The Orphan Zone: Why Meritorious $2–15 Million Claims Die Unfiled

The civil justice system has a quiet attrition problem, and it is not about weak claims. It is about strong claims whose economics do not fit any of the three channels through which commercial litigation gets financed. This article works through the arithmetic of each channel — hourly representation, contingency representation, and third-party funding — and shows why claims with damages between roughly $2 million and $15 million routinely fall between all three. We call this range the orphan zone, and it is where a disproportionate share of meritorious commercial claims go to die.

I. The Cost of Admission

Begin with what serious commercial litigation costs to prosecute. Industry rate surveys put average partner rates across the Am Law 50 at approximately $1,900 per hour, with partners at the two dozen largest firms averaging around $1,400 and senior associates around $900. Even outside Big Law, corporate litigation is the most expensive practice category tracked, and standard law-firm rates rose 9.6% year over year in 2025 alone.

The arithmetic compounds quickly. A lean team — one partner, two associates — running a document-intensive commercial case through discovery, expert work, dispositive motions, and trial will plausibly bill several thousand attorney hours over two to four years. At a blended rate of $700 to $900, fees alone reach seven figures before the first day of trial, and that is before expert witnesses, e-discovery vendors, forensic accountants, and court costs — categories that in valuation-heavy and fraud-heavy disputes can rival the legal fees themselves. A realistic all-in budget for a hard-fought commercial case at a capable firm runs from the high six figures for a lean regional matter to several million dollars for a national one.

For the holder of a $6 million claim, that budget is not an expense. It is a wager of 20% to 40% of the claim’s face value, paid in cash, over years, against an uncertain outcome — while the defendant, frequently a company or insurer for whom litigation spend is a budgeted line item, pays with someone else’s money and feels no urgency at all.

II. The Funder’s Arithmetic

Third-party funding was supposed to solve this, and for large claims it often does. But funding has an arithmetic of its own, and the arithmetic has a floor.

The industry’s standard screen is a damages-to-budget ratio of roughly 10:1 — a rule of thumb cited across funder and law-firm commentary — because the funder must recoup its investment plus a multiple while leaving the claimant enough recovery to stay incentivized; many funders decline any deal that would leave the claimant with less than half the proceeds. The U.S. Government Accountability Office’s review of the market reported that commercial funders typically invest in litigation with damages of $10 million or more, with minimum investments of approximately $2 million per deal. Some European funders will not consider disputes below €5 million; others look only above €30 million.

Apply the 10:1 screen to the cost figures above and the floor becomes visible: if a case needs a $1.5–2 million budget — unremarkable for a contested commercial matter — the funder wants $15–20 million in credible damages. A $6 million claim requiring a $1.5 million budget fails the screen not because it is weak but because the ratio is 4:1.

Market data confirms that capital flows accordingly, and increasingly away from single claimants. Per Westfleet Advisors’ most recent report, portfolio transactions — bundles of matters, typically arranged with law firms — absorbed roughly 64% of new commitments, while the average single-matter deal declined to approximately $4.5 million from $6.6 million a year earlier, amid capital conditions Westfleet described as the tightest in at least five years. Some funders, particularly in the U.K., advertise appetite for smaller matters, and the market is not monolithic; but where U.S. commercial funding dollars actually go is well documented, and it is not to $6 million single claims. Underwriting a claim costs a funder nearly as much at $6 million as at $60 million; only one of those covers the diligence.

III. The Contingency Filter

The third channel — contingency representation — is real but narrower than commonly assumed. A firm taking a $6 million claim on a 35–40% contingency is underwriting the same multi-year, seven-figure cost load described above, in exchange for an expected fee that must be discounted by the probability of loss, the probability of a discounted settlement, and years of carrying cost. Elite trial firms, whose hourly practices are oversubscribed at four-figure rates, rationally reserve full-contingency capacity for the largest and cleanest matters. What remains available to the mid-sized claim is often a firm whose economics permit the risk precisely because its cost structure — and sometimes its capability — is lighter than the dispute demands. The claimant with a strong $6 million claim thus faces a version of adverse selection: the counsel most willing may not be the counsel most able.

IV. The Orphan Zone, Defined

Stack the three screens and the gap appears with some precision:

Below roughly $2 million, disputes resolve through demand letters, arbitration, insurance, or abandonment — litigation economics never made sense and everyone knows it. Above roughly $15 million, the claim clears the funder’s 10:1 arithmetic, attracts elite contingency interest, and justifies self-funding for any institutional holder.

Between those bounds sits the orphan zone: claims large enough that abandoning them is a life-altering loss for the holder, and too small for the machinery built to finance disputes. It is populated by a recognizable cast — the option holder underpaid by an engineered valuation, the noteholder whose contractual fee was suppressed, the founder squeezed out below fair value, the small company whose counterparty simply refused to perform — holders for whom the claim may be the largest asset they own, and the only one they cannot afford to use.

The defendants in these matters understand the arithmetic perfectly. A rational defendant facing an orphan-zone claim has little reason to settle early or fairly: the claimant probably cannot sustain the fight, probably cannot attract institutional capital, and every month of delay compounds the pressure. Much of what looks like defendant intransigence in this range is simply the economics of the orphan zone, priced.

V. What It Takes to Rescue an Orphaned Claim

The orphan zone is not a merits problem, so it cannot be solved by better lawyering alone. It is a structural problem, and it yields to structure.

The ownership model we have described in earlier work — a dedicated vehicle that takes assignment of the claim, with the original holder retaining the majority economic interest while the vehicle’s manager funds all costs and directs the matter as principal — changes each variable in the orphan-zone equation. The holder’s cash exposure goes to zero, removing the wager. The 10:1 screen disappears, because the party bearing the costs is the party who owns the outcome and can rationally accept ratios a fund’s portfolio mathematics cannot. Cost discipline improves, because a principal spending its own money on its own matter budgets differently than any participant in an hourly arrangement. And the defendant’s delay calculus inverts: the claim is no longer held by an exhaustible individual but by a patient, funded entity whose entire purpose is the matter’s resolution.

The claims in the orphan zone are not marginal claims. They are, on the industry’s own screening criteria, frequently excellent ones — documentary liability, quantifiable damages, collectable defendants — orphaned by financing arithmetic rather than by merit. That is not a gap in justice so much as a gap in market structure. Gaps in market structure are, historically, where the next model gets built.

Standing Ventures is not a law firm and does not provide legal advice. This article is for general informational purposes only. Figures are illustrative market benchmarks, not quotes or predictions for any matter.