A website promoting crowdfunding of litigation has launched in the US, and is eyeing the UK as the first stop when it expands internationally, Litigation Futures can reveal.
LexShares opened for business last week, connecting accredited investors with claimants in commercial proceedings in order to make an equity investment in a specific case, taking a slice of the proceeds if successful and losing their money if it does not.
LexShares has already funded a case with a claim value of more than $40m and currently has several other legal claim investments available.
It has seed funding from Atlas Venture, an early-stage venture capital firm, and various angel investors.
“LexShares provides a transparent, economically rational and efficient means for connecting plaintiffs with investors to fund their commercial legal claims,” said chief executive and co-founder Jay Greenberg. “In doing so, we hope to provide plaintiffs with equal access to justice and investors with access to a new asset class that is not correlated with broader capital markets.”
Mr Greenberg, formerly part of Deutsche Bank’s technology investment banking group, founded LexShares with American litigation finance pioneer Max Volsky, who has overseen more than 10,000 investments in legal claims since 1999 and is the founder of litigation finance fund LexStone Capital.
Mr Greenberg told Litigation Futures that in its first year of operation LexShares be focused on US legal claims. But he added: “In the medium term we do plan to explore expansion opportunities in other jurisdictions. The UK would seem like a logical first step for that expansion.”
LexShares targets a broad range of commercial claims at all stages of litigation. All investment opportunities posted on LexShares are reviewed by its legal and securities professionals and are offered through WealthForge, a registered broker.
The platform has been endorsed by Richard Painter, a securities law professor at the University of Minnesota Law School, who first wrote about the potential of litigation funding in the mid-1990s, and from 2005 to 2007 served as associate counsel to the President and chief White House ethics lawyer.
He said: “Litigation finance is maturing. The next logical step is using a technology platform like LexShares to broaden access to this asset class and equalise access to the legal system.”