Discovery Costs

The expenses incurred in the pre-trial evidence-gathering phase of litigation, including document collection and review, depositions, interrogatories, and production of electronically stored information. Discovery costs in complex commercial litigation are frequently one of the largest line items in a litigation budget, often running into the millions of dollars for cases involving large institutional parties. Funders routinely include discovery costs as a covered expenditure in funding agreements and monitor burn rate against budget milestones throughout the case. Unexpectedly high discovery burdens can strain budgets and require supplemental funding discussions, making early cost estimation a critical part of the underwriting process.

Funders build discovery cost projections into the litigation budget as a distinct line item precisely because it is the most common source of budget overruns in complex commercial cases, and an unbudgeted discovery fight midway through a case forces a renegotiation the funder did not plan for. Funders increasingly require counsel to commit to phased discovery budgets tied to case milestones, so that additional capital draws are triggered by specific events rather than open-ended requests.