Litigation Finance & Legal Claims

Tokenized Legal Claims & Marketplaces

Emerging platforms that fractionalise or tokenize legal claims and judgments.

Investment Overview

Litigation finance provides capital to plaintiffs or law firms pursuing lawsuits in exchange for a share of settlement/verdict proceeds. Market size: $15B+ global litigation funding (2024), growing 15-20% annually as institutional investors enter. Investment access via: (1) Public litigation funders (Burford Capital, Omni Bridgeway), (2) Litigation finance funds (Bentham IMF, Longford Capital), (3) Crowdfunding platforms (LexShares, Mighty). Returns: 15-30% annual IRR (top quartile funds) driven by 2-5x returns on won cases. Uncorrelated with markets (0.0-0.1 correlation). Risks include adverse judgments, case duration (3-5 years typical), and adverse cost orders. Suitable for sophisticated investors seeking diversification and comfortable with 5-7 year lockups.

Market Size

$15B+ global litigation funding market (2024), projected $25B by 2028; US market $5B

Typical Returns

Litigation funds: 15-30% net IRR (top quartile); Public funders (Burford): 10-20% annual returns; Individual cases: -100% to +500% (binary outcomes)

Accessing Litigation Finance

Start with Public Litigation Funders

Burford Capital (BUR.L) is largest public funder; $6B AUM, 15-20% historical returns. Trades on London Stock Exchange. Minimum 1 share (~$12-15). Diversified portfolio (100+ cases) reduces binary risk. More liquid than private funds. Alternative: Omni Bridgeway (ASX: OBL).

Explore Litigation Finance Funds

Bentham IMF, Longford Capital, Parabellum Capital offer institutional litigation funds. Minimums $100K-$1M (accredited only). Target 15-25% net IRR. 5-7 year lockups. Diversified portfolios (20-50 cases) across commercial, IP, antitrust, international arbitration. For sophisticated investors.

Consider Crowdfunding for Single Cases

LexShares offers fractional investment in pre-vetted lawsuits. Minimums $5K-$25K per case. Target 2-3x returns over 3-5 years. Binary outcomes: Case wins = 100-300% return; loss = total loss. Diversify across 10-15 cases to mimic fund portfolio. Higher risk than institutional funds.

Understand Case Types and Returns

Commercial litigation (breach of contract, IP infringement): Lower returns (15-25% IRR) but higher success rates (60-70%). Antitrust, securities fraud: Higher returns (25-35% IRR) but lower success rates (40-50%). Personal injury: Fast resolution (1-2 years) but lower returns (10-15% IRR). Choose based on risk tolerance.

Key Investment Platforms

Burford Capital (BUR.L)

1 share (~$12-15)

Largest public litigation funder. $6B AUM. Portfolio: 100+ cases (commercial, IP, antitrust, arbitration). Historical returns: 15-20% annually. Trades London Stock Exchange. Market cap $2B. Dividend yield 3-4%. Quarterly reporting provides transparency. Most liquid litigation exposure.

LSE: BUR

Omni Bridgeway (OBL)

1 share (~$2-4 AUD)

Australian litigation funder. $3B AUM. Portfolio: Commercial, class actions, international arbitration. Listed on ASX. Returns: 12-18% annually. Dividend yield 2-3%. More conservative underwriting than Burford; lower returns but higher win rates. Market cap $800M.

ASX: OBL

LexShares

$5,000 per case (accredited only)

Crowdfunding platform for commercial litigation. Fractional investment in pre-vetted cases. Minimum $5K-$25K per case. Target 2-3x returns over 3-5 years. 60+ cases funded (2018-2024). Realized returns: 15-30% IRR on successful cases. Accredited investors only. Diversification critical (10-15 cases).

https://lexshares.com

Mighty

$100 per case

Consumer litigation platform. Fund individuals' lawsuits (employment, civil rights, personal injury). Minimum $100 per case. Lower returns (1.5-2x target) but faster resolution (1-2 years). Higher volume, smaller cases. Not accredited-only. Suitable for retail investors testing litigation finance.

https://mightyaf.com

Bentham IMF (now Omni Bridgeway after merger)

$1,000,000 (institutional only)

Institutional litigation fund. $500M+ fund sizes. Portfolio: Commercial litigation, class actions, IP, antitrust. Minimum $1M (institutional only). Target 20-25% net IRR. 5-7 year terms. 70-80% win rate. Diversification across 30-50 cases. Top-tier underwriting standards.

Part of Omni Bridgeway

Litigation Finance Risks

Understanding these risks is critical before investing in tokenized legal claims & marketplaces.

Adverse judgments: 30-40% of cases lose at trial; total loss of capital invested (no partial recovery)
Duration uncertainty: Cases take 3-5 years average; 10+ years for complex matters; capital locked up with no intermediate returns
Adverse cost orders: UK/Australia systems require losing party to pay winner's costs; can result in losses exceeding investment
Appeal risk: Winning at trial doesn't guarantee payout; appeals take 2-4 additional years and can reverse judgments
Settlement pressure: Defendants use time/cost pressure to force low settlements; 60-70% of cases settle (not all at full value)
Correlation with legal environment: Tort reform, caps on damages, pro-defendant judges reduce litigation value

Due Diligence Checklist

Check win rate: Top funders win 65-75% of cases; <60% win rate = poor underwriting or excessive risk-taking

Assess portfolio diversification: Funds should hold 20-50 cases; <10 cases = concentration risk; single-case investments extremely risky

Verify case type: Commercial litigation safer (60-70% win rates) than mass torts or securities fraud (40-50% win rates)

Understand fee structure: Most funds take 2-3x gross returns; attorneys take 30-40%; net to investors often 50-60% of gross recovery

Review historical returns: Top quartile funds deliver 20-30% IRR; median funds 10-15% IRR; bottom quartile often negative after fees

Check case merit: Platforms should provide detailed case summaries; if unable to understand legal theory, don't invest

Assess jurisdiction: Delaware, New York favorable to plaintiffs; Texas, certain California courts more defendant-friendly

Evaluate duration: Personal injury cases resolve faster (1-3 years) than commercial (3-7 years); longer duration = lower IRR despite similar gross returns

Real-World Examples

Burford Capital (2010-2024): $10K invested in IPO grew to $45K (11.5% CAGR including dividends). Outperformed S&P 500 in some periods; volatile (stock down 50% in 2019 on short-seller report).

LexShares case (anonymized): $50K invested in IP infringement case (2019). Case settled $8M (2022). Investor received $140K (2.8x gross return, 40% IRR over 3 years).

Burford's Petersen case: Invested $17M (2016) in Argentine YPF expropriation. Won $16B judgment (2020). Burford's share: $6B+ (300x+ return). Single case drove 40% of fund returns 2019-2022.

Why Consider Tokenized Legal Claims & Marketplaces?

High returns: 15-30% IRR from successful cases; 2-5x gross returns common on commercial litigation

Zero correlation: Case outcomes driven by legal merits, not market conditions; perfect portfolio diversifier

Asymmetric payoff: Limited downside (capital invested) vs. unlimited upside (some verdicts 10-50x investment)

Growing market: Corporate acceptance increasing; 70% of Fortune 500 use litigation funding (2024 vs. 20% in 2015)

Professional underwriting: Funds employ experienced litigators to vet cases; 70-80% case approval rate for funded matters

Related Investment Opportunities in Litigation Finance & Legal Claims

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