LegalPay is India’s first and only focused litigation financing fund at the moment. They invest in commercial lawsuits between corporates involving litigation and arbitration in higher forums in the country. They invest from ₹ 5 lakhs and goes as high as ₹ 10cr per case. They have secured the commitments of first tranche ₹ 10 Crores to invest in cases from HNIs and some family offices, further plan to close the fund raise of ₹100 Cr in the next 12 to 15 months to invest in 100 – 150 cases in the next 3-5-year time period.
Litigation Funding has been a hot topic of discussion in the legal industry for a couple of years now. In this practice, a funder invests in the lawsuit in exchange for a portion of the recovery made possible because of that lawsuit.
It is a non-recourse investment which means that the party only has to pay if the lawsuit is won.
This practice ensures a win win situation for all the stakeholders in the legal community as lawyers always get paid in full and time if the case is funded and the clients too get an option to offset the legal cost from their balance sheets.
LegalPay is doing Third Party Litigation Funding in India through its maiden fund. LegalPay is founded by, Anurag A, Himansu Kesari and Kundan Shahi, and backed by VC Fund partners and major GCs. The team brings along a rich experience of risk management and investment management.
CEO Kundan Shahi mentioned that in last one month they received more than 1000 requests for funding and cases range from Share Holder Disputes, Term Sheet Disputes, Intellectual property etc. He said that we are eyeing an Asset Under Management of USD 200 Millions by 2024 though our investment in commercial claims.
HNIs and other investors are showing interest in this asset class as it gives them opportunity to maximize their yield. This investment model works on Private Equity model without being accredited investors, you can decide to invest as little as 5 lacs and capital call being made in 3 years with fund life of 5 years. The historical return in around 42 % .
Investment in legal claims and we got attracted to has few core reasons that these investments are not related to market performance.
It does not matter how market performs, looking at the current covid situations, everyone is worried about their investment in other asset class however investment in legal has nothing to do with external situations.
Investment in legal claims is inevitable, unlike other alternative asset class, monetization is uncertain. For example, if you have invested in a startup or tech company, in order to realise the liquidity, there has to be some catalysts get the liquidity events, like company has to sold, acquire, IPO etc. and you don’t know when will it happen. However, investment in Legal Claims will definitely get closure, either settlements, judicated WIN or loss but you have the final outcome in a moderate time period.
Unlike the general perception, commercial cases are seeing faster resolution post 2014, and in high courts cases are getting disposed around 24 months, even USA courts are at 27 Months.
Kundan Shahi mentioned that our underwriting process is key to the performance and investor’s confidence, we know that we are underwriting a legal risk, so we try to derive a point wherein we are sure about the parameter level outcomes. These underwriting parameters give us insight about the case performance.
LegalPay is in process to fund 3 cases which they have selected for funding and they are in late stage of process. These cases are from arbitration.
