News

A legal start-up to help raise funds for lawsuits

Venkatesh Ganesh Bengaluru | Updated on September 07, 2018

For businesses facing intellectual property (IP) lawsuits, or individuals fighting to get their money back in cases of incomplete building projects, but without the money to fight the case, assistance is now just a swipe away.

“Litigation funding”, where a party unrelated to the lawsuit funds the litigation in return for a profit, is starting to find some takers.

Advok8, a new-age start-up founded in 2016 in the legal space, believes that it can create a market for this by assisting litigants in raising funds for their lawsuit. This is similar to the concept of crowdfunding, which has gained popularity in the West for getting a large section of investors to invest in a project for a return.

“It is like lending them money when they need it the most,” said Kundan Shahi, Founder and CEO, adding that a bulk of litigation funding requests also come from its mobile app.

Harilal Tripathi, who exports motor components was in a partnership with a Turkish businessman. However, Tripathi could not avail his share of the revenue in the partnership. “It was a case of breach of contract and I incurred a $300,000 loss,” said Tripathi. He did not have the funds to carry out a legal proceeding against the Turkish businessman. This is when he stumbled upon Advok8. He filed a claim for ₹2 crore and won.

How it works

So far, Advok8 has received around 350 requests for litigation funding. The start-up charges an upfront 20-25 per cent fee, after assessing the case files.

These cases were submitted by lawyers, law firms, individual litigants and business houses. It takes up cases that involve breach of contract, trademark infringement, medical negligence and patent infringement. However, it does not take up criminal cases.

“For funding, Advok8 reaches out to individual investors to invest in the legal claim of cases that mature within 2-4 years with an average funding size of a case being ₹5 lakhs–₹4 crore. The return on this investment is in an average of 150-200 per cent,” said Shahi.

The concept of Litigation Funding has got mainstream acceptance with the Indian Supreme Court recently validating this concept.

So far, the success ratio of cases that Advok8 has taken up is high, but that could be a challenge in days to come. “While playing safe may work initially, over a period of time complex cases will have to be taken up,” said a Karnataka High Court lawyer.

The case for a venture like this has got a theoretical rationale in India. As per the official data, there are 27 million cases pending across various courts in the country.

Published on August 15, 2018

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like