Understanding the “Opportunity Funnel”, and How to Stay Inside It
Most claimants believe litigation funding is about persuading a funder that their case is strong.
In reality, funding decisions are rarely made that way.
Institutional litigation funders operate more like investment managers than traditional financiers. They review large numbers of potential opportunities each year but ultimately deploy capital into only a small number of cases.
The reason is simple:
Funding decisions follow a structured filtration process.
Every case entering the system must pass through a sequence of increasingly rigorous investment screens.
This process can be understood as what I call the Litigation Funding Opportunity Funnel.
Understanding how that funnel works is one of the most important things a claimant or law firm can do to improve their chances of securing funding.
The Litigation Funding Opportunity Funnel
The exact percentages vary between funders, but the pattern is consistent across the market.
Opportunities fall away gradually at each stage.
A case rarely fails because of a single issue.
Instead, its probability erodes step by step as the investment analysis deepens.
Stage 1 — Mandate Fit
(Where most opportunities disappear)
Before reviewing pleadings, evidence or legal arguments, funders first assess whether the opportunity fits their investment mandate.
Typical criteria include:
• Minimum claim value
• Jurisdiction
• Type of dispute
• Litigation budget required
• Portfolio exposure limits
This stage often eliminates around 70% of enquiries.
Importantly, this has nothing to do with whether the claim is legally strong.
It simply reflects how investment funds allocate capital.
Practical advice
Claimants and lawyers should identify funders whose mandate actually matches the case before making an approach.
Sending opportunities to unsuitable funders wastes time and often creates unnecessary rejection signals in the market.
Stage 2 — Legal Merits Review
Once a case passes mandate screening, funders evaluate the legal foundation of the claim.
Typical diligence includes analysis of:
• Strength of the cause of action
• Supporting documentary evidence
• Anticipated defences
• Procedural and appellate risks
• Experience and track record of counsel
At this stage, roughly 60% of remaining opportunities may fall away.
This is where optimistic legal narratives meet investment discipline.
Practical advice
Funders become more comfortable when claimants and lawyers openly address the weaknesses of a case, not just its strengths.
Transparent analysis increases credibility.
Stage 3 — Damages & Economic Analysis
Even strong claims must function as investable assets.
Funders therefore stress-test:
• Damages methodologies
• Expert assumptions
• Litigation budgets
• Sensitivity scenarios
• Expected settlement ranges
Institutional capital typically looks for a meaningful ratio between potential recovery and funding required.
Many cases fail here because the economics do not withstand conservative modelling.
Practical advice
Damages calculations should always be supported by independent expert methodology, not optimistic projections.
Funders invest in defensible downside scenarios, not headline numbers.
Stage 4 — Enforcement & Recovery
Winning a case is only half the battle.
Funders must also assess whether a judgment can realistically be converted into cash.
This stage focuses on:
• Defendant solvency
• Asset traceability
• Enforcement jurisdictions
• Insolvency risk
• Political or sovereign factors
This stage quietly eliminates many otherwise strong claims.
A favourable judgment is not enough.
Recoverability is critical.
Practical advice
Before approaching funders, claimants should conduct at least basic asset tracing or recovery analysis.
Knowing where recovery may come from significantly strengthens a funding proposal.
Stage 5 — Time and Capital Efficiency
Litigation funding is long-duration capital.
Funders therefore model:
• Trial timelines
• Appeal exposure
• Enforcement duration
• Settlement probability windows
A case that may take five or six years must produce a return sufficient to justify that capital commitment.
Many opportunities fall away here when timelines become uncertain.
Practical advice
Providing realistic litigation timelines and procedural roadmaps significantly improves credibility with investment committees.
Final Stage — Investment Committee Allocation
By the time an opportunity reaches the final stage, it may already have passed extensive legal and economic review.
Yet even here, funding is not guaranteed.
Investment committees must also consider:
• Portfolio diversification
• Geographic risk exposure
• Sector concentration
• Competing opportunities
• Internal capital allocation priorities
This is why even strong cases sometimes fail to secure funding.
Why Good Cases Still Fail to Secure Funding
In practice, many opportunities fall out of the funnel for avoidable reasons.
Common issues include:
• Approaching funders whose mandates do not fit the case
• Overstated damages models
• Weak enforcement analysis
• Unrealistic timelines
• Disorganised case materials
None of these issues necessarily mean the case lacks merit.
But they reduce the probability of surviving the funnel.
How Claimants and Lawyers Can Improve Their Chances
In my experience advising on litigation capital transactions, opportunities perform significantly better when they are presented with the following structure:
1. Mandate targeting
Identify funders whose investment criteria match the case.
2. Institutional case materials
Prepare a structured investment-style memorandum, not just pleadings.
3. Damages discipline
Ensure damages models are conservative and defensible.
4. Recovery analysis
Provide credible insight into how and where judgments can be enforced.
5. Realistic timelines
Funders prefer credible timelines over optimistic ones.
The Role of a Litigation Capital Advisor
At Wild Dog, our role is not to “sell” cases to funders.
It is to ensure opportunities enter the funnel in the strongest possible position.
This typically involves:
• Matching opportunities with the right capital providers
• Stress-testing damages models
• Evaluating enforcement pathways
• Structuring investment memoranda
• Managing institutional diligence processes
We cannot change the underlying merits of a case.
But we can ensure strong cases do not fall out of the funnel due to avoidable structural weaknesses.
In a market where only a small percentage of opportunities ultimately secure capital, preparation can make a decisive difference.
If you want to stay up to date with what is going on with ATE insurance and non-recourse litigation funding, Wild Dog serves as a trusted advisor to attorneys and their clients. So stay informed. Stay competitive and subscribe to our Newsletter today.
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