Banking on double-digit returns with no market volatility, startups are attracting investors to fund lawsuits.
The platforms, such as LexShares in Boston and Trial Funder Inc. in Los Angeles, raise funding for personal-injury, civil-rights and other types of lawsuits.
The companies tend to target commercial cases which need less money than traditional litigation-finance companies consider giving, according to a WSJ report.
LexShares has had three cases settle, all favorably. In one case, investors got a 93 percent annualized return from a $28.5 million settlement of a whistleblower lawsuit against medical-waste disposal company Stericycle. The company was accused of defrauding government customers by withholding accurate pricing information.
The investments are not without risk as lawsuits can drag on and funders lose everything if a suit isn’t successful.
With investments paying out at high rates of return after fees, litigation funding is moving into the mainstream.
Read more at WSJ.com.
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