Underwriting a Contingency Docket for a Credit Facility

What a lender or funder actually examines when sizing a facility against a contingency fee firm's active caseload.

A contingency fee docket does not look like collateral to a conventional lender. There are no receivables in the ordinary sense, no inventory, and no predictable revenue stream — only a portfolio of pending matters whose value depends on litigation outcomes that have not yet occurred and on timelines the firm does not fully control. Underwriting a credit facility against that docket requires substituting a different kind of diligence for the financial-statement analysis a bank would otherwise run: case-by-case and portfolio-level assessment of what the docket is actually worth today, discounted for the risk that individual matters resolve for less than expected, are dismissed outright, or take substantially longer than projected to reach resolution. The lender's central task is converting an inherently uncertain, forward-looking set of legal claims into a defensible, present-day borrowing base — a translation problem with no equivalent in conventional commercial lending, where collateral value can usually be appraised against a market rather than against the unresolved outcome of litigation.

At the case level, the underwriter examines liability strength, procedural stage, and the defendant's capacity to satisfy a judgment or settlement — insurance coverage limits in a personal injury matter, or balance-sheet solvency in a commercial claim. A case still in early discovery carries materially more uncertainty than one that has survived summary judgment or is in active settlement negotiation, and the underwriter weights expected value accordingly, applying larger discounts to earlier-stage matters. The firm's own assessment of each case is one input among several rather than a number taken at face value, since counsel's optimism about a matter they have invested years of work and their own capital into is a well-documented bias that underwriters correct for through independent case review and comparison against similar matters' historical outcomes. Documentation quality matters too: a case file with complete medical records, expert reports, and a clear liability theory underwrites more favorably than one still being developed, because the underwriter can verify the firm's assessment rather than take it on faith.

At the portfolio level, the underwriter looks past any single matter to the docket's composition: how concentrated the expected value is in a handful of large, unresolved cases versus spread across many independent matters, how the case mix breaks down by type and by defendant or insurer, and how the firm's historical resolution rate and average time-to-resolution compare to the baseline for those case types. A docket concentrated in one or two large matters is underwritten more conservatively than a diversified docket of comparable aggregate value, because a single adverse outcome — a defense verdict, a dismissal, an unexpectedly low settlement — can move the entire facility's collateral coverage materially. Diversification across case types also matters, since correlated risk within a single case category, such as a mass tort inventory dependent on one set of bellwether outcomes, behaves more like a concentrated position than the number of individual cases might suggest.

These inputs feed a borrowing-base formula: the docket's conservatively estimated value, discounted for uncertainty and time, multiplied by an advance rate that leaves the lender a cushion if actual results come in below projection. The facility typically includes reporting covenants requiring the firm to update case status on a defined cycle — new filings, dispositive motions, settlement offers, and closed matters — and a redetermination mechanism that adjusts available credit as cases resolve, new matters enter the docket, or case-level assumptions change materially, such as an adverse ruling on a key legal theory affecting multiple cases at once. These structural protections exist precisely because the underwriting, however careful, is forward-looking against outcomes that have not yet occurred, and the facility needs a mechanism to stay current with the docket's actual state rather than freezing to an assessment made months or years earlier.

Criterica Capital underwrites contingency dockets by scoring case-level and portfolio-level composition against outcome models trained on court records, producing expected-value estimates calibrated to the actual disposition history of comparable matters rather than relying solely on counsel's own projections. This grounds the borrowing base in observed outcomes for similar case types, stages, and jurisdictions, and lets us extend facilities priced on the docket's actual economics rather than on relationship or reputation. Firms seeking a credit facility against their contingency caseload can contact our institutional team with a docket summary for a confidential assessment.

Discuss your matter with our institutional team.