Contracts are usually struck with the greatest of intentions, but often reality gets in the way. A data center vowing to safeguard its clients’ information may neglect to update its firewalls against an emergent Trojan horse virus. A manufacturing plant may produce hundreds of thousands of fittings one-eighth of an inch too small for the purchaser’s intended purpose. A lifestyle brand may arrange to sell its product lines in one retail chain despite having made an exclusive licensing agreement with another national retailer. Across a wide range of circumstances, when a party fails to fully perform their part of an agreed-upon exchange, a breach of contract occurs.
Depending on the character of that breach—such as whether it can be considered minor, material, or fundamental—the aggrieved party may be able to sue for damages and even compel or terminate performance. This ability to seek redress through the legal system against non-performing parties safeguards all contractual agreements, but is only enforceable to the extent that the aggrieved party can pursue a claim and eventually prevail in court. A potential breach-of-contract plaintiff, even one with the most worthy claim imaginable, may not recover full compensation or obtain performance if he or she lacks the resources necessary to conclude the lawsuit. Traditionally, such resource-strapped plaintiffs might have no choice but to settle—often for pennies on the dollar—or give up their claims entirely.
Litigation finance, also known as litigation funding or lawsuit funding, is a powerful and distinctive form of investment that allows third-party investors to provide the funds necessary for breach of contract claimants to fully litigate their lawsuits. In return, those plaintiffs agree to give the investors a portion of future proceeds, but only when their claims result in a recovery. Because an investor's return depends on the success of the plaintiff's case, traditionally only legally sophisticated investors capable of accurately assessing the merits of a case themselves could expect to participate in and benefit from litigation finance investments. In addition, the high cost of litigation often meant that only institutional investors had access to the amounts of capital necessary to invest in a lawsuit single-handedly.
Today, however, specialized knowledge and expertise no longer serve as barriers to participation. LexShares, an online platform specifically designed to connect investors with meritorious plaintiffs, can streamline the process for breach of contract litigation funding for all involved. Plaintiffs in need of capital to help pay for litigation costs or keep their businesses running simply apply for funding. Cases are reviewed by a team of legal professionals with experience in managing investments in legal claims. Those which are found to have strong merits are posted as investment opportunities with specific funding goals. Accredited investors can review case details and decide whether and how much to invest—starting with as little as $5,000.
LexShares’ innovative online model allows a wide range of accredited investors to evaluate case details and track the progress of litigation throughout the lifecycle of the case. In addition, investors need not fund a entire case themselves. Multiple investors can contribute their desired funding amount until plaintiffs reach their funding goals. Once the funding goal is reached, the plaintiff receives the funds needed for litigation expenses and working capital. The case is continually monitored as litigation progresses, and if the plaintiff settles or obtain a judgment, investors collect a portion of the recovery. A plaintiff who does not prevail owes investors nothing.
LexShares combines litigation finance expertise with an online venue that easily connects plaintiffs and their cases with accredited investors. By offering a wider spectrum of investors access to a new asset class—investments in legal claims—LexShares helps undercapitalized plaintiffs more easily finance their legal expenses, enables capital injections to ongoing cases which encounter what might otherwise be crippling funding constraints, and increases plaintiffs’ access to premier legal talent. Those attorneys and law firms can then take on cases from plaintiffs who might otherwise be unable to afford their fees, as well as offer them more flexible payment arrangements. In all of these ways, by making litigation finance as a whole more accessible to all, LexShares makes fairer and fuller recoveries more accessible and achievable for everyone involved.