How to Price a Case for Third-Party Litigation Funding
A guide to framing a case's economics the way a funder underwrites them, so a pricing conversation is about assumptions, not a headline number.
A litigation funder is not buying your case — it is buying a slice of a probability-weighted, time-discounted future recovery. Two cases with the same headline damages figure can price very differently once a funder runs its own numbers on probability of success, expected duration, and downside dispersion. Understanding that underwriting logic before you walk into the conversation puts you in a position to negotiate the terms instead of reacting to them.
Juricratic's simulation approach maps directly onto how funders think: build the case's expected value from explicit, disclosed assumptions, then show how that value responds to the dials most likely to move it. A funding pitch built on a structured simulation, rather than a single confident number, tends to be a more credible starting point for negotiation.
Funders underwrite expected value, not verdict headlines
A large potential verdict is the ceiling on recovery, not the number a funder prices against. Funders discount the headline figure by the probability of an actually favorable resolution — whether by settlement or judgment — and by the time value of the capital they commit, since a payout three years out is worth less to them today than one arriving next year.
Build the return math a funder will run
Most funders are ultimately solving for a target multiple on invested capital (MOIC) or an internal rate of return, conditioned on the risk of the specific matter. Walking through their arithmetic yourself is the fastest way to have a credible conversation about price.
- Start from expected recovery: damages, times probability of a favorable outcome, less expected erosion from fees and litigation cost.
- Funders typically want a return that scales with how long their capital is expected to be tied up and how risky the specific matter is, not a flat return regardless of duration or posture.
- Understand where the funder sits in the payout order relative to contingency fee and any other financing — that priority materially affects the return they need to justify the price they'll offer.
Time to resolution moves price as much as the merits do
Two cases with identical merits and identical damages can price very differently if one is expected to resolve in a year and the other in four. Capital tied up longer needs a higher return to hit the same annualized target, so procedural posture — a pending dispositive motion that could shorten or lengthen the runway — is itself a pricing input, not just a merits consideration.
What weakens your pricing position
Funders price risk, and several factors increase perceived risk independent of the underlying merits.
- An unresolved dispositive motion (like a pending motion to dismiss) widens the range of possible outcomes and typically increases the discount a funder applies.
- A thin, early-stage evidentiary record raises the imperfect-information discount — funders price in the risk that they, like the parties, don't yet know everything.
- Wide downside dispersion in a simulated outcome distribution can weaken pricing even when the mean expected value looks strong, because funders are sensitive to tail risk on capital they cannot easily unwind.
Presenting your case file to a funder
Bring a structured simulation rather than a single confident number: the assumption sheet behind your expected-value estimate, a sensitivity analysis showing which dials matter most, and an honest look at the downside scenarios. Funders who see how an estimate was built, including its weak points, generally trust it more than a polished number with no visible working.
- Is litigation funding the same as a loan?
- No. Litigation funding is typically non-recourse — the funder is repaid only from case proceeds if the case succeeds — so pricing reflects a transfer of risk, not simply the cost of borrowed capital.
- Why would two funders price the same case differently?
- Different funders run different underwriting models, have different target returns, and weigh portfolio fit differently — the same case can look more or less attractive depending on what else is already in a given funder's book.
- Does a strong expected value guarantee good funding terms?
- No. Funders weigh the shape of the outcome distribution, expected duration, and case-specific risk alongside the mean expected value, not the mean value alone.
This page is an educational explainer, not legal advice, and creates no attorney–client relationship. Juricratic is a simulation engine: every probability-like figure is a dial you set, not a calibrated prediction. Verify every rule, deadline, and figure against the authorities and orders that govern your matter.
Stop estimating one number at a time.
Juricratic models the whole matter as a solvable game and runs it thousands of times — so the settlement value, the risk, and the optimal line all move together when the facts do.
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