In the news

The far-reaching reverberations of COVID-19, the most disruptive pandemic in more than a century, have sent shock waves throughout the legal industry. Courts across the country have temporarily closed or suspended trials. Proceedings that would normally occur in person instead take place over video conference calls, governed by policies that evolve frequently. Law firms and in-house legal departments have implemented headcount reductions, salary cuts, or both. Finding itself in a position that was unthinkable just a few months ago, and with the disruption showing no signs of abating soon, the legal industry must now contend with a “new normal.”

Over the last three weeks, tech-driven litigation funder LexShares has received almost 30 inbound funding inquiries, representing a 100% jump from the three weeks prior, according to the firm’s founder and CEO Jay Greenberg. The uptick stems in large part from financially strained plaintiffs and law firms looking to get ahead of potential working capital constraints by turning to litigation finance to weather the oncoming economic storm brought by the coronavirus (COVID-19) pandemic.

Naturally, the surging popularity of litigation finance has raised important questions from legal industry participants. Why, for instance, has third-party funding suddenly boomed in the U.S.? Will new technology and regulations change the way parties seek and provide funding? How will attorneys’ funding options evolve as new providers and products enter the market? In sum — how different will litigation finance look one decade from now?

Tech-driven litigation funder LexShares notched an average deal size of USD 1.2m in 2019, up from roughly USD 630,000 in 2018, reflecting higher accredited investor interest in the nascent asset class, according to two sources familiar with the matter.

One high-profile litigation finance group, Burford Capital, is listed in London, while firms such as US-based LexShares and the UK’s AxiaFunder court investors to back lawsuits in return for a share of any awards. Some insurers executives remain more sanguine than others, arguing that the premiums insurers charge will eventually reflect the cost of bigger payouts.

Many detractors of the American rule, however, ignore the numerous exceptions that are prevalent in the U.S. legal system. For example, parties can define which side will pay the costs of a dispute when negotiating contracts. Similarly, fee-shifting statutes are common in federal and state litigation. Courts also routinely award attorney’s fees to prevailing parties in cases involving bad faith. A recent patent-related case, Peter v. NantKwest, which was argued before the Supreme Court on Monday, offers an interesting glimpse into one such exception.

We live in a world where access to justice often depends on access to capital. Many claimants face insurmountable challenges due to a lack of economic resources and, regardless of the merits of their claims, find themselves unable to receive the justice they deserve. The ever-rising cost of litigation often provides well-capitalized defendants with an overpowering weapon: financial asymmetry.

LexShares Co-Founders, Jay Greenberg and Max Volsky, were both named to Lawdragon's Top 100 Legal Consultants list for 2019, which assembles the "most brilliant crisis communicators, marketing mavens, management advisors and recruiters in the world."

LexShares, a leader in commercial litigation finance, and GLG Law, a leader in expert witness services, today announced an exclusive new partnership under which they will offer their litigation support products to one another’s clients. Together, LexShares and GLG Law have worked with more than three quarters of the AmLaw 100 and are trusted partners of hundreds of law firms globally.

LexShares is a commercial litigation funder that makes investments in all types of legal claims from litigation boutiques to Am Law 50 firms. It uses the Diamond Mine technology platform to source and identify legal claims in need of funding.

The rise of artificial intelligence has led to additional opportunities for litigation financing firms. LexShares, a litigation funding firm founded in 2014 with offices in Boston and New York City, has developed a proprietary platform that scours federal and some state court filings for potential investment leads.

The crowdfunding approach was pioneered by LexShares, a US-based platform launched in 2014, for accredited investors to invest at least $2,500 in individual disputes or a portfolio of cases. Jay Greenberg, LexShares chief executive, said there was "extreme demand for our assets", adding that a recently posted case had been fully subscribed in less than an hour.

Artificial intelligence may be helping to find potential litigation investments, but it is a long way from making investment decisions on its own. The online litigation finance firm LexShares Inc. announced for the first time Tuesday the number of cases that its proprietary software has generated as potential investment opportunities.

Attorneys Allen Yancy, formerly of Weil, Gotshal & Manges, and Matthew Oxman, formerly of Dewey & LeBoeuf, join LexShares’ underwriting group to help manage the firm’s rapidly growing deal pipeline.

Make no mistake: There has never been more capital looking to finance corporate litigation, and it is only expected to grow. There are at least two funds poised to launch by the end of the year. And to hear their pitches, funders are eyeing the nation's largest law firms as potential borrowers.

LexShares, the commercial litigation finance firm, has launched the LexShares Private Market, an exchange for secondary litigation finance transactions. Built exclusively for qualified institutions, the LexShares Private Market (LPM) is an online exchange that serves to bring litigation funders and institutional investors together on a unified platform, improving access to and liquidity of legal finance assets.

If you’re not familiar with how litigation finance works, you should fix that — fast. Litigation finance is growing dramatically in popularity and importance, and both litigators and transactional attorneys need to understand it — and what it means for the legal industry.

The world of legal technology is quickly evolving, with new products coming to market in rapid succession.... Litigation finance platform LexShares announced Jan. 25 that it has closed two investment funds for the maximum amount of $25 million.

Commercial litigation finance platform LexShares Inc. has closed the firm's first multiclaim fund, which was capped at $25 million, the company said Thursday.

LexShares, a commercial litigation finance platform, announced the successful singular closing of LexShares Marketplace Fund I, LLC and LexShares Marketplace Fund I QP, LLC (collectively “LMFI” or “the Fund”) for the Fund’s maximum amount of $25 million.

At the moment, there are very few ways for individuals to invest in litigation finance, but the field may become more accessible to retail investors over time. Currently LexShares is the only mainstream way for U.S. investors to invest directly in lawsuits, and it's only available to accredited investors.

"The year 2017 was undoubtedly a landmark year for litigation finance.... It is against this backdrop of growth that we focus on five important litigation finance trends to watch for in 2018."

"LexShares, a three-year-old funder that invests primarily in small to midsize commercial cases, recently announced it is raising $25 million for its first fund focused on portfolio investments. The firm, which uses an online platform to pair cases with investors, said it has invested $16.3 million in 40 cases so far."

"A start-up litigation finance firm is expanding its offerings, the latest sign of a shifting market for outside investment in lawsuits."

“LMFI will bolster LexShares’ ability to help plaintiffs with strong cases obtain redress against much better funded adversaries, allowing claims to be adjudicated based on their merits rather than financial resources,” LexShares co-founder and Chief Investment Officer Max Volsky said."

"One of the biggest pieces of feedback that we get from investors is that [cases] fill up so quickly that it's hard for investors to invest in them," Greenberg said. The new fund will allow greater participation—including from individual, accredited investors—and help spread risk, he added."

"As part of its announcement, LexShares has released internal performance metrics for the firm. And there are some pretty eye-popping numbers here. For starters, LexShares claims a median IRR net of fess and expenses of 66%."

"LexShares discloses performance to date and launches the LexShares Marketplace Fund I (LMFI) providing investors access to multiple legal claim investments through a single fund."

"Launched in late 2014, LexShares identifies investment-worthy cases through a combination of personal connections, AI-aided filtering, and independent vetting, and then posts them on its platform for investors to browse and fund themselves."

"Until now, this kind of investment has been available only to the very wealthy, who invested primarily through hedge funds. LexShares has made it possible for people who are not ultra wealthy to invest in lawsuits through a model similar to real estate crowdfunding. For people who don’t know what litigation funding is, Greenberg explains on this episode of the Capital Gains Podcast."

"Over the next few years, we will see the litigation finance market continue to grow and mature. This growth will be driven by client demand, fueled by increasing awareness on behalf of all litigation finance stakeholders, plaintiffs, attorneys, and investors."

"Our team's been investing in legal claims since the late 90s, we have a tried and true underwriting process to vet these claims," said Jay Greenberg, CEO and co-founder of LexShares.com"

"LexShares targets commercial cases that seek about $100,000 to $1 million in funding"

"Once reserved for hedge funds and other deep-pocketed investors, litigation funding is moving into the mainstream through startups like LexShares in Boston..."

"LexShares releases details of funding raised for a plaintiff in a qui tam whistleblower case against Stericycle, which resulted in a $28.5 million settlement and 93% annualized return for LexShares investors."

"Investors in litigation finance like the lack of correlation to other markets... Litigations exist in an economic vacuum, and changes in interest rates, currency values, and housing prices don’t seem to have an effect on court proceedings. Also, investors like the natural exit and liquidity – the average case lasts around 28 months, giving the investment a short-term life cycle."

"New York-based LexShares, launched in late 2014, allows SEC-accredited investors...to invest as little as $2,500 in individual commercial lawsuits by clicking on cases."

"Prior to LexShares, investments in litigation were primarily reserved for institutions and ultra high net worth individuals. Now with crowdfunding, individual investors are able to invest in the same asset class which these institutions have been taking advantage of for years."

"Litigation finance is an investor’s dream...While hedge funds have been backing litigation for years...LexShares is the first electronic marketplace for matching investors with cases, however, and could provide a test of broader interest in litigation as a source of returns."

"Online marketplace for investing in lawsuits welcomes financial institutions"

"We live in a litigious society, and based on the crowded courts, you could say that lawsuits are a shared societal investment. Hedge funds and pension funds know that...Now the hedgies have some courtroom competition."

"Business litigation...is an expensive proposition...But for the victor, the payouts can reach millions, or even billions, of dollars. So it’s no surprise that financiers from Wall Street found a way to get involved."

"The litigation funding marketplace is developing fast with innovative companies such as LexShares..."

"Litigation finance, where third parties help finance lawsuits, is just starting to make inroads in the United States, but its business model is already being disrupted."

"Another entrepreneur shaking up the legal business is Jay Greenberg, who quit an investment-banking career at Deutsche Bank to start LexShares, an online marketplace where high net-worth investors can finance commercial litigation."

Podcast: "Known as ‘litigation finance’, this form of investing hasn’t been available to a wide investor base but returns have been as high as 50%. Jay talks to Zack Miller, Tradestreaming’s host, about the origin of litigation finance and how investors can now use LexShares to get access to a very exciting asset class."

"There may be money to be made in the courtroom, and not just by the parties facing off."

"For several years, Bloomberg Businessweek has tracked the rise of “litigation finance,” a niche market where hedge funds invest in lawsuits. Today litigation finance moved in a new direction with the launch of LexShares..."

"A new website unveiled Wednesday uses crowdfunding to finance potentially high-value commercial lawsuits."

Nightly television news: "A new crowdfunding website aims to help raise money for legal cases."

"How does it work? Companies in the middle of a lawsuit will have the chance to post their case on the service's website. Once the case is deemed meritorious, accredited investors can decide if they want to invest."

"New online marketplace LexShares is launching to enable people to invest in commercial lawsuits and get a portion of the proceeds of cases that are won."

"Private equity financing of lawsuits in certain corporate cases has existed for several years, although the idea of funding a legal campaign for a return on investment is still in its infancy. The founders of LexShares are looking to change that."

"'The market really looked to me like private equity in the early 1980s.' Greenberg’s solution is LexShares, a company that officially launched today to run an online marketplace for investing in lawsuits."

"A new crowdfunding platform aimed at financing lawsuits is banking on the notion that mainstream investors will want to cash in on the growth of third-party litigation funding."

"Accredited investors around the world can use the site to browse lawsuits that require funding, and then put a minimum stake of $2,500 into any that appeal to them."

"That’s the idea behind LexShares, an online marketplace Greenberg and his business partner Max Volsky unveiled on Wednesday. The website lets investors buy a stake in the outcome of a lawsuit by giving businesses the cash they need to operate while their cases go forward."

"LexShares seeks to fund plaintiffs in commercial lawsuits for a share of the potential settlement; the legal startup’s staff of six vets suits before posting them, and only government-accredited investors can buy “stock” in a lawsuit."

"LexShares, a crowdfunding platform that enables individuals to invest in litigation, launched its service today. The platform connects accredited investors with plaintiffs in commercial lawsuits in order to make an equity investment in a specific case."