What documents are needed for litigation funding applications?

Key documents include: case summary and legal analysis, counsel's opinion on merits, damages quantification report, litigation budget, defendant financial information, key evidence and witness statements, and procedural history if litigation has commenced.

Back to Complete Guide

Due Diligence Process

Litigation Funding Due Diligence: How Funders Evaluate Your Case

Q: What do litigation funders look for in due diligence?

Litigation funders evaluate three core criteria: legal merits (minimum 60% success probability), quantum (damages must significantly exceed costs, typically 10:1 ratio), and collectibility (defendant's ability to pay any judgment or settlement).

Q: How long does litigation funding due diligence take?

The due diligence process typically takes 4-12 weeks, depending on case complexity. Simple commercial disputes may complete in 4-6 weeks, while complex arbitration or class actions may require 8-12 weeks of evaluation.

Understanding the rigorous evaluation process that determines whether your case secures third-party funding. Learn what funders look for and how to maximize your chances of approval.

Submit Your Case Calculate Funding Potential

Written by Audley Capital Research Team

Published December 16, 2025 • 12 min read • Based on analysis of 500+ funded cases

Litigation funding due diligence is the rigorous evaluation process that determines whether a case receives third-party financing. Because funders provide capital on a non-recourse basis—losing their entire investment if the case fails—they apply institutional-grade scrutiny to every application.

Understanding this process is essential for claimants and their legal counsel. Only 3-5% of submitted cases secure funding, making preparation and presentation critical to success.

What Are the Three Pillars of Funder Due Diligence?

Funders evaluate three core pillars: legal merits (minimum 60% success probability), quantum analysis (damages must justify costs by 5–10x), and defendant solvency (ability to pay any award). All three must be satisfied before funding is approved.

Legal Merits (Liability)

Minimum 60% probability of success at trial, supported by strong legal opinion from reputable counsel. The claim must be legally sound with clear causation.

Quantum (Damages)

Damages must significantly exceed costs—typically a 10:1 ratio. Most funders require minimum claim values of £5 million for single-case funding.

Collectibility

The defendant must have sufficient assets to pay a judgment. A strong case against an insolvent defendant is generally unfundable.

How Long Does the Due Diligence Process Take?

Week 1-2

Initial Screening

Preliminary review of case summary, jurisdiction, claim type, and approximate quantum. Cases that clearly fail threshold criteria are declined at this stage.

Week 3-6

Deep Dive Analysis

Comprehensive legal analysis, budget review, defendant financial investigation, expert consultation on quantum, and assessment of litigation strategy.

Week 7-10

Investment Committee

Presentation to funder investment committee, term sheet negotiation, and conditions precedent discussion.

Week 10-12

Documentation & Close

Litigation Funding Agreement (LFA) drafting, ATE insurance arrangement, final approvals, and capital commitment.

What Documents Do You Need for a Funding Application?

Detailed case summary and chronology

Counsel's written opinion on merits

Damages quantification report

Comprehensive litigation budget

Defendant financial analysis

Key evidence and witness statements

Procedural history (if commenced)

Expert reports (if available)

Jurisdiction and enforcement analysis

Settlement history and discussions

Why Are Funding Applications Rejected?

Insufficient Quantum

Damages too low relative to litigation costs to provide adequate funder return

Weak Legal Merits

Case success probability below the 60% threshold or significant legal uncertainties

Collectibility Concerns

Defendant lacks assets or operates in jurisdiction with poor enforcement

Excessive Duration

Projected timeline too long, affecting IRR and capital allocation

Strategic Misalignment

Case type or jurisdiction outside funder's investment criteria

Frequently Asked Questions

What do litigation funders look for in due diligence?

Funders evaluate three core criteria: legal merits (minimum 60% success probability), quantum (damages must significantly exceed costs, typically 10:1 ratio), and collectibility (defendant's ability to pay any judgment or settlement).

How long does litigation funding due diligence take?

The process typically takes 4-12 weeks, depending on complexity. Simple commercial disputes may complete in 4-6 weeks, while complex arbitration or class actions may require 8-12 weeks of evaluation.

What percentage of cases pass funder due diligence?

Only 3-5% of cases submitted to litigation funders pass their rigorous due diligence process. This high rejection rate reflects the non-recourse risk funders bear.

Can a case be rejected after initial approval?

Yes, funding commitments typically include conditions precedent. Cases can be rejected or terms renegotiated if material facts change, new adverse evidence emerges, or the defendant's financial position deteriorates significantly.

Related Resources

Complete Guide to Litigation Funding What is Litigation Funding? Building a Strong Funding Case Understanding Funding Costs

Ready to Submit Your Case for Evaluation?

Our team provides confidential, no-obligation case assessments. Learn whether your case meets funding criteria.

Start Your Application

Discuss your case, funding or investment

Tell us about your enquiry and the best time to reach you. No obligation — we typically respond within 24 hours.