Introduction to litigation funding

In a recently published article on Angel Investment Network’s website, AxiaFunder discuss litigation funding, its benefits, and the impacts of post Covid-19 economic environment on litigation investment.

Litigation funding - where a third-party agrees to fund the legal costs in exchange for a share of the proceeds eventually recovered by the claimant - is normally provided on a non-recourse basis and thus has to be repaid only if the case wins.

Litigation funding has the potential to yield significant returns to case investors – i.e. investors of a successful case can typically expect to double, triple or quadruple their initial investment. In addition, litigation funding as an asset class has zero correlation with the fluctuations in the broader economy and other assets. It is also very unlikely for cases to be related to one another. This feature offers further portfolio diversification.

Given that litigation investment has zero correlation with the fluctuations in the broader economy and other assets, it is considered a compelling investment in current economic environment plagued by volatility and uncertainty related to the Covid-19 pandemic. In addition, litigation itself is expected to increase during a recession due to a sharp increase in a number of business insolvency related claims.

To read the full article, visit https://www.angelinvestmentnetwork.net/an-introduction-to-litigation-funding.

Capital at risk. Returns not guaranteed.