Bringing a legal case in India is expensive, and can take years from start to finish. This often means the pursuit of justice is out of reach for citizens of average means. Kundan Shahi, who worked in insurance, knew there was a solution.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
Bringing a legal case in India is expensive, and can take years from start to finish. This often means the pursuit of justice is out of reach for citizens of average means. Kundan Shahi, who worked in insurance, knew there was a solution.
Your Story details that Shahi saw a connection between what insurers did and how legal cases could be funded by third-parties. His initial idea was to set up Advok8—an insurance company dedicated to funding cases. But the legal setup required to start an insurance company was expensive, complicated, and full of regulatory hoops to leap through.
In 2019, Shahi set up LegalPay as a legal services company. Cases being considered for funding are vetted by in-house lawyers using a variety of criteria. Cases are run through software that measures and calculates to determine the merits and probability of winning. LegalPay also considers precedence in similar cases, assessing the defendants’ ability to pay an award, as well as other factors.
Ultimately, LegalPay agrees to fund about 5% of the cases they consider. In addition to litigation funding, LegalPay also offers interim financing for insolvent companies. This practice is welcome by creditors and debtors alike.
Investors provide the monies used to fund cases. Shahi estimates that investors can expect an IRR of 25-30%. Because third-party litigation funding is so new to India, regulation of the industry is practically non-existent. The hope is that regulatory oversight is forthcoming. The industry is sure to grow in India.
