How litigation funders price a case

A funder prices a case on four questions: the probability of recovery, the expected size of the recovery, the time until it is paid, and the cost of the capital tied up until then. The first three come from the record of similar cases; the fourth is the funder’s own cost of money. Pricing errors come from guessing the first three.

Probability. What courts did in cases like this one: venue, case type, judge, stage, counsel. A record-based estimate replaces the underwriter’s impression.

Size. A distribution, not a point: a band of likely settlement or award values, with the inputs tagged by source.

Duration. The variable most often underpriced. A case that takes twice as long at the same recovery halves the return. Duration by court and case type is measurable from the record.

Capital cost. The funder’s own hurdle, applied to the advance over the expected duration.

Where it goes wrong. Relationship-based selection, point estimates instead of bands, duration treated as a constant, no re-scoring after funding.

Criterica Intelligence delivers these four answers from the record for a single matter (Snapshot) or a whole book (Portfolio), and re-scores as events arrive (Monitor and ReScore).

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