recovery through litigation, including through potential appeals.

Leases

Leases entered into by the Company, in which substantially all the benefits and risk of ownership are transferred to the Company, are recorded as obligations under capital leases. Obligations under capital leases, if any, reflect the present value of future lease payments, discounted at an appropriate interest rate, and are reduced by rental payments, net of imputed interest. Assets under capital leases are amortized based on the useful lives of the assets. All other leases are classified as operating leases, and leasing costs, including any rent holidays, leasehold incentives and rent concessions, are recorded on a straight-line basis over the lease term under general and administrative expense in the combined and consolidated statements of operations. See Note 6,

Operating Lease

, for more information.

Impairment of Long-Lived Assets

The Company evaluates long-lived assets, such as property and equipment including capitalized software costs, and finite-lived intangibles such as claims recovery rights, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable. If the estimated future cash flows (undiscounted and without interest charges) from the use of an asset group are less than the carrying value, a write-down would be recorded to reduce the related asset group to its estimated fair value. There were no impairment indicators in the years ended December 31, 2021 and 2020.

Claims Recovery

The Company’s primary income-producing activities are associated with the pursuit and recovery of proceeds related to claims recovery rights that the Company obtains through CCRAs, in which it becomes the owner of those rights. As such, such income is not generated from the transfer of control of goods or services to customers, but through the proceeds realized from perfection of claims recoveries from rights the Company holds outright. The Company also generates revenue by providing claims recovery services to other entities outside of the Company.

Claims recovery income

When the Company becomes entitled to proceeds from the settlement of a claim recovery pursuit or proceeding, it recognizes the amount in accounts receivable.

Claims recovery service income, ASC 606, Revenue from Contracts with Customers

On January 1, 2019, the Company adopted ASC 606, Revenue from Contracts with Customers, using the modified retrospective method for those contracts with customers which were not completed as of January 1, 2019. The adoption of ASC 606 did not have a material effect on the Company’s financial statements.

The guidance provides that an entity should apply the following steps: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when, or as, the entity satisfies a performance obligation.

The Company derives revenues from contracts with customers primarily from claims recovery services arrangements (“claims recovery services”). Claims recovery services include services to related parties or third parties to assist those entities with pursuit of claims recovery rights. The Company has determined it has a single performance obligation for the series of daily activities that comprise claims recovery services, which are recognized over time using a time-based progress measure and are typically based on 1) budgeted expenses for the current month with an adjustment for the variance between budget and actual expenses from the prior month or 2) on a contingent basis dependent on actual settlements or resolved litigation. Amounts estimated and recognized, but not yet fully settled or resolved as part of litigation are recognized as contract assets. There were no contract assets at December 31, 2021 or December 31, 2020, as amounts associated with unresolved litigation were fully constrained.

Claims recovery services are generally paid in advance on a monthly basis. The Company did not recognize any material revenue for the years ended December 31, 2021 and 2020 for performance obligations that were fully satisfied in previous periods.

For the years ended December 31, 2021 and 2020, the majority of the Company’s claims recovery service income was related to a servicing agreement with VRM MSP Recovery Partners LLC (“VRM”), which was entered into on March 27, 2018. As part of Virage Recovery Master LP’s investment in VRM, funds are set aside to pay service fees to the Company. As of December 31, 2021, VRM had $30.7 million reserved for the payment of services fees.

The Company applies ASC 606 utilizing the following allowable exemptions or practical expedients:

•

Exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less.

•

Election to present revenue net of sales taxes and other similar taxes, if any.

•

Transfers of Claims Cost Recovery Rights to Others

in-kind

contributions to equity method investees, or other types of arrangements.

Cost of Claims Recoveries

Costs of claims recoveries consist of all directly attributable costs specifically associated with claims processing activities, including contingent payments to assignors (i.e., settlement expenses) as well as amortization of CCRA intangible assets for those in which the Company made upfront payments for claims recovery rights.

Income Taxes

The various entities that comprise the Company, including consolidated affiliates, have elected to be treated as a partnership for federal income tax purposes. As such, the Company entities are treated as disregarded entities and are not subject to federal income taxation at the legal entity level. Instead, the Company’s members are liable for federal and state income taxes on their respective share of the Company’s taxable income or loss, subject to each member’s own adjustments for its capital accounts for tax purposes. Consequently, no income tax, income tax payable, or deferred tax assets and liabilities are recorded for any financial reporting date.

It is not practical to provide information about each member’s tax basis in the entities, as they are varied by member and subject to basis adjustments that exist outside of the Company’s financial accounting records.

For tax years beginning on or after January 1, 2018, the legal entities that comprise the Company are subject to partnership audit rules enacted as part of the Bipartisan Budget Act of 2015 (the “Centralized Partnership Audit Regime”). Under the Centralized Partnership Audit Regime, any Internal Revenue Service (“IRS”) audit of any or all of the legal entities that comprise the Company would be conducted at the partnership level. If the IRS determines an adjustment is warranted, the entities that comprise the Company that are implicated by such an adjustment will pay an “imputed underpayment,” including any applicable interest and penalties. The entities that comprise the Company may instead make a

“push-out”

election, in which case the partners or members for the year that is under audit would be required to include the adjustments on the partner’s or member’s income tax returns. If an entity that comprises part of the Company receives an imputed underpayment, a determination will be made based on the relevant facts and circumstances that exist at that time. Any payments that the entities that comprise the Company makes on behalf of its current partners or members will be reflected as a distribution to the partners or members, rather than tax expense.

Recent Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

ASU

2018-15,

Intangibles-Goodwill and

Other—Internal-Use

Software (Subtopic

350-40)—Customer’s

Accounting

for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

. In August 2018, the FASB issued ASU

2018-15,

Intangibles-Goodwill and

Other—Internal-Use

Software (Subtopic

350-

40)—Customer’s

Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.

This ASU addresses a customer’s accounting for implementation costs incurred in a cloud computing arrangement that is a service contract. The amendment aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain

internal-use

software (and hosting arrangements that include an

internal-use

software license). We adopted this new accounting standard as of January 1, 2020 on a prospective basis. The adoption of this ASU did not have a material impact on our combined and consolidated financial statements.

ASU

2018-13,

Fair Value Measurement (Topic 820): Disclosure Framework—Change to the Disclosure

Requirements for Fair Value Measurement

. In August 2018, the FASB issued ASU

2018-13,

Fair Value Measurement

(Topic 820): Disclosure Framework—Change to the Disclosure Requirements for Fair Value Measurement

, which modifies the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. This ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted. We adopted this guidance on January 1, 2020 and it had no material impact on our combined and consolidated financial statements.

New Accounting Pronouncements Issued but Not Yet Adopted

In February 2016, the FASB issued ASU

2016-02,

Leases

2018-10

, Codification Improvements to ASC

2016-02

Leases

, was issued to provide more detailed guidance and additional clarification for implementing ASU

2016-02.

Furthermore, in July 2018, the FASB issued ASU

2018-11,

Leases: Targeted Improvements

2020-03,

Codification Improvements to Financial Instruments, Leases

, was issued to provide more detailed guidance and additional clarification for implementing ASU

2016-02.

Additionally, on June 3, 2020, the FASB deferred by one year the effective date of the new leases standard for private companies, private

not-for-profits

and public

not-for-profits

that have not yet issued (or made available for issuance) financial statements reflecting the new standard. Furthermore, in June 2020, ASU

2020-05,

Revenue from Contracts with Customers and Leases

, was issued to defer effective dates of adoption of the new leasing standard for fiscal years beginning after December 15, 2021, and interim periods within fiscal years beginning after December 15, 2022. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s combined and consolidated operating results, cash flows, financial condition and related disclosures.

ASU

2016-13,

Financial Instruments –

Credit Losses (Topic 326): Measurement of Credit Losses

. In 2016, the FASB issued ASU 2016—13,

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on

Financial Instruments including subsequent amendments to the initial guidance

: ASU

2019-04,

Codification

Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and

Topic

825. Financial Instruments, ASU

2019-05,

Financial Instruments—Credit Losses (Topic 326): Targeted

Transition Relief

and ASU

2019-11,

Codification Improvements to Topic 326, Financial Instruments—Credit Losses

. ASU 326 and related amendments require credit losses on financial instruments measured at amortized cost basis to be presented at the net amount expected to be collected, replacing the current incurred loss approach with an expected loss methodology that is referred to as CECL. This ASU is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s combined and consolidated operating results, cash flows, financial condition and related disclosures.

ASU

2019-12,

Simplifying the Accounting for Income Taxes (Topic 740)

. In December 2019, the FASB issued ASU

2019-12,

Simplifying the Accounting for Income Taxes (Topic 740)

liabilities for outside basis differences. The standard also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a

step-up

in the tax basis of goodwill. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s combined and consolidated operating results, cash flows, financial condition and related disclosures.

ASU

2020-04,

Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on

Financial Reporting

. In March 2020, the FASB issued ASU

2020-04,

Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting

. The amendments in this Update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This standard is effective for all entities as of March 12, 2020 through December 31, 2022. Early adoption is permitted. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s combined and consolidated operating results, cash flows, financial condition and related disclosures.

ASU

2020-06,

Debt — Debt With Conversion and Other Options (Subtopic

470-20)

and Derivatives and Hedging

— Contracts in Entity’s Own Equity (Subtopic

815-

40): Accounting for Convertible Instruments and Contracts in an

Entity’s Own Equity

. On August 5, 2020, the FASB issued ASU

2020-06,

Debt — Debt with Conversion and Other Options

(Subtopic

470-20)

and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic

815-40):

Accounting for

Convertible Instruments and Contracts in an Entity’s Own Equity

. The amendments simplify the accounting for certain financial instruments with characteristics of liabilities and equity, including convertible instruments and contracts on an entity’s own equity. The standard is effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2021. Early adoption is permitted. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s combined and consolidated operating results, cash flows, financial condition and related disclosures.

Business Combination	9 Months Ended
Business Combination	Sep. 30, 2022
Business Combinations [Abstract]
Business Combinations	Note 3. BUSINESS COMBINATION On May 23, 2022, MSP Recovery, Inc. consummated the previously announced Business Combination pursuant to the MIPA as noted in Note 1. As a result of the closing of the Business Combination (the “Closing”), the Company is organized in an “Up-C” structure in which all of the business of Legacy MSP and its subsidiaries is held directly or indirectly by the Company, the Company is the managing member, consolidates Legacy MSP and the Company owns all of the voting economic Class A Units and the Members and their designees own all of the non-voting economic Class B Units in accordance with the terms of the first amended and restated limited liability company agreement of the Company. Each Up-C Unit may be exchanged for either, at the Company’s option, (a) cash or (b) one share of Class A common stock, par value $0.0001, of the Company (“Class A Common Stock”), subject to the provisions set forth in the LLC Agreement. The aggregate consideration paid to the Members (or their designees) at the Closing consisted of (i) 3,250,000,000 Units and (ii) rights to receive payments under the Tax Receivable Agreement. Of the 3,250,000,000 Units, 3,154,473,292 Units were issued in connection with the Closing and 95,526,708 Units were designated to the Company and Opco for cancelation (“Canceled Units”). Since the Closing, the Company has issued 50,022,000 Up-C Units to certain designated persons and intends to further issue shares of Class A Common Stock in respect of transaction-related bonuses or certain other designated persons, which together with the 50,022,000 Up-C Units would be equivalent in number to the Canceled Units. In connection with the Closing, the Company changed its name from “Lionheart Acquisition Corporation II” to “MSP Recovery, Inc.” The Business Combination is accounted for as a reverse recapitalization in accordance with GAAP. Under this method of accounting, the Company is treated as the acquirer for financial statement reporting purposes. The reverse recapitalization was treated as the equivalent of Legacy MSP issuing stock for the net assets of LCAP, accompanied by a recapitalization. The net assets of LCAP are stated at historical cost, with no goodwill or other intangible assets recorded. The Company received net proceeds in the business combination transaction of approximately $23.4 million, which includes the restricted cash received as part of FEF shares as defined in Note 16, Derivative Liability . The Company incurred direct and incremental costs of approximately $80.6 million related to the Business Combination, which consisted primarily of investment banking, legal, accounting and other professional fees. These transaction-related costs were recorded as a reduction of additional paid-in capital in the condensed consolidated balance sheets. Warrants As part of the business combination transaction, the Company assumed the liability related to the LCAP public warrants (“Public Warrants”) of $12.5 million. Pursuant to the terms of the Existing Warrant Agreement, and after giving effect to the issuance of the New Warrants, as defined below, the exercise price of the Public Warrants decreased to $0.0001 per share of Class A Common Stock. During the period from the Closing Date to September 30, 2022, approximately 7.9 million warrants of the original 11.8 million warrants had been exercised and the fair value of the remaining warrants decreased resulting in other income of $3.7 million for the three months ended September 30, 2022. For the nine months ended September 30, 2022, the fair value of the warrants increased resulting in other expense of $1.6 million. Following anti-dilution adjustments made in connection with the Business Combination, the Public Warrants have an exercise price of $0.0001 per share, which have become exercisable as of 10 days after closing of the Business Combination, on a cashless basis. Additionally, in connection with the Business Combination, the Company declared the New Warrant Dividend comprising approximately 1,028 million New Warrants payable to the holders of record of the Class A Common Stock as of the close of business on the Closing Date, after giving effect to the waiver of the right, title and interest in, to or under, participation in any such dividend by the Members, on behalf of themselves and any of their designees. The New Warrants will be exercisable 30 days following the Closing Date until their expiration date, which will be the fifth anniversary of the Closing Date or earlier redemption. The record date for the determination of the holders of record of the outstanding shares of Class A Common Stock entitled to receive the New Warrant Dividend was the close of business on the Closing Date. Pursuant to the terms of the LLC Agreement, at least twice a month, to the extent any New Warrants have been exercised in accordance with their terms, the Company is required to purchase from the MSP Principals, proportionately, the number of Up-C Units or shares of Class A Common Stock owned by such MSP Principal equal to the Aggregate Exercise Price divided by the Warrant Exercise Price in exchange for the Aggregate Exercise Price. The Company determined that the New Warrants instruments meet the equity scope exception in ASC 815 to be classified in stockholders’ equity, and as the repurchase right noted above has a mirrored value designed to offset the New Warrants, if exercised would be an equity only transaction. The New Warrants are each exercisable for one share of Class A Common Stock at an exercise price of $11.50 per share and will be subject to certain anti-dilution adjustments and become exercisable 30 days following the Closing, expiring five years from the date of Closing. Public Warrants and New Warrants are currently listed on Nasdaq under the symbols “MSPRZ” and “MSPRW”, respectively. Tax Receivable Agreement In connection with the Business Combination, the Company also entered into a Tax Receivable Agreement (the “TRA”). Pursuant to the TRA, the Company is required to pay the sellers 85% of the amount of tax benefits that the Company actually realizes as a result of (i) the Company’s direct and indirect allocable share of existing tax basis acquired in the Business Combination, (ii) increases in the Company’s allocable share of existing tax basis and tax basis adjustments that will increase the tax basis of the tangible and intangible assets of the Company as a result of the Business Combination and as a result of sales or exchanges of Up-C Units for cash or shares of Class A Common Stock, and (iii) certain other tax benefits related to entering into the Tax Receivable Agreement, including tax benefits attributable to payments under the Tax Receivable Agreement. During the nine months ended September 30, 2022, 5,753,080 of Class V units were exchanged for Class A common stock of the Company. The Company receives an increase in its share of the tax basis in the net assets of MSP Recovery, LLC due to the interests being redeemed. The Company has assessed the realizability of the net deferred tax assets and in that analysis has considered the relevant positive and negative evidence available to determine whether it is more likely than not that some portion or all of the deferred tax assets will be realized. The Company has recorded a full valuation allowance against the deferred tax assets as of September 30, 2022, which will be maintained until there is sufficient evidence to support the reversal of all or some portion of these allowances. As the tax benefits associated with the TRA have not be recognized, based on estimates of future taxable income, the Company has concluded it is not probable to recognize any tax receivable agreement liability. If the valuation allowance recorded against the deferred tax assets is released in a future period, the Tax Receivable Agreement liability may be considered probable at that time and recorded within earnings. Non-Controlling interest As a result of the Business Combination, the Company reflects non-controlling interests as a result of the Up-C structure. The Company holds all of the voting Class A Units of Opco, whereas the Members (or their designees) hold all of the non-voting economic Class B Units of Opco (these Class B Units represent the non-controlling interest in the Company). The ownership percentage of Class V Common Stock held in the Post-Combination Company by the Members (or their designees) will be equivalent to the number of Class B Units held in the Company, and as such, reflects the non-controlling interest in the Company, which is equivalent to the Class V Common Stock ownership percentage. See Note 11, Noncontrolling Interest , for more information on ownership interests in the Company. Nomura Promissory Note On May 27, 2022, the Company issued an unsecured promissory note to Nomura in a principal amount of approximately $24.5 million related to advisory fees and deferred underwriting fees and expenses that became due and payable by the Company to Nomura, in connection with the consummation of the Business Combination. The maturity date of the promissory note is May 29, 2023. On the maturity date, the Company is required to pay Nomura an amount in cash equal to the outstanding principal amount, plus accrued and unpaid interest, plus any other obligations then due or payable under the promissory note. Upon two days prior written notice to Nomura, the Company may prepay all or any portion of the then outstanding principal amount under the promissory note together with all accrued and unpaid interest thereon.

Asset Acquisitions	9 Months Ended
Asset Acquisitions	Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract]
Asset Acquisitions	Note 4. ASSET ACQUISITIONS On May 23, 2022 as part of the closing of the Business Combination, the Company acquired assets through the issuance of Up-C units. In exchange for approximately 196.6 million Up-C units, the Company acquired CCRAs previously held by Series MRCS LLC, a series of MDA, Series LLC (“Series MRCS”), an affiliate of MSP. The CCRAs are included as Intangible Assets, net in the condensed consolidated balance sheet. The CCRAs are held at cost, which was determined using the Closing Date market price of the Company’s Class A shares discounted by 4.5% for lack of marketability due to timing before shares are sellable. The CCRAs are treated as finite life intangible assets similar to other CCRAs that the Company has acquired and have a useful life of 8 years. For further details on this CCRA acquisition, see Note 7, Intangible Assets, Net . Investment in rights to claim recovery cash flows On May 23, 2022 as part of the closing of the Business Combination, the Company acquired assets through the issuance of Up-C units. In exchange for approximately 356.8 million Up-C units, the Company acquired the rights to receive the distributable net proceeds of a portfolio of claims owned by VRM MSP, a Delaware limited liability company and joint investment vehicle of Virage Recovery Master LP (“VRM”) and Series MRCS (the “Proceeds”). Under this asset acquisition structure, the Company determined that the arrangements to acquire the rights to proceeds from certain claims recovery rights would be treated as an investment in a financial asset under ASC 825. These rights to cash flows differ from the CCRAs included in Intangibles Assets, net in the condensed consolidated balance sheet as the Company does not hold the rights to the CCRAs, but rather holds the rights to cash flows. The Company has not elected the fair value option and therefore will hold the investment at cost, which was determined using the Closing Date market price of the shares discounted by 4.5% for lack of marketability due to timing before shares are sellable. As cash flows are received, subject to the VRM Full Return, the Company will reduce its investment for realized (or receivable) distributions of net proceeds from this financial instrument in proportion to the amounts received or receivable to management’s estimate of expected net proceeds from the underlying investments, and subject to potential impairment if indicators are present; the excess of proceeds received (or receivable) over the portion of the financial asset deemed to be recovered will be recognized as income in the same period. At Closing, an additional 65 million Up-C units (the “Reserved Shares”) were reserved in escrow for the payment to VRM for the VRM Full Return on or prior to the one-year anniversary of Closing in accordance with a guaranty agreement. Pursuant to which, among other things, if the VRM Full Return (defined below) has not been paid by distribution of recovery proceeds prior to such time, then the Members, along with the Company, will guarantee the payment to VRM of any amount of the VRM Full Return, that remains unpaid at such time, on or prior to the one-year anniversary of the Closing by any of the following means (or any combination thereof): (a) sale of the Reserved Shares, and delivery of the resulting net cash proceeds thereof to VRM, or (b) sale of additional shares of Company Class A Common Stock and delivery of the net cash proceeds thereof to VRM. The “VRM Full Return” means an amount of recovery proceeds distributed (i) first, until VRM received, in the aggregate, a 20% annual compounded return on its contributions to VRM MSP, (ii) second, until VRM received an aggregate amount equal to its contributions to VRM MSP (the aggregate amount of clauses (i) and (ii), collectively, the “VRM Full Return”). The value of the VRM Full Return was $752.5 million as of September 30, 2022. Upon payment of the VRM Full Return, VRM and Series MRCS would assign and transfer to the Company their respective rights to receive all Proceeds. As the Members have guaranteed payment through the Reserved Shares or through conversion and subsequent sale of their Up-C Units, an indemnification asset is included in the condensed consolidated balance sheet for the full value of the VRM Full Return. In addition, as the Company is the primary obligor, the value of the VRM Full Return is included as a guaranty obligation in the condensed consolidated balance sheet.

Investment In Equity Method Investees

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure

Note 5. INVESTMENT IN EQUITY METHOD INVESTEES

The Company holds three investments which are accounted for using the equity method:

MAO-MSO

Recovery II LLC Series PMPI (“Series PMPI”),

MAO-MSO

Recovery LLC and

MAO-MSO

Recovery II LLC (both collectively the

“MAO-MSO

entities”).

Series PMPI is a series of

MAO-MSO

Recovery II LLC. The Company exercises significant influence over the operating and financial activities of Series PMPI, but does not exercise control of the entity. In accordance with Series PMPI’s operating agreement, the controlling member is entitled to a preferred return of 20% per annum (the “Preferred Return”). Once the Preferred Return has been met, the controlling member is entitled to 50% of claims recoveries by PMPI. The noncontrolling member is allocated 100% of the costs of PMPI. Since the Preferred Return exceeds the total members’ equity of PMPI as of both September 30, 2022 and December 31, 2021, the value of the equity method investment in the condensed consolidated balance sheet is $0.

The

MAO-MSO

entities are Delaware limited liability companies formed as master series entities whose central operations are to form other series legal entities that will hold and pursue claims recovery rights. The

MAO-MSO

entities are not designed to hold or pursue claims recoveries themselves. The Company holds a 50% economic interest in both entities, and has significant influence through its equity investment, but does not control either entity. As equity method investments, the Company recognizes its proportionate share of net earnings or losses as equity earnings in Other income. The activity of these entities has been insignificant for the nine months ended September 30, 2022 and 2021. Since the Company did not make a contribution to the

MAO-MSO

entities and the entities have recorded losses, the value of the equity method investment in the condensed consolidated balance sheets is $0 as of both September 30, 2022 and December 31, 2021.

Summary financial information for equity accounted investees, not adjusted for the percentage ownership of the Company is as follows:


	For the three months ended,						For the nine months ended,
Series PMPI (in thousands)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Revenue	$	16			—			16			1
Amortization		500			500			1,500			1,500
Other expenses		8			—			8			—
Profit (Loss)	$	(492	)		(500	)		(1,492	)		(1,499	)


Series PMPI (in thousands)	September 30, 2022		December 31, 2021
Total Assets	$	3,841		5,390
Total Liabilities	$	274		266

Note 3. INVESTMENT IN EQUITY METHOD INVESTEES

MSP holds three investments which are accounted for using equity method:

MAO-MSO

Recovery II LLC Series PMPI (“Series PMPI”),

MAO-MSO

Recovery LLC and

MAO-MSO

Recovery II LLC (both collectively the

“MAO-MSO

entities”).

Series PMPI is a series entity of

MAO-MSO

Recovery II LLC. The Company exercises significant influence over the operating and financial activities of Series PMPI, but does not exercise control of the entity. In accordance with Series PMPI’s operating agreement, the controlling member is entitled to a preferred return of 20% per annum (the “Preferred Return”). Once the Preferred Return has been met, the controlling member is entitled to 50% of claims recoveries by PMPI. The noncontrolling member is allocated 100% of the costs of PMPI. Since the Preferred Return exceeds the total members’ equity of PMPI as of both December 31, 2021 and 2020, the value of the equity method investment in the combined and consolidated balance sheet is $0.

The

MAO-MSO

entities are not designed to hold or pursue claims recoveries themselves. The Company holds a 50% economic interest in both entities, and has significant influence through its equity investment, but does not control either entity. As equity method investments, the Company recognizes its proportionate share of net earnings or losses as equity earnings in Other income. The activity of these entities has been insignificant for the years ended December 31, 2021 and 2020. Since the Company did not make a contribution to the

MAO-MSO

entities and the entities have recorded losses, the value of the equity method investment in the combined and consolidated balance sheets is $0 as of both December 31, 2021 and 2020.

Summary financial information for equity accounted investees, not adjusted for the percentage ownership of the Company is as follows (in thousands):


Series PMPI	Revenue		Amortization		Other expenses		Profit (Loss)
For the year ended December 31, 2021	$	1	$	2,000	$	—	$	(1,999	)
For the year ended December 31, 2020	$	34	$	2,000	$	20	$	(1,986	)

Series PMPI					Total Assets		Total Liabilities
As of December 31, 2021					$	5,390	$	266
As of December 31, 2020					$	7,393	$	270

Property, plant and equipment, net

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

Note 6. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consist of the following:


(In thousands)	September 30, 2022			December 31, 2021
Office and computer equipment	$	416		$	356
Leasehold improvements		113			113
Internally developed software		2,944			1,020
Other software		67			66

Property, plant and equipment, gross	$	3,540		$	1,555
Less: accumulated depreciation and amortization of software		(1,060	)		(805	)

Property, plant and equipment, net	$	2,480		$	750

For the three and nine months ended September 30, 2022 and 2021, depreciation expense and amortization expense was $103 thousand and $254 thousand, respectively, and $89 thousand and $256 thousand, respectively.

Note 4. PROPERTY, PLANT AND EQUIPMENT, NET

Property, plant and equipment, net consist of the following (in thousands):


	December 31,
	2021			2020
Office and computer equipment	$	356		$	305
Leasehold improvements		113			113
Internally developed software		1,020			589
Other software		66			67
Property, plant and equipment, gross	$	1,555		$	1,074
Less: accumulated depreciation and amortization of software		(805	)		(462	)
Property, plant and equipment, net	$	750		$	612

Depreciation expense and amortization expense of software was $343 thousand and $235 thousand for the years ended December 31, 2021 and 2020, respectively.

Intangible Assets, Net

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets, Net

Note 7. INTANGIBLE ASSETS, NET

During the nine months ended September 30, 2022, the Company acquired CCRAs held by Series MRCS. The assets were acquired through the issuance of equity as part of the Business Combination. The assets are held at cost and treated as a finite intangible asset with a useful life of 8 years, similar to Intangible assets, net.

Intangible assets, net consists of the following:


(in thousands)	September 30, 2022			December 31, 2021
Intangible assets, gross	$	2,171,174		$	84,955
Accumulated amortization		(93,603	)		(737	)

Net	$	2,077,571		$	84,218

During the three months ended September 30, 2022, the Company purchased $48.2 million of CCRAs included in Intangible Assets, net, all payable in cash or through Class A common stock issuance. The payment is due March 31, 2023 and is recorded within Other Current Liabilities in the condensed consolidated balance sheet as of September 30, 2022. During the nine months ended September 30, 2022, in addition to the CCRAs acquired as part of the Business Combination and the acquired CCRAs noted for the three months ended September 30, 2022, the Company also purchased $12.7 million of CCRAs included in Intangible assets, net, of which $2.7 million was paid in cash and $10.0 million was paid through Class A Common Stock issuance. For the CCRAs acquired through equity issuance, the Company is required to provide additional shares or cash if the value of the shares provided is not equal to $10.0 million or greater within 1 year of issuance. As such, the Company recorded a liability of $8.7 million within Other current liabilities in the condensed consolidate balance sheet for the difference between $10.0 million and the fair value of the shares as of September 30, 2022.

For the three and nine months ended September 30, 2022 and 2021, claims amortization expense was $66.0 million and $92.5 million, respectively, and $47 thousand and $114 thousand, respectively.

Future amortization for CCRAs is expected to be as follows:


(in thousands)	CCRAs Amortization
2022 (remaining)	$	67,849
2023		271,397
2024		271,324
2025		271,272
2026		271,272
Thereafter		924,457

Total	$	2,077,571

Note 5. INTANGIBLE ASSETS, NET

Intangible assets, net consists of the following (in thousands):


	December 31, 2021
	CCRAs
Gross	$	84,955
Accumulated amortization		(737	)
Net	$	84,218


	December 31, 2020
	CCRAs
Gross	$	1,000
Accumulated amortization		(573	)
Net	$	427

During the year ended December 31, 2021, the Company purchased $84.0 million of CCRAs, of which $500 thousand was through the issuance of a note payable, $150 thousand was paid in cash and the remaining amount was through assignment as noted in Note 1. The full principal amount of the note payable is due June 1, 2030 with interest only payments required on an annual basis prior to due date. The interest rate is 2%.

Amortization of CCRA expense was $164 thousand and $125 thousand for the years ended December 31, 2021 and 2020, respectively.

Future amortization for CCRAs is expected to be as follows (in thousands):


2022		10,620
2023		10,620
2024		10,547
2025		10,495
2026		10,495
Thereafter		331,441
Total	$	84,218

Operating Leases

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Leases [Abstract]

Operating Leases

Note 8. OPERATING LEASES

The Company leases office space under a

non-cancellable

operating lease expiring November 2023. In addition, the Company rents an office space from the Law Firm, which is on a

month-to-month

basis and therefore is not included in the future minimum lease payments below. Rent expense for the three and nine months ended September 30, 2022 and 2021 was $194 thousand and $579 thousand, respectively, and $178 thousand and $582 thousand, respectively.

The future minimum lease payments under

non-cancelable

operating leases as of September 30, 2022 for the next five years and thereafter are as follows:


(In thousands)	Lease Payments
Year Ending December 31,
2022 (remaining)	$	58
2023 (1)		217

Total	$	275

(1)	Operating lease expires before or during the year ending December 31, 2023

Note 6. OPERATING LEASE

The Company leases an office space under a

non-cancellable

operating lease expiring November 2023. Rent expense for the years ended December 31, 2021 and 2020 was $0.8 million and $1.5 million, respectively. Rent expense for these periods includes expenses for office space the Company rents from the Law Firm. The rent is on a month to month basis and therefore not included in the future minimum lease payments below.

The future minimum lease payments under

non-cancelable

operating leases as of December 31, 2021 for the next five years and thereafter are as follows (in thousands):


Year Ending December 31,	Lease Payments
2022	$	231
2023(1)		217
Total	$	448

(1) Operating lease expires before or during the year ending December 31, 2023

Variable Interest Entities	9 Months Ended	12 Months Ended
Variable Interest Entities	Sep. 30, 2022	Dec. 31, 2021
Variable Interest Entity Disclosure [Abstract]
Variable Interest Entities	Note 9. VARIABLE INTEREST ENTITIES The Company evaluates its ownership, contractual, and other interests in entities to determine if they are VIEs, if the Company has a variable interest in those entities, and the nature and extent of those interests. These evaluations are highly complex and involve management judgment and the use of estimates and assumptions based on available historical information, among other factors. Based on its evaluations, if the Company determines it is the primary beneficiary of such VIEs, it consolidates such entities into its financial statements. VIEs information below is presented on aggregate basis based on similar risk and reward characteristics and MSP’s involvement with the VIEs. Investments in unconsolidated Variable Interest Entities The Company is involved with VIEs in which it has investments in equity but does not consolidate because it does not have the power to direct the activities that most significantly impact their economic performance and thus is not considered the primary beneficiary of the entities. Those VIEs are reflected as equity method investments. Total assets and liabilities for these VIEs were $3.8 million and $0.3 million, respectively, at September 30, 2022 and $5.4 million and $0.3 million, respectively, at December 31, 2021. Generally, MSP’s exposure is limited to its investment in those VIEs (see Note 5, Investment in Equity Method Investees ). For MAO-MSO Recovery II, LLC and Series PMPI, MSP may be exposed to providing additional recovery services at its own cost if recovery proceeds allocated to it are insufficient to recover the costs of those services. MSP does not have any other exposures or any obligation to provide additional funding.	Note 7. VARIABLE INTEREST ENTITIES Consolidated Variable Interest Entities The Company evaluates its ownership, contractual, and other interests in entities to determine if they are VIEs, if it has a variable interest in those entities, and the nature and extent of those interests. These evaluations are highly complex and involve management judgment and the use of estimates and assumptions based on available historical information, among other factors. Based on its evaluations, if the Company determines it is the primary beneficiary of such VIEs, it consolidates such entities into its financial statements. VIEs information below is presented on aggregate basis based on similar risk and reward characteristics and MSP’s involvement with the VIEs. The Company includes a number of entities that are determined to be VIEs and which are combined under common control (see Note 1), and for which the common control group can direct the use of the entities’ assets and resources for other purposes. The Company consolidates VIEs in which one of the combined entities is the primary beneficiary. The assets of the consolidated VIEs may only be used to settle obligations of these VIEs and to settle any investors’ ownership liquidation requests. There is no recourse to MSP for the consolidated VIEs’ liabilities. The assets of the consolidated VIEs are not available to MSP’s creditors. Total assets and liabilities included in its combined and consolidated balance sheets for these VIEs were $9.7 million and $122.7 million, respectively, at December 31, 2021 and $9.7 million and $95.1 million, respectively, at December 31, 2020. Investments in unconsolidated Variable Interest Entities The Company is involved with VIEs in which it has investments in equity but does not consolidate because it does not have the power to direct the activities that most significantly impact their economic performance and thus is not considered the primary beneficiary of the entities. Those VIEs are reflected as equity method investments. Total assets and liabilities for these VIEs were $5.4 million and $0.3 million, respectively, at December 31, 2021 and $7.4 million and $0.3 million, respectively, at December 31, 2020. Generally, MSP’s exposure is limited to its investment in those VIEs (see Note 3). For MAO-MSO Recovery II, LLC and Series PMPI, MSP may be exposed to providing additional recovery services at its own cost if recovery proceeds allocated to it are insufficient to recover the costs of those services. MSP does not have any other exposures or any obligation to provide additional funding.

Claims Financing Obligations and Notes Payable	9 Months Ended	12 Months Ended
Claims Financing Obligations and Notes Payable	Sep. 30, 2022	Dec. 31, 2021
Debt Disclosure [Abstract]
Claims Financing Obligations and Notes Payable	Note 10. CLAIMS FINANCING OBLIGATIONS AND NOTES PAYABLE During the three months ended September 30, 2022, the Company finalized an Amendment to Claim Proceeds Investment Agreement and a Warrant Agreement with Brickell Key Investments LP (the “Holder”), pursuant to which the parties have agreed to amend the original Claims Proceeds Investment Agreement (“CPIA”) and required payment terms. The Amendment and Warrant Agreement were executed effective September 30, 2022. Pursuant to the agreements, the Company grants to the Holder the right to purchase Class A common shares in the Company (the “Class A Shares”) in accordance with the terms and conditions of the Agreement. The maximum amount of Class A Shares that the Holder may purchase from the Company is 66,666,666 (the “Amount”) for a purchase price equal to $6,666.67 ($0.0001 per Class A Share), and is payable in cash. This Warrant (the “Warrant”) will expire at 5:00 p.m. (Eastern Time), on September 30, 2027 and may be exercised in whole or in part by Holder at any time prior to such date. The Holder can only sell a maximum of 15% per month of the Class A Shares obtained through the Warrant. In exchange for the Company issuing the Warrant, the amounts owed to the Holder pursuant to CPIA are amended to equal $80 million. The Holder has the right to receive the $80 million owed through proceeds as outlined in the CPIA, cash paid by the Company or monetization of the Warrant (through the sale of the Warrant or sale of the underlying Class A Shares). If the Holder monetizes the Warrant, the amount owed will be reduced at a measure of $1.20 per Class A Share. In connection with the Amendment and Warrant Agreement, the Holder also executed a Stock Pledge Agreement (the “Pledge Agreement”) with MSP Founders, John H. Ruiz and Frank Quesada (the “Founders”). As part of the agreement, the Founders agreed to pledge 50 million shares to secure payment of the original principal amount of the CPIA. If the Holder were to receive amounts in excess of $80 million, the Founders would receive interest of 10% on the original principal amount of the CPIA. In addition, the Pledge Agreement provides the right to repurchase the Warrant from the Holder on or before June 30, 2023. The Founders entered into an agreement with the Company where this repurchase right has been assigned to the Company (the “Side Agreement”). The Pledge Agreement and Side Agreement were executed effective September 30, 2022. As the Company has, at its option, the ability to pay its obligation through cash proceeds or through monetization of the Warrants, the amount owed as of September 30, 2022 was included as Claims financing obligation and notes payable on the condensed consolidated balance sheet. Also the liability related to the remaining amounts due was recorded as $80 million as of September 30, 2022 as the Company, at its option, has the ability to repurchase the Warrants for $80 million on or before June 30, 2023. The resulting gain on debt extinguishment from the amendment was $63.4 million and was recorded in Other (expense) income, net within the condensed consolidated statement of operations for the three and nine months ended September 30, 2022. Based on claims financing obligations and notes payable agreements, as of September 30, 2022 and December 31, 2021, the present value of amounts owed under these obligations were $172.3 million and $201.4 million, respectively, including unpaid interest to date of $1.5 million and $94.5 million, respectively. The weighted average interest rate is 5.8% based on the current book value of $172.3 million with rates that range from 2% to 11%. The Company is expected to repay these obligations from cash flows from claim recovery income or potentially for the renegotiated debt through class A common stock issuances. As of September 30, 2022, the minimum required payments on these agreements are $330.5 million. Certain of these agreements have priority of payment regarding any proceeds until full payment of the balance due is satisfied. The maturity of the commitments range from the date sufficient claims recoveries are received to cover the required return or in some cases by 2031. Also, during 2020, the Company obtained funds under the Paycheck Protection Program (the “PPP Loan”) in the amount of $1,086 thousand. Since the amount must be repaid unless forgiven in accordance with the Paycheck Protection Program, the Company accounted for the funds as debt under ASC 470. As of December 31, 2021, the total amount of the PPP Loans have been forgiven.	Note 8. CLAIMS FINANCING OBLIGATIONS AND NOTES PAYABLE Based on claims financing obligations and notes payable agreements, as of December 31, 2021 and 2020, the present value of amounts owed under these obligations were $201.4 million and $90.5 million, respectively, including unpaid interest to date of $94.5 million and $67.5 million, respectively. The weighted average interest rate is 22% based on the current book value of $201.4 million with rates that range from 2% to 30%. The Company is expected to repay these obligations from cash flows from claim recovery income. As December 31, 2021, the minimum required payments on these agreements are $368.0 million with $117.5 million of the required payments being non-recourse. Certain of these agreements have priority of payment regarding any proceeds until full payment of the balance due is satisfied. However, in some cases, to the extent that, upon final resolution of the Claims, the investors receive from proceeds an amount that is less than the agreed upon return, the investors have no recourse to recover such deficit from the Company. Certain of these agreements fall under ASC 470 for the sale of future revenues classified as debt. The maturity of the commitments range from the date sufficient claims recoveries are received to cover the required return or in some cases by 2031. Also, during 2020, the Company obtained funds under the Paycheck Protection Program (the “PPP Loan”) in the amount of $1,086 thousand. Since the amount must be repaid unless forgiven in accordance with the Paycheck Protection Program, the Company accounted for the funds as debt under ASC 470. The PPP Loan bears interest of 1%, with repayments to be made from 2022 to 2025. The Company may apply to have the loan forgiven in part or in full, depending if certain requirements are met, in 2021. Any amounts forgiven will be recognized as other income in the period in which they are officially relieved. As of December 31, 2021, the total amount of the PPP Loans have been forgiven. As of December 31, 2020, the total amounts owed under the PPP Loans was $1,043 thousand.

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 7: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Members' Equity and Non-controlling Interest

Noncontrolling Interest

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Noncontrolling Interest [Abstract]

Noncontrolling Interest

Note 11. NONCONTROLLING INTEREST

The

non-controlling

interest balance primarily represents the

Up-C

Units of the Company held by the Members. The following table summarizes the ownership of Units in the Company as of September 30, 2022:


	Common Units		Ownership Percentage
Ownership of Class A Common Units		72,909,609		2.3	%
Ownership of Class V Common Units		3,148,720,212		97.7	%

Balance at end of period		3,221,629,821		100.0	%

The

non-controlling

interest holders have the right to exchange

Up-C

Units, at the Company’s option, for (i) cash or (ii) one share of Class A Common Stock, subject to the provisions set forth in the LLC Agreement. As such, future exchanges of

Up-C

Units by

non-controlling

interest holders will result in a change in ownership and reduce or increase the amount recorded as

non-controlling

interest and increase or decrease additional

paid-in-capital

or retained earnings when the Company has positive or negative net assets, respectively. As of September 30, 2022, 5.8 million

Up-C

Units have exchanged into Class A shares.

In addition to the

non-controlling

interest related to

Up-C

Units, the Company also has

non-controlling

interests related to

MAO-MSO

Recovery LLC Series FHCP (“FHCP”), which is a

non-wholly

owned subsidiary of MSP Recovery, LLC. In accordance with FHCP’s operating agreement, the noncontrolling member is entitled to a preferred return of 20% per annum (the “Preferred Return”). Once the Preferred Return has been met, the noncontrolling member is entitled to 80% of claims recoveries by FHCP. The controlling member is allocated 100% of the costs of FHCP. Since the Preferred Return exceeds the total members’ equity of FHCP as of September 30, 2022 and December 31, 2021, the

non-controlling

interest also includes $4.3 million representing the entire members’ equity of FHCP.

Note 9. MEMBERS’ EQUITY AND NONCONTROLLING INTEREST

The entities included in the Financial Statements that are under common control (see Note 1) generally have a single class of units and are controlled by a single individual or entities controlled by that individual (the “Controlling Member”). The Controlling Member and other noncontrolling members generally retain similar rights and privileges in these entities, based on their respective ownership percentages.

MAO-MSO

Recovery LLC Series FHCP (“FHCP”) is a

non-wholly

Members' Equity and Non-controlling Interest

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Noncontrolling Interest [Abstract]

Note 11. NONCONTROLLING INTEREST

The

non-controlling

interest balance primarily represents the

Up-C

Units of the Company held by the Members. The following table summarizes the ownership of Units in the Company as of September 30, 2022:


	Common Units		Ownership Percentage
Ownership of Class A Common Units		72,909,609		2.3	%
Ownership of Class V Common Units		3,148,720,212		97.7	%

Balance at end of period		3,221,629,821		100.0	%

The

non-controlling

interest holders have the right to exchange

Up-C

Units, at the Company’s option, for (i) cash or (ii) one share of Class A Common Stock, subject to the provisions set forth in the LLC Agreement. As such, future exchanges of

Up-C

Units by

non-controlling

interest holders will result in a change in ownership and reduce or increase the amount recorded as

non-controlling

interest and increase or decrease additional

paid-in-capital

or retained earnings when the Company has positive or negative net assets, respectively. As of September 30, 2022, 5.8 million

Up-C

Units have exchanged into Class A shares.

In addition to the

non-controlling

interest related to

Up-C

Units, the Company also has

non-controlling

interests related to

MAO-MSO

Recovery LLC Series FHCP (“FHCP”), which is a

non-wholly

non-controlling

interest also includes $4.3 million representing the entire members’ equity of FHCP.

Note 9. MEMBERS’ EQUITY AND NONCONTROLLING INTEREST

MAO-MSO

Recovery LLC Series FHCP (“FHCP”) is a

non-wholly

Commitments and Contingencies	9 Months Ended	12 Months Ended
Commitments and Contingencies	Sep. 30, 2022	Dec. 31, 2021
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	Note 12. COMMITMENTS AND CONTINGENCIES The Company is subject to certain legal proceedings, claims, investigations, and administrative proceedings in the ordinary course of its business. The Company records a provision for a liability when it is both probable that the liability has been incurred and the amount of the liability can be reasonably estimated. These provisions, if any, are reviewed and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Depending on the nature and timing of any such proceedings that may arise, an unfavorable resolution of a matter could materially affect the Company’s future consolidated results of operations, cash flows or financial position in a particular period. As of September 30, 2022, there was no material pending or threatened litigation against us. The Company pursues claims recoveries through settlement, arbitration and legal proceedings. The accounting policy for these activities is discussed under Claims recovery income in Note 2, Basis of presentation and summary of significant accounting policies . Approximately 88% of the Company’s expected recoveries arise from claims being brought under the Medicare Secondary Payer Act. This law allows the Company to pursue recoveries against primary payers for reimbursement of medical expenses that the Company’s assignors paid for when primary payers (i.e. liability insurers) were responsible for payment. The Repair Abuses of MSP Payments Act (“RAMP Act”) introduced to the U.S. House of Representatives in June 2022 seeks to repeal the private cause of action under the Medicare Secondary Payer Act – a fundamental component of how the Company is able to calculate damages. The Medicare Secondary Payer Act’s private cause of action incentivizes private parties, such as MSP Recovery, to pursue reimbursement of conditional payments by rewarding them with double damages. The repeal of the private cause of action would remove the possibility of recovering double damages. If the Medicare Secondary Payer Act is substantially changed or repealed, or if the RAMP Act were enacted to apply retroactively, it could significantly reduce the Company’s potential recoveries and have a material adverse effect on its business, financial condition and results of operations.	Note 10. COMMITMENTS AND CONTINGENCIES The Company is subject to certain legal proceedings, claims, investigations, and administrative proceedings in the ordinary course of its business. The Company records a provision for a liability when it is both probable that the liability has been incurred and the amount of the liability can be reasonably estimated. These provisions, if any, are reviewed and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel and other information and events pertaining to a particular case. Depending on the nature and timing of any such proceedings that may arise, an unfavorable resolution of a matter could materially affect the Company’s future combined and consolidated results of operations, cash flows or financial position in a particular period. As of December 31, 2021, there were no material pending or threatened litigations against us. The Company pursues claims recoveries through settlement, arbitration and legal proceedings. The accounting policy for these activities is discussed under Claims recovery income in Note 2 – Basis of presentation and summary of significant accounting policies .

Related Party	9 Months Ended	12 Months Ended
Related Party	Sep. 30, 2022	Dec. 31, 2021
Related Party Transactions [Abstract]
Related Party	Note 13. RELATED PARTY Loan from related parties During the nine months ended September 30, 2022, the Company issued an unsecured promissory note in an aggregate principal amount of $112.8 million (the “Promissory Note”) to John H. Ruiz and Frank C. Quesada, the Company’s Chief Executive Officer and director and Chief Legal Officer and director, respectively (collectively, the “MSP Principals”), to provide operating cash to the Company. The Promissory Note bears interest at an annual rate of 4%, payable in kind, and will mature on the four year anniversary of the issuance. The Promissory Note is payable by the Company at any time, without prepayment penalties, fees, or other expenses. During the three and nine months ended September 30, 2022, the Company recorded $1.3 million and $1.5 million, respectively, on interest expense related to the Promissory Note. A portion of the proceeds under the Promissory Note in an amount equal to $36.5 million was advanced to the Law Firm, an affiliate of certain Members, for certain operating expenses as contemplated by the Legal Services Agreement. This amount is reflected in prepaid expenses and other current assets within the condensed consolidated balance sheets and had a balance of $31.9 million as of September 30, 2022. The payments of Law Firm expenses is reflected in Professional fees - legal within the condensed consolidated statement of operations. Legal Services – MSP Recovery Law Firm Certain Company entities have previously entered into legal services agreements (the “Existing LSAs”) with the Law Firm, an affiliate of certain Members, for the recovery of claims. Pursuant to the terms of the Existing LSAs, the Law Firm provides the Company with investigation, case management, research and legal services in the pursuit of recovery of claims in exchange for a portion of the recovered proceeds relating to such claims. The Existing LSAs also provide that the Law Firm serves as exclusive lead counsel for any litigation relating to such claims. As of September 30, 2022 there was no amount due, and December 31, 2021, $5.5 million, respectively, was due to the Law Firm and included in the condensed consolidated balance sheets in Affiliate Payable. For the three and nine months ended September 30, 2022, $4.6 million and $24.7 million, respectively was included in Professional fees - legal for expenses related to the Law Firm in the condensed consolidated statements of operations. The amounts were largely due to share base compensation as noted below and the payment of Law Firm expenses per the related party loan as noted above. For the three and nine months ended September 30, 2021, the amounts were de minimus. For the three and nine months ended September 30, 2022, $0 thousand and $271 thousand, respectively, were included in cost of claims recoveries for expenses related to the Law Firm in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2021, no amounts were included cost of claims recoveries for expenses related to the Law Firm in the condensed consolidated statements of operations. The Law Firm may also collect and/or hold cash on behalf of the Company in the ordinary course of business. As of September 30, 2022 and December 31, 2021, $1.5 million and $3.4 million, respectively, was due from the Law Firm and included in the condensed consolidated balance sheets in Affiliate Receivable. In addition, the Company rents office space from the Law Firm as discussed in Note 8, Operating Lease . For the nine months ended September 30, 2022, the Company issued 8,022,000 Class A common stock shares to the Law Firm employees, which was deemed to be share based compensation. As such $20.1 million of expense was included within Professional fees - legal for expenses related to the Law Firm in the condensed consolidated statements of operations for the nine months ended September 30, 2022. MSP Recovery Aviation, LLC The Company may make payments related to operational expenses on behalf of its affiliate, MSP Recovery Aviation, LLC (“MSP Aviation”). MSP Aviation was created to provide aircraft rental to third party customers and the Company. The Company has made payments in the periods of the financial statements only related to specifically billed flights and these rates are at or below the market rate for such services. As of September 30, 2022 and December 31, 2021, $153 thousand and $153 thousand, respectively was due from MSP Aviation and included in the condensed consolidated balance sheets in Affiliate Receivable. For the three and nine months ended September 30, 2022, $150 thousand and $400 thousand, respectively was included in General and Administrative expenses related to MSP Aviation in the condensed consolidated statements of operations. For the three and nine months ended September 30, 2021, the amounts were de minimus. Funds held for other entities The Company may collect and/or hold cash on behalf of its affiliates in the ordinary course of business. As of September 30, 2022 and December 31, 2021, $19.8 million and $39.7 million was due to affiliates of the Company and included in the condensed consolidated balance sheets in Affiliate Payable. These amounts were primarily due to Series MRCS, and will be repaid either through excess cash flows from operations or other financing. During the year ended December 31, 2021, the Company also entered into a note payable with Series MRCS as outlined in Note 7, Intangible Assets, Net . As of September 30, 2022 and December 31, 2021, the balance of the note payable was $0.5 million and included in the condensed consolidated balance sheets in Claims financing obligation and notes payable. As of December 31, 2021, $0.4 million was due to MSP National, LLC from Series MRCS and as of September 30, 2022 and December 31, 2021, there were additional receivables from other affiliates of $146 thousand and $92 thousand, respectively. These were included in the condensed consolidated balance sheets in Affiliate Receivable. VRM Historically, MSP Recovery, LLC has received claims recovery service income for services provided to VRM MSP. The Company concluded that VRM MSP is a related party due to ownership interests in the entity held by Series MRCS LLC. During the nine months ended September 30, 2022 and 2021, $0 million and $10.6 million, respectively, and $1.7 million and $7.0 million, respectively, of claims recovery service income was received from VRM MSP as part of the servicing agreement and was included in the condensed consolidated statements of operations.	Note 11. RELATED PARTY Legal Services—MSP Recovery Law Firm Certain Company entities have previously entered into legal services agreements (the “Existing LSAs”) with the Law Firm, an affiliate of certain Members, for the recovery of Claims. Pursuant to the terms of the Existing LSAs, the Law Firm provides MSP with investigation, case management, research and legal services in the pursuit of recovery of Claims in exchange for a portion of the recovered proceeds relating to such Claims. The Existing LSAs also provide that the Law Firm serve as exclusive lead counsel for any litigation relating to such Claims. As of December 31, 2021 and 2020, $5.5 million and $0.2 million, respectively, was due to the Law Firm and included in the combined and consolidated balance sheets in Affiliate Payable. The Law Firm may also collect and/or hold cash on behalf of the Company in the ordinary course of business. As of December 31, 2021 and 2020, $3.4 million and $4.3 million, respectively, was due from the Law Firm and included in the combined and consolidated balance sheets in Affiliate Receivable. In addition, the Company rents office space from the Law Firm as discussed in Note 6. MSP Recovery Aviation, LLC MSP Recovery, LLC may make payments related to operational expenses on behalf of its affiliate, MSP Recovery Aviation, LLC (“MSP Aviation”). As of both December 31, 2021 and 2020, $153 thousand was due from the MSP Aviation and included in the combined and consolidated balance sheets in Affiliate Receivable. Funds held for other entities MSP Recovery, LLC may collect and/or hold cash on behalf of its affiliates in the ordinary course of business. As of December 31, 2021 and 2020, $39.7 million and $38.8 million, respectively, was due to affiliates of the Company and included in the combined and consolidated balance sheets in Affiliate Payable. These amounts were primarily due to Series MRCS LLC, an affiliate of MSP, and will be repaid either through excess cash flows from operations, other financing or in connection with the transaction noted in Note 1. During the year ended December 31, 2021, the Company also entered into a note payable with Series MRCS as outlined in Note 5. As of December 31, 2021, the balance of the note payable was $500 thousand and included in the combined and consolidated balance sheets in Claims financing obligation & notes payable. As of both December 31, 2021 and 2020, $0.4 million was due to MSP National, LLC from Series MRCS LLC and as of December 31, 2021 and 2020, there were additional receivables from other affiliates of $92 thousand and $17 thousand, respectively. These were included in the combined and consolidated balance sheets in Affiliate Receivable. VRM MSP Recovery, LLC receives claims recovery service income for services provided to VRM. The Company concluded that VRM is a related party due to ownership interests in the entity held by Series MRCS LLC, an affiliate of MSP. During the years ended December 31, 2021 and 2020, $11.5 million and $13.1 million, respectively, of claims recovery service income was received from VRM as part of the servicing agreement and was included in the combined and consolidated statements of operations.

Investments in Equity Securities and Obligations to Deliver Securities	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Investments, Debt and Equity Securities [Abstract]
Investments in Equity Securities and Obligations to Deliver Securities	Note 14. INVESTMENTS IN EQUITY SECURITIES AND OBLIGATIONS TO DELIVER SECURITIES The Company had an outstanding obligation to provide equity securities (a “short position”) as of December 31, 2020. The short position was classified as a liability, marked-to-market and was evaluated at Level 1 for fair value. During the nine months ended September 30, 2021, the Company covered its short position by acquiring 100,000 equity shares of a publicly traded U.S. company for $1.8 million, recognizing a realized loss of $193 thousand in Other income, net in the condensed consolidated statements of operations. As of September 30, 2022 and December 31, 2021, the Company had no investments in equity securities.	Note 12. INVESTMENTS IN EQUITY SECURITIES AND OBLIGATIONS TO DELIVER SECURITIES The Company had an outstanding obligation to provide equity securities (a “short position”) as of December 31, 2020. The short position was classified as a liability, marked-to-market and was evaluated at Level 1 for fair value. During the year ended December 31, 2021, the Company covered its short position by acquiring 100,000 equity shares of a publicly traded U.S. company for $1.8 million, recognizing a realized loss of $193 thousand in Other income, net in the combined and consolidated statements of operations. Additionally, the Company purchased 200,000 equity shares of a publicly traded U.S. company for a total of $4.1 million, of which all shares were disposed for $4.5 million, recognizing a realized gain of $394 thousand in Other income, net in the combined and consolidated statements of operations. As of December 31, 2021, the Company had no investments in equity securities.

Net Loss Per Common Share

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Net Loss Per Common Share

Note 15. NET LOSS PER COMMON SHARE

Basic earnings per share of Class A common stock is computed by dividing net income attributable to common shareholders by the weighted-average number of shares of Class A common stock outstanding during the period. Diluted earnings per share of Class A common stock is computed by dividing net income attributable to common shareholders adjusted for the assumed exchange of all potentially dilutive securities, by the weighted-average number of shares of Class A common stock outstanding adjusted to give effect to potentially dilutive elements. Diluted loss per share for all period presented is the same as basic loss per share as the inclusion of the potentially issuable shares would be anti-dilutive.

Prior to the Business Combination, the equity structure of MSP Recovery, LLC included units which shared in the profits and losses of MSP Recovery, LLC. In reviewing the calculation of earnings per unit for periods prior to the Business Combination, the Company concluded that it resulted in values that would not be meaningful to the users of the unaudited condensed consolidated financial statements. As such, earnings per share information for the three and nine months ended September 30, 2021 has not been presented. The basic and diluted earnings per share for the three and nine months ended September 30, 2022 represent income (loss) from only the period from the Closing Date to September 30, 2022 for the Company.

The following table sets forth the computation of basic and diluted earnings per share of Class A common stock:


(In thousands except shares and per share amounts)	Three months ended September 30, 2022			Nine months ended September 30, 2022
Numerator - basic and diluted:
Net loss	$	(27,060	)	$	(118,075	)
Less: Net loss attributable to MSP Recovery, LLC pre Business Combination		—			28,639
Less: Net loss attributable to the noncontrolling interest post Business Combination	$	26,597		$	87,685

Net loss attributable to common shareholders	$	(463	)	$	(1,751	)
Denominator - basic and diluted:
Weighed-average shares of Class A common stock outstanding		69,036,899			53,138,474
Earnings per share of Class A common stock - basic and diluted	$	(0.01	)	$	(0.03	)

Shares of the Company’s Class V common stock do not participate in the earnings or losses of the Company and are therefore not participating securities. As such, separate presentation of basic and diluted earnings per share of Class V common stock under the

two-class

method has not been presented.

In the calculation for earnings per share for the three and nine months ended September 30, 2022, the Company excluded from the calculation of diluted earnings per share 3,148,720,212 shares of Class V common stock, 3,916,725 Public Warrants outstanding, and 1,028,046,326 shares of New Warrants outstanding because their effect would have been anti-dilutive.

Derivative Liability	9 Months Ended
Derivative Liability	Sep. 30, 2022
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Liability	Note 16. DERIVATIVE LIABILITY The Company and CF entered into an agreement for an OTC Equity Prepaid Forward Transaction (the “Transaction”). Pursuant to the terms of the Transaction, CF agreed to (a) transfer to the Company for cancellation any warrants to purchase shares received as a result of being the stockholder of record of a share as of the close of business on the closing date of the Business Combination, pursuant to the previously announced and declared LCAP dividend and (b) waive any redemption right that would require the redemption of the Subject Shares (as defined below) in exchange for a pro rata amount of the funds held in LCAP’s trust account. At closing of the Business Combination, the Company transferred from the trust account to an escrow account an amount equal to (a) the aggregate number of such Subject Shares (approximately 1.1 million shares), multiplied by (b) the per share redemption price for shares out of the trust account, as a prepayment to CF of the amount to be paid to CF in settlement of the Transaction for the number of shares owned by CF at the closing of the Business Combination (the “FEF Shares”). CF may sell the Subject Shares at its sole discretion in one or more transactions, publicly or privately. Any such sale shall constitute an optional early termination of the Transaction upon which (a) CF will receive from the escrow account an amount equal to the positive excess, if any, of (x) the product of the redemption price and the aggregate number of shares over (y) an amount equal to the proceeds received by CF in connection with sales of the shares, and (b) the Company will receive from the escrow account the amount set forth in (y) above. The Company concluded that the instrument includes an embedded derivative for the change in value of the Company’s Class A common stock and as such, at the end of each period the Company will mark to market the shares through booking a derivative liability/asset. The calculation of the derivative liability/asset would be the difference between the restricted cash and current fair value of the outstanding FEF shares (number of FEF shares multiplied by market price of the Company’s Class A common stock as of period end). As of September 30, 2022, CF had not sold any FEF shares. The aggregate purchase price of $11.4 million is reflected in restricted cash with the fair value of the shares of $1.4 million included as Class A common stock subject to possible redemption within temporary equity and the derivative liability of $10.0 million reflected in current liabilities in the condensed consolidated balance sheets.

Subsequent Events	12 Months Ended
Subsequent Events	Dec. 31, 2021
Subsequent Events [Abstract]
Subsequent Events	Note 13. SUBSEQUENT EVENTS The Company has evaluated subsequent events from the balance sheet date through March 10, 2022, the date the financial statements were available to be issued. On January 10, 2022, the Company announced the launch of LifeWallet LLC (“LifeWallet”). LifeWallet is being designed to help first responders and healthcare providers quickly and easily access patient medical histories. LifeWallet is part of MSP Recovery’s Chase to Pay platform, providing real-time analytics at the point of care, helping identify the primary insurer, assisting providers in receiving reasonable and customary rates for accident-related treatment, shortening the Company’s collection time frame, and increasing revenue visibility and predictability. The Company absorbed part of the technology behind LifeWallet through an employment agreement with the developer of the technology. As such as of December 31, 2021, the Company had no investment related to LifeWallet included in the combined and consolidated balance sheets. Through the date the financial statements were available to be issued, LifeWallet has committed to advertising costs within the next 12 months of approximately $1.5 million.

Basis of Presentaton and Summary of Significant Accounting Policies (Policies)

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Accounting Policies [Abstract]

Basis of presentation

year-end

All intercompany transactions and balances are eliminated from the condensed consolidated financial statements.

Basis of presentation

Principles of consolidation

Principles of combination and consolidation

Non-Controlling interest

Non-controlling

Interests

As part of the Business Combination and described in Note 1,

Description of Business

, the Company became the managing member of MSP Recovery, LLC, which is consolidated as the Company controls the operating decisions of MSP Recovery, LLC. The

non-controlling

interest relates to the

Up-C

Units that are convertible into Class A Common Stock of the Company at the discretion of the holder of the

Up-C

Unit. The

Up-C

Unit holders retained approximately 99.76% of the economic ownership percentage of the Company as of the Closing Date. The

non-controlling

interest of Class V shareholders was 97.70%.

non-controlling

interest and increase the balance of additional

paid-in

capital.

Non-Controlling

interest

non-controlling

interest.

Non-controlling

non-controlling

interest holders on the Company’s combined statements of operations. See Note 9, “Members’ Equity and

Non-Controlling

Interests,” for more information on ownership interests in the Company.

Estimates and Assumptions

Segments

Operating segments are defined as components of an entity for which separate financial information is available and regularly reviewed by the chief operating decision maker (“CODM”). The Company manages its operations as a single segment for the purposes of assessing performance and making decisions. The Company’s CODM is its Chief Executive Officer. The Company has determined that it operates in one operating segment and one reportable segment, as the CODM reviews financial information presented on a combined and consolidated basis for purposes of making operating decisions, allocating resources, and evaluating financial performance. In addition, all the Company’s revenues and long-lived assets are attributable primarily to operations in the United States and Puerto Rico for all periods presented.

COVID-19 Impact

COVID-19

Impact

The

COVID-19

on the Company’s operational and financial performance will depend on certain developments, including the duration and spread of the outbreak. As of September 30, 2022,

COVID-19

has not had a significant impact on the Company.

COVID-19

Impact

During the years ended December 31, 2021 and 2020, an outbreak of the novel coronavirus

(“COVID-19”)

had spread across the globe and had been declared a public health emergency by the World Health Organization and a National Emergency by the President of the United States. The

COVID-19

on the Company’s operational and financial performance will depend on certain developments,

including

the duration and spread of the outbreak. As of December 31, 2021,

COVID-19

has not had a significant impact on the Company.

Concentration of credit risk and Off-Balance Sheet Risk

Concentration of credit risk and

Off-Balance

Sheet Risk

Cash and cash equivalents and affiliate receivable are financial instruments that are potentially subject to concentrations of credit risk. See Note 13,

Related Party

off-balance-sheet

risk of loss.

Concentration of credit risk and

Off-Balance

Sheet Risk

Cash and cash equivalents and affiliate receivable are financial instruments that are potentially subject to concentrations of credit risk. See Note 11,

Related Party

off-balance-sheet

risk of loss.

Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

Restricted Cash consists of cash held in escrow related to the Prepaid Forward Agreement with CF. See Note 16,

Derivative Liability

, for more information on the Prepaid Forward Agreement.

Fair Value Measurements

The Company applies the provisions of Accounting Standards Codification (“ASC”) 820,

Fair Value Measurements

, for fair value measurements of financial assets and financial liabilities and for fair value measurements of

non-financial

items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company also applied the provisions of the subtopic to fair value measurements of

non-financial

assets and

non-financial

liabilities that are recognized or disclosed at fair value in the financial statements on a

non-recurring

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Quoted prices for similar assets and liabilities in active markets or inputs that are observable.

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

The Company’s investments in rights to claim recovery cash flows are carried at cost as noted in Note 4,

Asset Acquisitions.

Outstanding borrowings that qualify as financial instruments are carried at cost, which approximates their fair value as of September 30, 2022 and December 31, 2021.

Fair Value Measurements

The Company applies the provisions of ASC 820,

Fair Value Measurements

, for fair value measurements of financial assets and financial liabilities and for fair value measurements of

non-financial

items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company also applied the provisions of the subtopic to fair value measurements of

non-financial

assets and

non-financial

liabilities that are recognized or disclosed at fair value in the financial statements on a

non-recurring

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Quoted prices for similar assets and liabilities in active markets or inputs that are observable.

Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

The carrying amounts of the Company’s outstanding borrowings that qualify as financial instruments are carried at cost, which approximates their fair value as of December 31, 2021 and 2020.

The Company had an outstanding obligation to provide equity securities (a “short position”) as of December 31, 2020. The short position was classified as a liability,

marked-to-market

and was evaluated at Level 1 for fair value as disclosed in Note 12,

Investments in Equity Securities and Obligations to Deliver Securities.

Equity Method Investments

Property, Plant and Equipment

The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows:


Office and Computer Equipment		3 years
Furniture and Fixtures		3 years
Leasehold Improvements		Lesser of lease term or estimated life

Property, Plant and Equipment

The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows:


Office and Computer Equipment		3 years
Furniture and Fixtures		3 years
Leasehold Improvements		Lesser of lease term or estimated life

Internal Use Software

Internal-use

Internal Use Software

Internal-use

Intangible assets

The Company amortizes capitalized costs associated with CCRAs over 8 years, based on the typical expected timing to pursue recovery through litigation, including through potential appeals.

Intangible assets (CCRAs)

The Company amortizes capitalized costs associated with CCRAs over 8 years, based on the typical expected timing to pursue recovery through litigation, including through potential appeals.

Investment in rights to claim recovery cash flows

Leases

Operating Leases

, for more information.

Leases

Leases entered into by the Company, in which substantially all the benefits and risk of ownership are transferred to the Company, are recorded as obligations under capital leases. Obligations under capital leases, if any, reflect the present value of future lease payments, discounted at an appropriate interest rate, and are reduced by rental payments, net of imputed interest. Assets under capital leases are amortized based on the useful lives of the assets. All other leases are classified as operating leases, and leasing costs, including any rent holidays, leasehold incentives and rent concessions, are recorded on a straight-line basis over the lease term under general and administrative expense in the combined and consolidated statements of operations. See Note 6,

Operating Lease

, for more information.

Impairment of Long-Lived Assets

Claims Recovery

Claims recovery income

When the Company becomes entitled to proceeds from the settlement of a claim recovery pursuit or proceeding, it recognizes the amount in accounts receivable.

Claims recovery service income, ASC 606, Revenue from Contracts with Customers

Asset Acquisitions

The Company applies ASC 606 utilizing the following allowable exemptions or practical expedients:

•

Exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less.

•

Election to present revenue net of sales taxes and other similar taxes, if any.

•

Claims Recovery

The Company’s primary income-producing activities are associated with the pursuit and recovery of proceeds related to claims recovery rights that the Company obtains through CCRAs, in which it becomes the owner of those rights. As such, such income is not generated from the transfer of control of goods or services to customers, but through the proceeds realized from perfection of claims recoveries from rights the Company holds outright. The Company also generates revenue by providing claims recovery services to other entities outside of the Company.

Claims recovery income

When the Company becomes entitled to proceeds from the settlement of a claim recovery pursuit or proceeding, it recognizes the amount in accounts receivable.

Claims recovery service income, ASC 606, Revenue from Contracts with Customers

The Company derives revenues from contracts with customers primarily from claims recovery services arrangements (“claims recovery services”). Claims recovery services include services to related parties or third parties to assist those entities with pursuit of claims recovery rights. The Company has determined it has a single performance obligation for the series of daily activities that comprise claims recovery services, which are recognized over time using a time-based progress measure and are typically based on 1) budgeted expenses for the current month with an adjustment for the variance between budget and actual expenses from the prior month or 2) on a contingent basis dependent on actual settlements or resolved litigation. Amounts estimated and recognized, but not yet fully settled or resolved as part of litigation are recognized as contract assets. There were no contract assets at December 31, 2021 or December 31, 2020, as amounts associated with unresolved litigation were fully constrained.

The Company applies ASC 606 utilizing the following allowable exemptions or practical expedients:

•

Exemption to not disclose the unfulfilled performance obligation balance for contracts with an original length of one year or less.

•

Election to present revenue net of sales taxes and other similar taxes, if any.

•

Transfers of Claims Cost Recovery Rights to Others

in-kind

contributions to equity method investees, or other types of arrangements.

Transfers of Claims Cost Recovery Rights to Others

in-kind

contributions to equity method investees, or other types of arrangements.

Cost of Claims Recoveries

Claims amortization expense

, Intangible Assets, Net

Income Taxes

“push-out”

Recent Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

ASU

2019-12,

Simplifying the Accounting for Income Taxes (Topic 740)

. In December 2019, the FASB issued ASU

2019-12,

Simplifying the Accounting for Income Taxes (Topic 740)

step-up

ASU

2020-04,

Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

. In March 2020, the FASB issued ASU

2020-04,

Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

ASU

2020-06,

Debt — Debt With Conversion and Other Options (Subtopic

470-20)

and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic

815-

40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

. On August 5, 2020, the FASB issued ASU

2020-06,

Debt — Debt with Conversion and Other Options (Subtopic

470-20)

and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic

815-40):

Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity

December 15, 2021

. Early adoption is permitted. The Company adopted this guidance on January 1, 2022 and it had no material impact on our condensed consolidated financial statements.

ASU

2022-03,

Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

. On June 30, 2022, the FASB issued ASU

2022-03,

Fair Value Measurement (Topic 820)—Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions

June 2022

Asset Acquisitions

New Accounting Pronouncements Issued but Not Yet Adopted

In February 2016, the FASB issued ASU

2016-02,

Leases

2018-10

, Codification Improvements to ASC

2016-02

Leases

, was issued to provide more detailed guidance and additional clarification for implementing ASU

2016-02.

Furthermore, in July 2018, the FASB issued ASU

2018-11,

Leases: Targeted Improvements

2020-03,

Codification Improvements to Financial Instruments, Leases

, was issued to provide more detailed guidance and additional clarification for implementing ASU

2016-02.

Additionally, on June 3, 2020, the FASB deferred by one year the effective date of the new leases standard for private companies, private

not-for-profits

and public

not-for-profits

that have not yet issued (or made available for issuance) financial statements reflecting the new standard. Furthermore, in June 2020, ASU

2020-05,

Revenue from Contracts with Customers and Leases

ASU

2016-13,

Financial Instruments –

Credit Losses (Topic 326): Measurement of Credit Losses

. In 2016 and subsequently, the FASB issued ASU

2016-13,

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments including subsequent amendments to the initial guidance

: ASU

2019-04,

Codification Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825. Financial Instruments, ASU

2019-05,

Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief,

ASU

2019-11,

Codification Improvements to Topic 326, Financial Instruments - Credit Losses

. ASU 326, and ASU

2022-02,

Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures

Recent Accounting Pronouncements

New Accounting Pronouncements Recently Adopted

ASU

2018-15,

Intangibles-Goodwill and

Other—Internal-Use

Software (Subtopic

350-40)—Customer’s

Accounting

for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract

. In August 2018, the FASB issued ASU

2018-15,

Intangibles-Goodwill and

Other—Internal-Use

Software (Subtopic

350-

40)—Customer’s

Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract.

internal-use

software (and hosting arrangements that include an

internal-use

ASU

2018-13,

Fair Value Measurement (Topic 820): Disclosure Framework—Change to the Disclosure

Requirements for Fair Value Measurement

. In August 2018, the FASB issued ASU

2018-13,

Fair Value Measurement

(Topic 820): Disclosure Framework—Change to the Disclosure Requirements for Fair Value Measurement

New Accounting Pronouncements Issued but Not Yet Adopted

In February 2016, the FASB issued ASU

2016-02,

Leases

2018-10

, Codification Improvements to ASC

2016-02

Leases

, was issued to provide more detailed guidance and additional clarification for implementing ASU

2016-02.

Furthermore, in July 2018, the FASB issued ASU

2018-11,

Leases: Targeted Improvements

2020-03,

Codification Improvements to Financial Instruments, Leases

, was issued to provide more detailed guidance and additional clarification for implementing ASU

2016-02.

Additionally, on June 3, 2020, the FASB deferred by one year the effective date of the new leases standard for private companies, private

not-for-profits

and public

not-for-profits

that have not yet issued (or made available for issuance) financial statements reflecting the new standard. Furthermore, in June 2020, ASU

2020-05,

Revenue from Contracts with Customers and Leases

ASU

2016-13,

Financial Instruments –

Credit Losses (Topic 326): Measurement of Credit Losses

. In 2016, the FASB issued ASU 2016—13,

Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on

Financial Instruments including subsequent amendments to the initial guidance

: ASU

2019-04,

Codification

Improvements to Topic 326, Financial Instruments-Credit Losses, Topic 815, Derivatives and Hedging, and

Topic

825. Financial Instruments, ASU

2019-05,

Financial Instruments—Credit Losses (Topic 326): Targeted

Transition Relief

and ASU

2019-11,

Codification Improvements to Topic 326, Financial Instruments—Credit Losses

ASU

2019-12,

Simplifying the Accounting for Income Taxes (Topic 740)

. In December 2019, the FASB issued ASU

2019-12,

Simplifying the Accounting for Income Taxes (Topic 740)

step-up

ASU

2020-04,

Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on

Financial Reporting

. In March 2020, the FASB issued ASU

2020-04,

Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting

. The amendments in this Update provide optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. This standard is effective for all entities as of March 12, 2020 through December 31, 2022. Early adoption is permitted. The Company is currently evaluating the effect that implementation of this standard will have on the Company’s combined and consolidated operating results, cash flows, financial condition and related disclosures.

ASU

2020-06,

Debt — Debt With Conversion and Other Options (Subtopic

470-20)

and Derivatives and Hedging

— Contracts in Entity’s Own Equity (Subtopic

815-

40): Accounting for Convertible Instruments and Contracts in an

Entity’s Own Equity

. On August 5, 2020, the FASB issued ASU

2020-06,

Debt — Debt with Conversion and Other Options

(Subtopic

470-20)

and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic

815-40):

Accounting for

Convertible Instruments and Contracts in an Entity’s Own Equity

Description of Business (Tables)

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Summary of Entity Name and Adopted Method


Entity Name		Method

MSP Recovery of Puerto Rico LLC (Puerto Rico)		Combined

MDA Series, LLC		Combined

MSP Recovery, LLC		Combined

MAO-MSO Recovery LLC Series FHCP		Consolidated (non-wholly owned)

MSP Recovery Services, LLC		Combined

MSPA Claims 1, LLC		Consolidated (wholly owned)

MSP National, LLC		Consolidated (wholly owned)

MSP Recovery Claims Prov Series LLC		Combined

MSP Recovery Claims CAID Series LLC		Combined

MSP WB LLC		Combined

MSP Recovery Claims HOSP Series LLC		Combined

MSP Productions, LLC		Combined

MSP Recovery Claims HP, Series LLC		Combined

MSP Recovery Claims COM, Series LLC		Combined

Basis of Presentaton and Summary of Significant Accounting Policies (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Accounting Policies [Abstract]

Summary of disclosure in tabular form of useful lives of property plant and useful lives

The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows:


Office and Computer Equipment		3 years
Furniture and Fixtures		3 years
Leasehold Improvements		Lesser of lease term or estimated life

The Company provides for depreciation and amortization on property and equipment using the straight-line method to allocate the cost of depreciable assets over their estimated lives as follows:


Office and Computer Equipment		3 years
Furniture and Fixtures		3 years
Leasehold Improvements		Lesser of lease term or estimated life

Investment In Equity Method Investees (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

Disclosure In Tabular Form Of Summarized Financial Information Of Equity Method Investees

Summary financial information for equity accounted investees, not adjusted for the percentage ownership of the Company is as follows:


	For the three months ended,						For the nine months ended,
Series PMPI (in thousands)	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021
Revenue	$	16			—			16			1
Amortization		500			500			1,500			1,500
Other expenses		8			—			8			—
Profit (Loss)	$	(492	)		(500	)		(1,492	)		(1,499	)


Series PMPI (in thousands)	September 30, 2022		December 31, 2021
Total Assets	$	3,841		5,390
Total Liabilities	$	274		266

Summary financial information for equity accounted investees, not adjusted for the percentage ownership of the Company is as follows (in thousands):


Series PMPI	Revenue		Amortization		Other expenses		Profit (Loss)
For the year ended December 31, 2021	$	1	$	2,000	$	—	$	(1,999	)
For the year ended December 31, 2020	$	34	$	2,000	$	20	$	(1,986	)

Series PMPI					Total Assets		Total Liabilities
As of December 31, 2021					$	5,390	$	266
As of December 31, 2020					$	7,393	$	270

Property, plant and equipment, net (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment [Table Text Block]

Property, plant and equipment, net consist of the following:


(In thousands)	September 30, 2022			December 31, 2021
Office and computer equipment	$	416		$	356
Leasehold improvements		113			113
Internally developed software		2,944			1,020
Other software		67			66

Property, plant and equipment, gross	$	3,540		$	1,555
Less: accumulated depreciation and amortization of software		(1,060	)		(805	)

Property, plant and equipment, net	$	2,480		$	750

Property, plant and equipment, net consist of the following (in thousands):


	December 31,
	2021			2020
Office and computer equipment	$	356		$	305
Leasehold improvements		113			113
Internally developed software		1,020			589
Other software		66			67
Property, plant and equipment, gross	$	1,555		$	1,074
Less: accumulated depreciation and amortization of software		(805	)		(462	)
Property, plant and equipment, net	$	750		$	612

Intangible Assets, Net (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Summary Of Intangible Assets Net

Intangible assets, net consists of the following:


(in thousands)	September 30, 2022			December 31, 2021
Intangible assets, gross	$	2,171,174		$	84,955
Accumulated amortization		(93,603	)		(737	)

Net	$	2,077,571		$	84,218

Intangible assets, net consists of the following (in thousands):


	December 31, 2021
	CCRAs
Gross	$	84,955
Accumulated amortization		(737	)
Net	$	84,218


	December 31, 2020
	CCRAs
Gross	$	1,000
Accumulated amortization		(573	)
Net	$	427

Schedule Of Expected Future Amortization Expense Of Intangible Assets

Future amortization for CCRAs is expected to be as follows:


(in thousands)	CCRAs Amortization
2022 (remaining)	$	67,849
2023		271,397
2024		271,324
2025		271,272
2026		271,272
Thereafter		924,457

Total	$	2,077,571

Future amortization for CCRAs is expected to be as follows (in thousands):


2022		10,620
2023		10,620
2024		10,547
2025		10,495
2026		10,495
Thereafter		331,441
Total	$	84,218

Operating Leases (Tables)

9 Months Ended

12 Months Ended

Sep. 30, 2022

Dec. 31, 2021

Leases [Abstract]

Schedule Of Future Minimum Lease Payments Under Non-cancelable Operating Leases

The future minimum lease payments under

non-cancelable

operating leases as of September 30, 2022 for the next five years and thereafter are as follows:


(In thousands)	Lease Payments
Year Ending December 31,
2022 (remaining)	$	58
2023 (1)		217

Total	$	275

(1)	Operating lease expires before or during the year ending December 31, 2023

The future minimum lease payments under

non-cancelable

operating leases as of December 31, 2021 for the next five years and thereafter are as follows (in thousands):


Year Ending December 31,	Lease Payments
2022	$	231
2023(1)		217
Total	$	448

(1) Operating lease expires before or during the year ending December 31, 2023

Noncontrolling Interest (Tables)

9 Months Ended

Sep. 30, 2022

Noncontrolling Interest [Abstract]

Summary of Ownership Units

The following table summarizes the ownership of Units in the Company as of September 30, 2022:


	Common Units		Ownership Percentage
Ownership of Class A Common Units		72,909,609		2.3	%
Ownership of Class V Common Units		3,148,720,212		97.7	%

Balance at end of period		3,221,629,821		100.0	%

Net Loss Per Common Share (Tables)

9 Months Ended

Sep. 30, 2022

Earnings Per Share [Abstract]

Schedule of Computation of Basic and Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share of Class A common stock:


(In thousands except shares and per share amounts)	Three months ended September 30, 2022			Nine months ended September 30, 2022
Numerator - basic and diluted:
Net loss	$	(27,060	)	$	(118,075	)
Less: Net loss attributable to MSP Recovery, LLC pre Business Combination		—			28,639
Less: Net loss attributable to the noncontrolling interest post Business Combination	$	26,597		$	87,685

Net loss attributable to common shareholders	$	(463	)	$	(1,751	)
Denominator - basic and diluted:
Weighed-average shares of Class A common stock outstanding		69,036,899			53,138,474
Earnings per share of Class A common stock - basic and diluted	$	(0.01	)	$	(0.03	)

Description of Business - Summary of Entity Name and Adopted Method (Detail)	12 Months Ended
	Dec. 31, 2021
MSP Recovery Puerto Rico [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Combined
MDA Series LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Combined
MSP Recovery LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Combined
MAO MSC Recovery LLC Series FHCP [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Consolidated (non-wholly owned)
MSP Recovery Services LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Combined
MSPA Claims One LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Consolidated (wholly owned)
MSP National LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Consolidated (wholly owned)
MSP Recovery Claims Prov Series LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Combined
MSP Recovery Claims CAID Series LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Combined
MSP WB LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Combined
MSP Recovery Claims HOSP Series LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Combined
MSP Productions LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Combined
MSP Recovery Claims HP Series LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Combined
MSP Recovery Claims COM Series LLC [Member]
Disclosure In Tabular Form Of The Method Adopted By The Companies In Preparing And Consolidating The Financial Statements [Line Items]
Description Of Method Used In Preparing Financial Statements	Combined

Description of Business - Additional Information (Detail) - USD ($)
$ / shares in Units, $ in Thousands

9 Months Ended

Jun. 16, 2022

Sep. 30, 2022

May 23, 2022

May 17, 2022

Dec. 31, 2021

Sep. 27, 2021

Jul. 11, 2021

Dec. 31, 2020

Life Wallet LLC [Member] | Advertising Costs Commitment [Member]

$ 32,660

^[1]

$ 13,304

^[1]

$ 54

Other commitments remainder of fiscal year

1,700

John H. Ruiz and Frank C [Member] | Promissory Notes [Member]

Aggregate principal amount

$ 112,800

Interest rate

4.00%

Debt instrument, maturity term

4 years

MSP Recovery Law Firm [Member]

Payment of advances

$ 36,500

Cantor Fitzgerald [Member] | Common Stock Purchase Agreement [Member]

31,900

Percentage of volume of weighted average price of common stock to sell under purchase agreement

98.00%

Prudent Group [Member] | Assignment Agreement And Services Agreement [Member]

Maximum monetize amount of net recovery interest in claim demand

$ 250,000

Percentage of amount paid on claim

90.00%

Virage Capital Management LP [Member] | Investment Capacity Agreement [Member]

Maximum amount of paid amount purchasable pursuant to Agreement

$ 3,000,000

Percentage of recoveries payable to assignor

50.00%

Percentage of recoveries from the assignor

50.00%

Membership Interest Purchase Agreement [Member]

Common stock units issued or issuable pursuant to business combination

3,250,000,000

Common stock units to be deposited in the escrow account

6,000,000

Membership Interest Purchase Agreement [Member] | Other Current Assets [Member]

Business combination acquisition costs not expensed

13,300

Investment Capacity Agreement [Member] | Virage Capital Management LP [Member]

Maximum amount of paid amount purchasable pursuant to Agreement

$ 3,000,000

Percentage of recoveries payable to assignor

50.00%

Percentage of recoveries from the assignor

50.00%

Servicing Agreement [Member] | Virage Recovery Master LP [Member]

Reserved for the payment of service fees

$ 30,700

Servicing Agreement [Member] | Prudent Group [Member]

Percentage of annual return on amount paid for net recovery proceeds

18.00%

Class V Common Stock [Member] | Non Economic Voting Shares [Member]

Class V Common Stock [Member] | Non Economic Voting Shares [Member] | Lion Heart [Member]

$ 0.0001

Common Class B [Member] | Non Economic Voting Shares [Member] | Opco [Member]

$ 0.0001

$ 0.0001

Common Class A [Member] | Cantor Fitzgerald [Member] | Common Stock Purchase Agreement [Member]

$ 0.0001

Option to sell maximum shares value under purchase agreement

$ 1,000,000

[1]

Basis of Presentaton and Summary of Significant Accounting Policies - Summary Of Disclosure In Tabular Form Of Useful Lives Of Property Plant And Useful Lives (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Dec. 31, 2021
Office And Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	3 years	3 years
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Useful Life	3 years	3 years
Leaseholds and Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives		Lesser of lease term or estimated life
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Estimated Useful Lives	Lesser of lease term or estimated life

Basis of Presentaton and Summary of Significant Accounting Policies - Additional Information (Detail)

3 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2022

USD ($)

Sep. 30, 2021

USD ($)

^[1]

Sep. 30, 2022

USD ($)

SEGMENT

Sep. 30, 2021

USD ($)

Dec. 31, 2021

USD ($)

SEGMENT

Dec. 31, 2020

USD ($)

Number of operating segments | SEGMENT

Equity Method Investments

$ 0

Finite lived intangible assets useful lives

8 years

Impairment of long lived assets

$ 0

Specific Contract [Member]

5,748,000

^[1]

$ 2,439,000

$ 17,795,000

^[1]

$ 9,213,000

^[1]

14,500,000

^[2]

$ 13,632,000

^[2]

Up-C Unit Holders [Member] | Class A Common Stock [Member]

$ 5,000,000

Non-controlling interests ownership percentage

99.76%

Class V Shareholders [Member] | Class A Common Stock [Member]

Non-controlling interests ownership percentage

97.70%

ASU 2019-12

Change in accounting principle, accounting standards update, adopted [true false]

true

Change in accounting principle, accounting standards update, adoption date

Jan. 01, 2022

Change in accounting principle, accounting standards update, immaterial effect [true false]

true

ASU 2020-04

Change in accounting principle, accounting standards update, adopted [true false]

true

Change in accounting principle, accounting standards update, adoption date

Jan. 01, 2022

Change in accounting principle, accounting standards update, immaterial effect [true false]

true

ASU 2020-06

Change in accounting principle, accounting standards update, adopted [true false]

true

Change in accounting principle, accounting standards update, adoption date

Jan. 01, 2022

Change in accounting principle, accounting standards update, immaterial effect [true false]

false

ASU 2022-03

Change in accounting principle, accounting standards update, adopted [true false]

true

Change in accounting principle, accounting standards update, adoption date

Jun. 30, 2022

Change in accounting principle, accounting standards update, immaterial effect [true false]

false

Change in accounting principle, accounting standards update, early adoption [true false]

true

Virage Recovery Master LP [Member] | Servicing Agreement [Member]

Reserved for the payment of service fees

$ 30,700,000

Minimum [Member]

Equity method ownership percentage for entities that track separate capital accounts

3.00%

Minimum [Member] | Equity Method Investment Investee [Member]

Equity method investments ownership percentage

20.00%

Maximum [Member]

Equity method ownership percentage for entities that track separate capital accounts

5.00%

Maximum [Member] | Equity Method Investment Investee [Member]

Equity method investments ownership percentage

20.00%

Fair Value, Inputs, Level 2 [Member]

Liabilities at fair value

Assets at fair value

$ 0

Fair Value, Inputs, Level 3 [Member]

Liabilities at fair value

Assets at fair value

$ 0

[1]	For the three and nine months ended September 30, 2022 and 2021, claims recovery service income included $0 million and $10.6 million, respectively, and $1.7 million and $7.0 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM MSP”). See Note 13, Related Party, for further details.
[2]	For the years ended December 31, 2021 and 2020, claims recovery service income included $11.5 million and $13.1 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM”). See Note 11, Related Party, for further details.

Business Combination - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands			3 Months Ended	9 Months Ended
	May 27, 2022	May 23, 2022	Sep. 30, 2022	Sep. 30, 2022
Business Acquisition [Line Items]
Change in fair value of warrant liability				$ 1,619
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 0.0001	$ 0.0001
Period of new warrants exercisable closing date				30 days
Warrant [Member]
Business Acquisition [Line Items]
Class of warrants or rights exercisable period				10 days
Tax Receivable Agreement [Member]
Business Acquisition [Line Items]
Percentage of pay sellers to amount of tax benefit				85.00%
Nomura Promissory Note [Member]
Business Acquisition [Line Items]
Principal amount of unsecured promissory note	$ 24,500
Maturity date	May 29, 2023
Debt description				On the maturity date, the Company is required to pay Nomura an amount in cash equal to the outstanding principal amount, plus accrued and unpaid interest, plus any other obligations then due or payable under the promissory note. Upon two days prior written notice to Nomura, the Company may prepay all or any portion of the then outstanding principal amount under the promissory note together with all accrued and unpaid interest thereon.
Common Class A [Member]
Business Acquisition [Line Items]
Change in fair value of warrant liability			$ 3,700	$ 1,600
Class of Warrant or Right, Exercise Price of Warrants or Rights			$ 11.5	$ 11.5
Business combination units issued		3,250,000,000
Warrant, exercise price, decrease per share		$ 0.0001
Warrants exercised			11,800,000	11,800,000
Period of subject to certain ant dilution adjustments exercisable				30 days
Dividend comprising number of new warrants payable holders				1,028,000,000
Subject to certain ant dilution adjustments exercisable term				5 years
Warrants issued			7,900,000	7,900,000
Common Class A [Member] \| Canceled Units [Member]
Business Acquisition [Line Items]
Business combination units issued		95,526,708
Common Class A [Member] \| UPC Units [Member]
Business Acquisition [Line Items]
Business combination units issued		50,022,000
Common Class A [Member] \| Warrant [Member]
Business Acquisition [Line Items]
Business combination transaction, assumed liability		$ 12,500
Common Class A [Member] \| Membership Interest Purchase Agreement [Member]
Business Acquisition [Line Items]
Business combination units issued		3,154,473,292
Business combination, share price per share		$ 0.0001
Business combination, direct and incremental costs		$ 80,600
Common Class A [Member] \| Forced Expiratory Flow Shares [Member]
Business Acquisition [Line Items]
Net proceeds in business combination		$ 23,400
Common Stock [Member]
Business Acquisition [Line Items]
Exchange of stock units to common stock				5,753,080

Asset Acquisitions - Additional Information (Detail) - USD ($) shares in Millions, $ in Millions	May 23, 2022	Sep. 30, 2022
Series MRCS LLC [Member] \| Claims Cost Recovery Agreements
Business Acquisition [Line Items]
Number of Up C units issued in exchange of assets acquired	196.6
Finite life intangible assets acquired useful life	8 years
Series MRCS LLC [Member] \| Claims Cost Recovery Agreements \| Common Class A [Member]
Business Acquisition [Line Items]
Percentage of discount on shares lack of marketability	4.50%
Vrm Msp Recovery Partners Llc \| Investment In Rights To Claim Recovery Cash Flows [Member]
Business Acquisition [Line Items]
Number of Up C units issued in exchange of assets acquired	356.8
Percentage of discount on shares lack of marketability	4.50%
VRM [Member]
Business Acquisition [Line Items]
Number of Up C units issued in exchange of assets acquired	65.0
VRM [Member] \| Reserved Shares [Member]
Business Acquisition [Line Items]
Annual compounded return percentage on contribution	20.00%
Value of full return		$ 752.5

Investment In Equity Method Investees - Summary of Financial Information For Equity Accounted Investees (Detail) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2022

Sep. 30, 2021

Sep. 30, 2022

Sep. 30, 2021

Dec. 31, 2021

Dec. 31, 2020

Disclosure In Tabular Form Of Summarized Financial Information Of Equity Method Investees [Line Items]

Profit (Loss)

$ (27,060)

$ (10,259)

$ (118,075)

^[1]

$ (23,411)

^[1]

$ (33,077)

$ (24,266)

Total Assets

6,574,675

104,006

17,843

Total Liabilities

1,181,066

255,414

133,690

Equity Method Investee [Member]

Disclosure In Tabular Form Of Summarized Financial Information Of Equity Method Investees [Line Items]

Revenue

Amortization

500

1,500

2,000

Other expenses

Profit (Loss)

(492)

$ (500)

(1,492)

$ (1,499)

(1,999)

(1,986)

Total Assets

3,841

5,390

7,393

Total Liabilities

$ 274

$ 266

$ 270

[1]	Balances include related party transactions. See Note 13, Related Party, for further details.

Sum of the carrying amounts as of the balance sheet date of all assets that are recognized. Assets are probable future economic benefits obtained or controlled by an entity as a result of past transactions or events.

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Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

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Investment In Equity Method Investees - Additional Information (Detail) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2022 USD ($) INVESTMENT	Dec. 31, 2021 USD ($)	Dec. 31, 2020 USD ($)
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	$ 0	$ 0
Number of holding investments \| Investment \| INVESTMENT	3
PMPI [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	$ 0	$ 0	$ 0
Percentage of preferred return for the controlling	20.00%	20.00%	20.00%
Percentage of recovery claims for the controlling	50.00%	50.00%	50.00%
Percentage of costs allocated to non controlling	100.00%	100.00%	100.00%
MAO [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	$ 0	$ 0	$ 0
Equity method investment ownership percentage	50.00%	50.00%	50.00%
MSO [Member]
Schedule of Equity Method Investments [Line Items]
Equity Method Investments	$ 0	$ 0	$ 0
Equity method investment ownership percentage	50.00%	50.00%	50.00%

Property, plant and equipment, net (Detail) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 3,540	$ 1,555	$ 1,074
Less: accumulated depreciation and amortization of software	(1,060)	(805)	(462)
Property, Plant and Equipment, Net	2,480	750	612
Office and computer equipment
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	416	356	305
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	113	113	113
Internally developed software
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	2,944	1,020	589
Other software
Property, Plant and Equipment [Line Items]
Property, Plant and Equipment, Gross	$ 67	$ 66	$ 67

Property, plant and equipment, net (Parenthetical) (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense	$ 103	$ 89	$ 254	$ 256	$ 343	$ 235
Software Development [Member]
Property, Plant and Equipment [Line Items]
Depreciation and amortization expense					$ 343	$ 235

Intangible Assets, Net - Summary Of Intangible Assets Net (Detail) - Claims Cost Recovery Rights [Member] - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Finite-Lived Intangible Assets [Line Items]
Gross	$ 2,171,174	$ 84,955	$ 1,000
Accumulated amortization	(93,603)	(737)	(573)
Total	$ 2,077,571	$ 84,218	$ 427

Intangible Assets, Net - Schedule Of Expected Future Amortization Expense Of Intangible Assets (Detail) - Claims Cost Recovery Rights [Member] - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Finite Lived Intangible Assets Future Amortization Expense [Line Items]
Remaining 2022	$ 67,849
2022 and 2023	271,397	$ 10,620
2023 and 2024	271,324	10,620
2024 and 2025	271,272	10,547
2025 and 2026	271,272	10,495
2026		10,495
Thereafter	924,457
Thereafter		331,441
Total	$ 2,077,571	$ 84,218	$ 427

Intangible Assets, Net - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020
Notes Payable Due June One Two Thousand And Twenty Three [Member]
Intangible Assets, Net [Line Items]
Maturity date					Jun. 01, 2030
Interest rate					2.00%
Claims Cost Recovery Rights [Member]
Intangible Assets, Net [Line Items]
Intangible assets paid for with cash					$ 150
Amortization expense	$ 66,000	$ 47	$ 92,500	$ 114	164	$ 125
Purchase of CCRAs					84,000
Issuance of notes payable					$ 500
Issuance Value Of Shares	10,000		10,000
Claims Cost Recovery Rights [Member] \| Series MRCS LLC [Member]
Intangible Assets, Net [Line Items]
Finite-lived Intangible Assets Acquired	48,200
Additional Finite Lived Intangible Assets Acquired	12,700
Payments to Acquire Businesses, Gross			2,700
Minimum Required Issuance Value Within One Year To Avoid Additional Cash Or Equity Payments	10,000		10,000
Difference Between Fair Value And Issuance Value Of Shares	8,700		8,700
Claims Cost Recovery Rights [Member] \| Series MRCS LLC [Member] \| Common Class A [Member]
Intangible Assets, Net [Line Items]
Business Acquisition, Equity Interest Issued or Issuable, Value Assigned	$ 10,000		$ 10,000

Operating Leases - Schedule Of Future Minimum Lease Payments Under Non-cancelable Operating Leases (Detail) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021
Lessee, Operating Lease, Liability, Payment, Due [Abstract]
Remaining 2022	$ 58
2022 and 2023	217	$ 231
2023		217
Total	$ 275	$ 448

Operating Leases - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020
Leases [Abstract]
Rent expense	$ 194	$ 178	$ 579	$ 582	$ 800	$ 1,500
Lease expiration period			November 2023		November 2023

Variable Interest Entities - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Sep. 30, 2021	Dec. 31, 2020
Variable Interest Entity [Line Items]
Assets	$ 6,574,675	$ 104,006		$ 17,843
Liabilities	1,181,066	255,414		133,690
Variable Interest Entity, Primary Beneficiary [Member]
Variable Interest Entity [Line Items]
Assets		9,700		9,700
Liabilities		122,700		95,100
Variable Interest Entity, Not Primary Beneficiary [Member]
Variable Interest Entity [Line Items]
Assets	3,800	5,400	$ 5,400	7,400
Liabilities	$ 300	$ 300	$ 300	$ 300

Claims Financing Obligations and Notes Payable - Additional Information (Detail) - USD ($)	3 Months Ended	9 Months Ended	12 Months Ended
	Sep. 30, 2022	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Claims Financing Obligations and Notes Payable [Line Items]
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 0.0001	$ 0.0001
Gain (Loss) on Extinguishment of Debt	$ 63,400,000	$ 63,367,000
Warrant [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Liability Related To Remaining Amounts Due	$ 80,000,000	80,000,000
Option To Repurchase Of Warrants		$ 80,000,000
Common Class A [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Common stock, shares authorized	5,500,000,000	5,500,000,000
Common stock	$ 7,000	$ 7,000
Common stock par or stated value per share	$ 0.0001	$ 0.0001
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 11.5	$ 11.5
Claims Proceeds Investment Agreement [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Shares Pledged Under Agreement	50,000,000	50,000,000
Claims Proceeds Investment Agreement [Member] \| Warrant [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Percentage Of Shares Obtained Through Warrant	15.00%	15.00%
Warrants and Rights Outstanding	$ 80,000,000	$ 80,000,000
Class of Warrant or Right, Exercise Price of Warrants or Rights	$ 1.2	$ 1.2
Interest On Principal Amount Of Agreement	10.00%	10.00%
Claims Proceeds Investment Agreement [Member] \| Common Class A [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Common stock, shares authorized	66,666,666	66,666,666
Common stock	$ 6,666.67	$ 6,666.67
Common stock par or stated value per share	$ 0.0001	$ 0.0001
PPP Loan [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Debt instrument, Face amount	$ 1,086,000	$ 1,086,000		$ 1,086,000
Debt instrument, Interest rate, Stated percentage				1.00%
Debt instrument, Term			2025 years	2022 years
Long-term debt, Gross				$ 1,043,000
Financing Obligations and Notes Payable Agreements [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Line of credit facility, Maximum borrowing capacity	$ 172,300,000	172,300,000	$ 201,400,000	90,500,000
Interest expense, Debt		$ 1,500,000	$ 94,500,000	$ 67,500,000
Weighted average interest rate	5.80%	5.80%	22.00%
Line of credit facility, Current borrowing capacity	$ 172,300,000	$ 172,300,000	$ 201,400,000
Financing Obligations and Notes Payable Agreements [Member] \| Minimum [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Line of credit facility, Interest rate during period		2.00%	2.00%
Financing Obligations and Notes Payable Agreements [Member] \| Maximum [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Line of credit facility, Interest rate during period			11.00%
Financing Obligations and Notes Payable Agreements [Member] \| Maximum [Member] \| Previously Reported [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Line of credit facility, Interest rate during period			30.00%
Nonrecourse Required Payments [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Repayments of lines of credit			$ 117,500,000
Minimum Required Payment [Member]
Claims Financing Obligations and Notes Payable [Line Items]
Repayments of lines of credit	$ 330,500,000		$ 368,000,000

Noncontrolling Interest - Summarizes the ownership of Units (Details) - UP-C Units [Member]	Sep. 30, 2022 shares
Noncontrolling Interest [Line Items]
Common units issued	3,221,629,821
Ownership percentage	100.00%
Class A Common Units [Member]
Noncontrolling Interest [Line Items]
Common units issued	72,909,609
Ownership percentage	2.30%
Class V Common Units [Member]
Noncontrolling Interest [Line Items]
Common units issued	3,148,720,212
Ownership percentage	97.70%

Noncontrolling Interest - Additional Information (Detail) - USD ($) $ in Thousands	Sep. 30, 2022	Dec. 31, 2021	Dec. 31, 2020
Noncontrolling Interest [Line Items]
Non-controlling interest	$ 5,213,812	$ 4,348	$ 4,332
UP-C Units [Member]
Noncontrolling Interest [Line Items]
Common unit exchange value	5,800
MAOMSO Recovery LLC Series FHCP [Member] \| MSP Recovery LLC [Member]
Noncontrolling Interest [Line Items]
Non-controlling interest	$ 4,300	$ 4,300
Percentage of entitled preferred return by non-controlling member	20.00%
Entitled claims recover percentage by non-controlling member	80.00%
Percentage of non-controlling member allocated cost	100.00%

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which is directly or indirectly attributable to that ownership interest in subsidiary equity which is not attributable to the parent (that is, noncontrolling interest, previously referred to as minority interest).

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Members' Equity and Non-controlling Interest - Additional Information (Detail) - MAOMSO Recovery LLC Series FHCP [Member] - MSP Recovery LLC [Member]	Dec. 31, 2021
Members Equity and Noncontrolling Interest [Line Items]
Non-controlling interest, Ownership percentage by non-controlling owners	100.00%
Minimum [Member]
Members Equity and Noncontrolling Interest [Line Items]
Non-controlling interest, Ownership percentage by non-controlling owners	20.00%
Maximum [Member]
Members Equity and Noncontrolling Interest [Line Items]
Non-controlling interest, Ownership percentage by non-controlling owners	80.00%

Commitments And Contingency - Additional Information (Details)	9 Months Ended
	Sep. 30, 2022
Commitments and Contingencies Disclosure [Abstract]
Percentage of expected recoveries arise from claims under Medicare Secondary Payer Act	88.00%

Related Party - Additional Information (Detail) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2022

Sep. 30, 2021

Sep. 30, 2022

Sep. 30, 2021

Dec. 31, 2021

Dec. 31, 2020

$ 5,748

^[1]

$ 2,439

^[1]

$ 17,795

^[1]

$ 9,213

^[1]

$ 14,500

^[2]

$ 13,632

^[2]

General and Administrative Expense [Member]

32,660

^[3]

32,660

^[3]

13,304

^[3]

Unsecured Promissory Notes [Member]

150

400

111

773

Interest expense

1,300

1,500

Funds Held For Other Entities [Member]

Note payable related party

500

Funds Held For Other Entities [Member] | Affiliate Payable [Member]

Due to related party current

19,800

39,700

38,800

MSP Recovery Law Firm [Member]

31,900

MSP Recovery Law Firm [Member] | Professional Fees Legal [Member]

271

MSP Recovery Law Firm [Member] | Professional Fees Legal [Member] | Common Class A [Member]

4,600

5,000

MSP Recovery Law Firm [Member] | Unsecured Promissory Notes [Member]

20,100

Proceeds from promissory notes

36,500

MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Common Class A [Member]

31,900

$ 31,900

Common stock shares issued

8,022,000

MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Professional Fees Legal [Member]

MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Cost Of Claims Recoveries [Member]

4,600

$ 24,700

MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Affiliate Payable [Member]

271

Due to related party current

5,500

200

MSP Recovery Law Firm [Member] | Existing Legal Services Agreements [Member] | Affiliate Receivable [Member]

Due from related party current

1,500

3,400

4,300

MSP Recovery Aviation, LLC [Member] | General and Administrative Expense [Member]

MSP Recovery Aviation, LLC [Member] | Affiliate Receivable [Member]

150

400

Due from related party current

153

Series MRCS LLC [Member] | Claims Financing Obligation and Notes Payable [Member]

Note payable related party

500

Other Affiliates [Member] | Additional Receivables From Other Affiliates [Member] | Affiliate Receivable [Member]

Due from related party current

146

VRM [Member]

MSP National LLC [Member] | Affiliate Receivable [Member]

$ 1,700

10,600

$ 7,000

11,500

13,100

Due to related party current

$ 400

Msp Principals [Member] | Unsecured Promissory Notes [Member]

Aggregate principal amount

$ 112,800

Debt instrument, Term

4 years

Interest rate, payable in kind

4.00%

[1]	For the three and nine months ended September 30, 2022 and 2021, claims recovery service income included $0 million and $10.6 million, respectively, and $1.7 million and $7.0 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM MSP”). See Note 13, Related Party, for further details.
[2]	For the years ended December 31, 2021 and 2020, claims recovery service income included $11.5 million and $13.1 million, respectively, of claims recovery service income from VRM MSP Recovery Partners LLC (“VRM”). See Note 11, Related Party, for further details.
[3]	As of September 30, 2022 and December 31, 2021, the total affiliate receivable, indemnification asset, affiliate payable, guaranty obligation and loan from related parties balances are with related parties. In addition, the prepaid expenses and other current assets and claims financings obligation and notes payable includes balances with related parties. See Note 13, Related Party, for further details.

Investments in Equity Securities and Obligations to Deliver Securities - Additional Information (Detail) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2022	Sep. 30, 2021	Dec. 31, 2021	Dec. 31, 2020
Investments in Equity Securities and Obligations to Deliver Securities [Line Items]
Number of equity shares acquired to cover the short position		100,000	100,000
Purchase of securities to cover short position	$ 1,800		$ 1,800
Number of additional equity shares purchased			200,000
Purchase of equity securities			$ 4,100
Proceeds from disposed of equity securities		$ 4,450	4,450	$ 1,273
Realized gain on equity securities		$ 201	201	$ 18
Investment in equity securities	0		0
Other Income [Member]
Investments in Equity Securities and Obligations to Deliver Securities [Line Items]
Realized loss on investments to cover short position	$ 193		(193)
Realized gain on equity securities			$ 394

Net Loss Per Common Share - Schedule of Computation of Basic and Diluted Earnings Per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands

3 Months Ended

9 Months Ended

12 Months Ended

Sep. 30, 2022

Sep. 30, 2021

Sep. 30, 2022

Sep. 30, 2021

Dec. 31, 2021

Dec. 31, 2020

Numerator - basic and diluted:

Less: Net (income) loss attributable to MSP Recovery, LLC pre Business Combination

$ (27,060)

$ (10,259)

$ (118,075)

^[1]

$ (23,411)

^[1]

$ (33,077)

$ (24,266)

28,639

Less: Net (income) loss attributable to the noncontrolling interest post Business Combination

26,597

87,685

Net loss attributable to controlling members

$ (463)

$ (10,275)

$ (1,751)

$ (23,427)

$ (33,093)

$ (24,248)

Denominator - basic and diluted:

Weighed-average shares of common stock outstanding - diluted

^[2]

69,036,899

53,138,474

Weighed-average shares of common stock outstanding - diluted

Denominator - basic and diluted:

69,036,899

53,138,474

Weighed-average shares of common stock outstanding - basic

^[2]

69,036,899

53,138,474

Earnings per share of common stock - diluted

^[2]

$ (0.01)

$ (0.03)

Earnings per share of common stock - basic

^[2]

$ (0.01)

$ (0.03)

[1]	Balances include related party transactions. See Note 13, Related Party, for further details.
[2]	Earnings per share information has not been presented for periods prior to the Business Combination (as defined in Note 1, Description of Business), as it resulted in values that would not be meaningful to the users of these unaudited condensed consolidated financial statements. Refer to Note 15, Net Loss Per Common Share for further information.

Net Loss Per Common Share - Additional Information (Detail)	9 Months Ended
	Sep. 30, 2022 shares
Public Warrants Outstanding [Member]
Antidilutive securities excluded from computation of earnings per share amount	3,916,725
Warrant [Member]
Antidilutive securities excluded from computation of earnings per share amount	1,028,046,326
Class V Common Stock [Member]
Antidilutive securities excluded from computation of earnings per share amount	3,148,720,212

Derivative Liability - Additional Information (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2022 USD ($) shares
Derivative Instruments, Gain (Loss) [Line Items]
Restricted cash	$ 11,420
Fair value of shares	1,356
Derivative Liability	$ 10,065
FEF Shares [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Aggregate number of shares transferred to escrow account \| shares	1,100,000
Restricted cash	$ 11,400
Derivative Liability	10,000
FEF Shares [Member] \| Common Class A [Member]
Derivative Instruments, Gain (Loss) [Line Items]
Fair value of shares	$ 1,400