How Funders Evaluate Commercial Cases: The Six-Factor Framework

Liability, damages, collectability, duration, counsel quality, and return, the dimensions that drive every funding decision.

Every commercial funding decision rests on a structured evaluation across six dimensions, and understanding them clarifies why some strong-seeming cases are declined and some unglamorous ones are funded. The first is liability: how strong is the legal theory, how persuasive is the evidence, and how compelling are the anticipated defenses. A case can have enormous damages potential and still be unfundable if liability is genuinely contested on grounds the plaintiff may not overcome.

The second factor is damages. A funder examines the methodology for calculating damages, the strength of the supporting expert analysis, and the realistic range of recovery rather than the headline number in the complaint. Damages theories that depend on aggressive assumptions or that may not survive Daubert scrutiny are discounted heavily. The third factor, collectability, asks whether a favorable judgment can actually be enforced: a large judgment against an insolvent or judgment-proof defendant has little practical value.

The fourth factor is duration. Time is the silent enemy of returns, because the longer capital is deployed, the higher the multiple required to achieve a target internal rate of return. A funder estimates the realistic timeline to resolution, including the prospect of appeals, and prices accordingly. The fifth factor, counsel quality, assesses whether the litigation team has the capability and resources to execute the case to its potential; even a strong claim can founder with inadequate representation.

The sixth factor synthesizes the others into the return analysis. The funder asks whether the expected recovery, discounted for the probability of success and the time to resolution, supports the return required to compensate for the risk. Only when all six factors align, a strong claim, quantifiable and defensible damages, a collectible defendant, a reasonable timeline, capable counsel, and adequate return, does a case warrant funding. The framework is a series of gates, and a case must clear every one.

Criterica Capital applies this six-factor framework with the liability and duration assessments calibrated against outcome models trained on 106M+ court records. This grounds the most subjective elements of the analysis, probability and timing, in observed data. Firms and claimants who want to understand how their matter would be evaluated can contact our institutional team for a confidential assessment.

Discuss your matter with our institutional team.