From an investor perspective, Litigation Finance allows investors to earn money from legal claims without seeing a day in court. While this was once an opportunity only available to sophisticated, well capitalized investors, it’s becoming democratized thanks to global startups like LegalPay.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
From an investor perspective, Litigation Finance allows investors to earn money from legal claims without seeing a day in court. While this was once an opportunity only available to sophisticated, well capitalized investors, it’s becoming democratized thanks to global startups like LegalPay.
Live Mint explains that legal funding is considered an alternative investment because it is uncorrelated to the rest of the market. When COVID sent the world into financial turmoil, litigation funding remained profitable and has only grown in scope and profitability.
India-based LegalPay offers two avenue to access the market: litigation funding, and interim financing under IBC (insolvency & bankruptcy code). Litigation funding carries more risk—but also has the potential for higher returns. Typically, cases under consideration for funding are carefully vetted, then funding is offered to the most promising opportunities.
Funds provided to litigants are issued on a non-recourse basis. There’s a risk of walking away with nothing if the case loses. If the case wins, investors could see 2-4 times their investment when the award is collected and split among the parties.
