LexShares of New York has launched a crowdfunding platform that enables individuals to make an equity investment with plaintiffs in commercial lawsuits. If the plaintiff prevails, the investor will receive a portion of the proceeds from a settlement or court judgment, proportionate to the investment.
The service follows the launch of Legal Funding Central six months ago, which helps personal injury plaintiffs access upfront money from their lawsuits by matching them with qualified investors – from individual funders to the most respected firms.
“LexShares provides a transparent, economically rational and efficient means for connecting plaintiffs with investors to fund their commercial legal claims,” said Jay Greenberg, Co-Founder and CEO of LexShares. “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.”
“Financing is key to the success of a lawsuit. Large companies often have an unfair advantage because they have virtually unlimited access to legal resources that individuals or smaller companies do not,” explained Volsky, Co-Founder and Chief Investment Officer at LexShares. “Our mission is to even the playing field.”
LexShares targets a broad range of commercial legal claims at all stages of litigation. It operates using best practices in ethics and professional responsibility, and has integrated multiple privacy layers into the platform to protect all parties. All legal claim investment opportunities posted on LexShares are reviewed by its legal and securities professionals and are offered through WealthForge, LLC, a registered broker-dealer and member FINRA / SIPC.
Plaintiffs apply to have their cases posted on LexShares and, if they are considered to have strong merit, are posted to the platform. Once posted, accredited investors can review the case and decide if they want to invest. Investors are able to track litigation activity related to their investment. If the plaintiff wins, the investor receives a portion of proceeds; if the plaintiff loses, the investor forfeits their investment.
LexShares has already funded a case with a claim value of more than $40 million and currently has multiple other legal claim investment opportunities available for investment.
Funding personal injury cases
Legal Funding Central (LFC) will handle any type of case, from those seeking $500 to those seeking $5 million or more. "This means a lot of personal injury cases, of course, as those plaintiffs are the most common and also the most in need of responsible funding. So we help those plaintiffs in a socially responsible way," said Seth Simons, Managing Editor of LFC.
The online platform matches plaintiffs – people and small businesses – directly with qualified funders. Its funders include individual investors as well as more established companies. The marketplace is competitive: funders have no choice but to offer lower rates and better terms if they want the business.
"We're completely open with our clients about how legal funding is more expensive than traditional forms of financing. If we don't think they'll see the bulk of their recovery, we'll encourage them to seek other options," Simons said.
Simons compared LexShares is to Kickstarter, and compared Legal Funding Central to the Lending Club of legal funding. "Our platform is geared towards helping plaintiffs find the lowest and best rates. We do allow qualified attorneys to invest through us as well. We also run the leading content site to educate people about the space.