Litigation finance comes of age

Once the preserve of hedge funds and other large institutions, private investors can now share in the potential high returns offered by litigation finance.

The UK’s first litigation crowdfunding platform, AxiaFunder, which launched in January, enables primarily high-net-worth and sophisticated investors to provide funding to claimants who can’t afford to pay for their legal disputes. In return for their investment, investors receive a fixed return on their capital if the case wins. Factoring in some losses, average returns are expected to be between 25% and 30% a year although the outcome of each case is binary, making it important to spread your investment across several cases.  

The platform’s first case, a professional negligence dispute that was seeking to raise £12,720, was funded in January and settled in August for an investor return of 43% in 8 months. Meanwhile, AxiaFunder’s second case, a breach of contract by a property developer which was seeking to raise a minimum of £12,000, was funded – less 8 hours after going live on the platform. Structured as an Innovative Finance ISA (IFISA) bond, it targets a fixed return of 75% a year if the case wins. To date this case is progressing well and has already accrued interest (if successful) of 56.25%. AxiaFunder’s third case raising £40,000 was funded in under 30 minutes.  There is now a fourth case available for funding in the AxiaFunder platform that offers potentially high returns.