Mumbai: Tech-based litigation financier LegalPay has secured an undisclosed seed funding round led by leading accelerator VC, 9Unicorns to tap an estimated $20 billion legal expense market in the country.
Early-stage investment platform LetsVenture also participated in the round along with some marquee angal investors including Ambarish Gupta (Founder of New York-based PE-fund Basis Vectors & founder of Knowlarity).
Founded in 2020 by seasoned investor Kundan Shahi, LegalPay is India’s first third-party litigation finance platform that helps entities/businesses ease the financial burden of litigation cases such as shareholder and IPR related disputes. Such cases are filtered with the help of technology from the websites of Indian courts. It focuses mostly on late-stage cases or those that are nearing closure with a financial requirement of anything ranging from Rs 20 lakhs to Rs 3.5 crore. Besides, cases should have strong legal merit, a high-performing legal team, and clarity on the settlement timeline.
The cases are financed through funds raised from large family offices and HNIs/ultra HNIs in the country. The investors in return can expect a minimum of 30% IRRs across stages and types of cases, which also means that the cases undergo a strict and detailed risk and underwriting process. LegalPay charges a two percent management fee and a 20% carry for the transactions made on the platform. While the platform enables investment by the family offices and HNIs with a bigger risk appetite, it aims to allow access to individual investors by the end of 2021.
On the fundraising, Kundan Shahi, CEO of, LegalPay said, “Litigation finance promotes lawsuits to be decided purely on their merits. Simultaneously, it is also creating an alternative investment asset class for Indian investors with an opportunity to realize significant returns through litigation finance. We are delighted that our current investors have placed their trust in the vision of our company. This fundraise is a validation of growing interest in this asset class. We believe that with the constant support of our investors, we will be able to change the role of third-party legal financing in India in the years to come.”
He further stated that with the second wave of COVID 19 adversely impacting businesses, litigation cases are on the rise. The company plans to deploy over Rs 100 crore for the next 2 years on late-stage cases that have a faster realization.
Anuj Golecha, Co-founder at 9unicorns said, “While litigation finance has been in practice since 1870, LegalPay is trying to organize this the litigation financing sector by and giving access to curated deals to the existing litigation financiers. It has been structured in such a fashion that even at a 17% success rate, investors can secure their invested amount. This can be a lucrative alternative-investment asset class, for the Indian investors, returns of which are not correlated to market performance. We wish LegalPay’s founding team success in their endeavors.”
Sunitha Ramaswamy, President, Early Stage, LetsVenture “LegalPay represents a unique business model that will definitely help consumers to overcome the initial challenges to pay legal fees which could otherwise be a very cumbersome process. The flexibility to provide a feasible solution for consumers who face the issue of lack of funds while dealing with a legal matter is definitely the need of the hour which is being addressed by LegalPay, we are indeed looking forward to working with the team as they scale up their operations.”
While the litigation finance business is quite popular in the developed markets such as North America and Europe, India is slowly warming up to this idea. The Indian legal expense market is almost worth $20 billion, and it is growing at a CAGR of 10-12%. However, it is highly unorganized at present as India does not allow contingency/success-based fees for lawyers. At a portfolio level, LegalPay aims to settle claim value worth Rs 200 crore (AUM) in this year itself.
