There are many ways to price litigation funding transactions, and different funders and their investors may employ different methods even for the same investment. In this piece and a following part 2, I explain one method of pricing single case investments using a simplified fundamental analysis where “risk” is reduced to a straight percentage chance of winning or losing (which is obviously a simplified view of the world of litigation funding). I then look at pricing from the other end of the equation to determine what a funder’s pricing may imply about the risk of a case. Finally. I turn to some real-world applications of implied risk to explain why it is often irrational for funders to abandon cases, and whether funders are too expensive. Continue reading
