Funders approve less
than three percent.
The question is which three.

The foundation of every funding decision is legal merit. A case may have a massive damages claim, a solvent defendant, and exceptional counsel — but if the legal theory is weak, the claim will be dismissed on summary judgment and the investment will be lost. The Merit Assessment engine evaluates legal strength across five dimensions, each scored and weighted to produce a composite merit score. Cause of action viability examines whether the legal theory is well-established, novel but supported by emerging precedent, or speculative and vulnerable to challenge. A breach of contract claim based on clear contractual language scores differently from an antitrust claim requiring proof of market definition and anticompetitive effect. Precedent analysis maps the specific legal issues in the case against the controlling precedent in the assigned jurisdiction. If the key legal issue has been decided favorably by the circuit court in a published opinion, the precedent score is high. If the issue is one of first impression, or if the controlling precedent is adverse and the claimant must distinguish it, the score reflects that risk. Evidentiary support assesses whether the claimant has the documents, witnesses, and expert opinions needed to prove each element of the claim. A smoking-gun email that shows the defendant's knowledge of infringement scores differently from a circumstantial case built on inference. Dispositive motion survival probability estimates the likelihood that the case survives the defendant's inevitable motion to dismiss and motion for summary judgment — the two procedural gates that eliminate a significant percentage of funded cases before trial. The assigned judge's historical grant rate for MTD and MSJ in comparable cases is a critical input. The composite merit score must exceed the funder's threshold — typically 60% for UK market funders, varying by funder and case type — before the opportunity advances to the next stage of due diligence.

Winning a case is not the same as collecting the award. A $50 million judgment against an insolvent defendant is worth less than a $10 million settlement from a Fortune 500 company with $5 billion in cash. The Recovery Intelligence engine evaluates the defendant's ability and willingness to pay — because the funder's return depends not on winning the case, but on converting the win into cash. For publicly traded defendants, the engine analyzes market capitalization, cash and equivalents, total debt, lien structure, and credit ratings. For privately held defendants, it examines available financial disclosures, UCC filings, real property records, and industry benchmarking. For sovereign defendants in investor-state arbitration, it evaluates sovereign credit ratings, foreign reserve levels, New York Convention ratification status, and the sovereign's history of honoring arbitral awards. The engine calculates a judgment satisfaction probability — the likelihood that a favorable judgment or settlement will actually be collected in full. A defendant with $3.8 billion in cash and no material liens has a 97% satisfaction probability. A defendant in a capital-intensive industry with high leverage and pending regulatory actions may have a 60% probability — meaning the funder should discount the expected return by 40% to account for collection risk, or require security provisions in the funding structure. Bankruptcy risk is modeled separately: if the defendant files for bankruptcy during the litigation, the funder's claim may be treated as an unsecured creditor claim in the bankruptcy estate, receiving pennies on the dollar rather than the full judgment amount. The Altman Z-Score, Ohlson O-Score, and proprietary models calibrated against litigation-specific bankruptcy events are all applied.

The quality of the claimant's legal team is one of the strongest predictors of case outcome — and one of the most difficult factors to assess objectively. A funder evaluating a $10 million investment needs to know not just that the law firm is "good," but specifically: has the lead partner tried cases of this type to verdict? What is their win rate? How familiar are they with the assigned judge? Do they have the staffing depth to handle this case alongside their other commitments? Have they performed well on previously funded matters? The Counsel Quality engine transforms these subjective assessments into scored, data-driven evaluations. For the lead partner, the engine examines trial history: how many cases of this type has the partner tried to verdict, and what percentage resulted in plaintiff verdicts? A partner with 14 patent trials and an 11-win record (79% win rate) scores very differently from a partner with 3 trials and a 1-win record. Judge familiarity is measured by counting the number of prior matters the lead partner has handled before the assigned judge — partners who know the judge's procedural preferences, evidentiary standards, and courtroom expectations have a material advantage. Firm practice area ranking examines whether the firm is recognized in the specific practice area by Chambers, Legal 500, and comparable ranking services. Staffing depth assesses whether the firm has sufficient associate and paralegal resources to handle this case alongside its existing caseload without the case becoming a secondary priority. And for funders who have invested in matters handled by this firm before, historical funded-matter performance provides the most direct evidence of all: when this team handles funded cases, what returns have those cases produced?

A 3x return in 18 months is a fundamentally different investment than a 3x return in 5 years. Duration is the variable that transforms a nominal return multiple into an annualized rate of return — and annualized return is what investors care about. A funded case that produces a 2.5x MOIC in 14 months generates an IRR above 100%. The same 2.5x MOIC over 48 months generates an IRR of approximately 26%. The case outcome is identical. The investment quality is radically different. The Duration engine models case timeline at a granularity that traditional assessments cannot match. For each phase of litigation, the engine estimates duration based on the assigned judge's historical pace: how long does this judge take from filing to Markman hearing (in patent cases)? From motion practice to discovery cutoff? From discovery close to trial? Each judge has a characteristic tempo, and judges in the Eastern District of Texas move differently from judges in the District of Delaware. The engine also models the factors that extend duration beyond the judge's baseline: discovery complexity (the number of custodians, the volume of documents, the need for foreign language translation), third-party discovery disputes, expert discovery challenges, and the likelihood and impact of interlocutory appeals. Most critically, the engine models post-trial risk: the probability that a favorable verdict is appealed (which extends the investment horizon by 12-24 months) and the probability that the appeal changes the outcome (which affects the expected recovery). For funders evaluating appellate monetization opportunities — purchasing a share of a verdict that is currently on appeal — the appeal duration and reversal probability are the primary variables. The output is not a single number but a probability-weighted duration distribution: the P50 case resolves in 28 months, the P75 in 36 months, and the P95 in 42 months. The investment committee sees the full range, not a point estimate that inevitably proves wrong.

The return model is where every other engine's output converges into a single investment thesis. The case has merit (Engine 01). The defendant can pay (Engine 02). The counsel is strong (Engine 03). The duration is within tolerance (Engine 04). But what does the investment actually return? The answer depends on the funding structure, the outcome distribution, and the interplay between timing and recovery. The Return Structure engine models the funder's economics under every outcome scenario. In the base settlement scenario (P50: $24M recovery), the funder's $8M investment produces a $24M gross recovery. Under the funding agreement's terms — typically 2-3x the funded amount or 25-40% of the gross recovery, whichever is greater — the funder receives its investment back plus a contractual return. If the agreement specifies a 3x multiple cap, the funder receives $24M or the 3x cap ($24M), retaining $24M and producing a 3.0x MOIC. In the verdict scenario (P25: $38M jury verdict), the return is capped at the contractual maximum or the percentage, producing a 4.75x MOIC but with a 34% appeal risk that extends the duration. In the loss scenario (P15: summary judgment granted), the funder recovers nothing: 0x MOIC, total loss. The weighted MOIC across all scenarios — adjusted by the probability of each outcome and the duration of each resolution pathway — produces the risk-adjusted expected return: 2.8x MOIC at a risk-adjusted IRR of 31%. The investment committee does not see a single optimistic projection. It sees the complete scenario landscape — the best case, the base case, the worst case, and the probability-weighted center — enabling a decision that accounts for the full risk-return spectrum.

The investment committee has 45 minutes to evaluate a $10 million non-recourse deployment. The quality of their decision depends on the quality of the information they receive — and the format in which they receive it. A 200-page due diligence report is comprehensive but unusable in a 45-minute meeting. A one-page summary is digestible but lacks the depth to answer the committee's probing questions. The IC Decision Support engine produces a structured decision package designed for the investment committee's workflow. The package begins with a one-page executive summary: case description, legal merit score, defendant solvency, counsel assessment, duration projection, return structure, portfolio fit, identified risks, and a clear recommendation (Approve, Conditional Approve, Decline, or Defer). Behind the summary is a detailed appendix organized by engine: 5-10 pages per dimension, with the data, methodology, and analysis that produced each score. The appendix includes comparable investment analysis: how have similar cases (same case type, jurisdiction, claim value range, counsel quality tier) performed in the funder's historical portfolio and in the market generally? If the funder has funded 8 prior patent cases in the Eastern District of Texas and those cases produced a median MOIC of 2.4x with a median duration of 26 months, that comparable data informs whether the projected 2.8x MOIC at 28 months for the current opportunity is realistic or optimistic. The risk matrix presents every identified risk with its potential impact (quantified in MOIC reduction), its probability, and the mitigant (if any). The IC package is generated in under 2 hours from the raw due diligence data — a process that previously required a deal team of 3-4 professionals working for 2-3 weeks to compile manually.

An individually excellent investment may be a poor portfolio decision. If the fund already has 40% of its capital deployed in patent cases in the Eastern District of Texas, adding another EDTX patent case — no matter how strong its individual merit — concentrates jurisdiction risk that a single adverse ruling could devastate. The Portfolio Fit engine evaluates every proposed investment in the context of the existing portfolio, answering: does this investment improve or worsen our diversification? Jurisdiction concentration analysis compares the proposed investment's jurisdiction against the portfolio's existing geographic distribution. If the portfolio is overweight in EDTX (40% of deployed capital versus a target of 25%), a new EDTX case increases concentration risk. If the portfolio is underweight in the District of Delaware (5% versus a target of 15%), a Delaware case improves diversification. Case type diversification examines the mix of commercial disputes, patent cases, antitrust claims, international arbitrations, and mass torts in the portfolio. Counsel overlap identifies whether the proposed investment's legal team handles other matters in the portfolio — because a law firm capacity constraint or a key-partner departure could simultaneously affect multiple investments. Duration balance ensures the portfolio has a healthy mix of short-duration (12-18 month) and long-duration (36-48 month) investments, avoiding a liquidity crunch when all cases are in the same phase simultaneously. Correlation risk models the probability that two or more investments in the portfolio will be affected by the same external event — a Supreme Court ruling, an economic downturn, a regulatory change — ensuring that the portfolio's exposure to correlated outcomes stays within risk limits.

Underwriting does not end at investment committee approval. The capital is deployed, and the case enters a multi-year lifecycle during which every assumption in the original underwriting memo may change. The judge may be reassigned. The key witness may become unavailable. An IPR petition may be instituted. The defendant may announce a merger that creates new enforcement complications. The opposing counsel may make a settlement overture that needs to be evaluated against the funder's economics. The Post-Funding Monitoring engine tracks every funded matter continuously, comparing actual developments against the assumptions in the original underwriting model. Key milestones are tracked on a case timeline: did the motion to dismiss get denied (as the merit assessment predicted)? Was claim construction favorable (as the precedent analysis projected)? Is discovery proceeding on the projected timeline (or has the judge extended the schedule)? Budget burn is monitored against the original cost model: if outside counsel has billed 40% of the projected total by the 25% mark of the projected duration, the burn rate suggests the case will exceed budget — a signal that either the case is more complex than anticipated or the staffing efficiency is below benchmark. Settlement signals are detected through case activity patterns: a sudden increase in settlement conference scheduling, a shift in opposing counsel's tone in correspondence, or a defendant's request for mediation may indicate that a resolution is approaching. Risk events — adverse rulings, key witness challenges, regulatory developments that affect the legal theory — are escalated to the deal team with an updated impact analysis showing how the event changes the MOIC and IRR projections. When the monitoring data shows that the original underwriting assumptions have materially changed — positively or negatively — the engine triggers a formal revaluation, updating the investment committee on whether the deployment remains within the approved risk-return parameters.