We seek to partner with great entrepreneurs, businesses, and legal teams in an endeavor to provide the most competitive pricing in the market.
The shorter the likely duration, the more valuable the litigation asset. We invest in claims at all stages of the litigation process, from pre-filing to the eve of trial to post-judgment. Factors that affect the likely duration include (i) the stage of the litigation at the time financing is sought; (ii) the case schedule; (iii) the practices of the presiding judge and/or jurisdiction; (iv) the likely outcome and duration of any appeals; and (v) the complexity of the subject matter.
Damages to Investment Ratio
Generally, the greater the likely damages, the more valuable the claim and the smaller the percentage of proceeds that will be needed in consideration of the investment. Many litigations are embedded with multiple claims, each with a different model of damages and likelihood of success. In such scenarios, we will work to structure an investment that balances our returns with the various potential outcomes.
Probability of Success on the Merits
Litigation is inherently uncertain. Each side has its own story, which may or may not be fully revealed until trial. Discovery may provide new information unavailable at the outset of a case. Witnesses may perform well or poorly. Judges or juries may act in unanticipated manners. We therefore believe that the probability of success for any individual claim ranges from 20% to 80%. While handicapping the precise probability of success can be difficult, we invest only in claims to which we assign a probability of success of 60% or greater, meaning that our analysis at the time of investment shows that the party that we are financing has the better of the arguments at issue. The more information available to establish liability and damages, the more valuable the claim and the better pricing a claimholder can expect to receive. Factors that increase the likelihood of success include (i) documentary evidence supporting the case narrative and damages; (ii) strong witnesses; and (iii) favorable discovery.
Other Variables
Some litigations present additional risk factors such as collection risk (if the defendant is domiciled in an unfavorable jurisdiction) or economic risk (if the defendants financial position is questionable) which may affect the pricing of the litigation asset.