Advance Rate

The advance rate in litigation finance refers to the ratio of funded capital to the estimated value of the claim or the expected recovery — analogous to loan-to-value in real estate lending. A funder advancing $3 million against a claim with a $15 million expected recovery is deploying at a 20% advance rate. Lower advance rates provide greater coverage against adverse outcomes, partial recoveries, and cost overruns, and are therefore associated with lower pricing to the claimant. In portfolio facilities, advance rate is calculated at the aggregate portfolio level rather than on individual claims, allowing cross-collateralization to support higher advance rates on individual positions than would be available on a single-case basis.

A lower advance rate is how funders protect against partial recoveries, cost overruns, and adverse judgments without changing the headline pricing terms, which is why advance rate — not just the return multiple — is one of the primary levers funders adjust based on claim-quality diligence. In portfolio facilities, cross-collateralization lets a funder support a higher advance rate on individual positions than the same claim could obtain standalone, since aggregate portfolio performance backstops any single position's shortfall.