Investing in a litigation case doesn’t seem to make sense at first glance, but there’s sound logic behind it. The best way to explain the reasoning is through examples. Therefore, two very different case studies will follow.
Case study 1: The OJ Simpson murder case
The OJ Simpson murder case attracted a lot of media attention and was a very high-profile murder case. Although the case took place in 1997, most people will remember or know about this case. The jury eventually acquitted OJ Simpson of the murder of his ex-wife and her friend. This was a very notorious criminal trial in the history of the USA, and most people didn’t expect his acquittal.
Now, would you want to invest in this specific murder case? Probably not, and most likely nobody would. There was a lot of publicity around this case, and at the time being, OJ could afford his expensive lawyers.
But what if we turn this around and look at a hypothetical case where somebody seems to be innocent, but can’t afford a defense team? It may be well worth investing in such a case.
Case study 2; Bentley Clothing group vs Bentley Motors in the UK
The Bentley Clothing collective was established in 1962 near Wembley, London. They sell “sporting lifestyle clothing for ladies and gentlemen”.
In 1987, the Bentley Motors group, a luxury car manufacturer, started to sell clothing under their Bentley brand. In 1988, the Bentley Clothing group approached Bentley Motors to negotiate for a Bentley mark license. However, a solution could not be reached in this case. This resulted in litigation starting in 2015.
Interestingly enough, the court ruled in favor of the Bentley Clothing collective. The Series Mark and the work mark Bentley were infringed. By using two distinct signs simultaneously, the ‘B-in-wings’ and Bentley used as a word, would confuse an average customer, the High Court concluded.
Here we have a classic ‘David vs Goliath’ case. David won, and that is the interesting part. It shows that it can be beneficial to invest in litigation cases. The two Bentley companies most likely don’t need funding for their lawsuits. However, there are plenty of people that have good cases, but can’t afford a lawyer to help them.
What is Litigation Finance?
Litigation Finance (also known as Litigation Funding) has been around in Europe since the Middle Ages. Modern legislation started to shape up in the UK and Australia from the 1990s onward. In the United States, it wasn’t introduced until 2006. The Chamber of Commerce initially tried to ban the practice, but to no avail. Nowadays, the US has over 45 funds with over $10 billion, helping claimants seek justice. Expectations are that the global litigation industry is to double this multi-billion market by 2027.
For many people, litigation seems unreachable most of the time. Starting a litigation process against a big, well-known company, may require $3–4 million. That is a serious hurdle, and many people will walk away from such cases, lacking the required funds. That is how big pharma, big oil, big anything most of the time will get away with whatever they did.
This is the moment to call for litigation financiers. They can bring the required millions of dollars to the table without a problem. Moreover, they can provide the best lawyers in the field, working the defense strategy and giving advice throughout the whole case. For all of this, they take around 20–30% of the settlement or recovery.
Almost instantly, the advantage moves to the plaintiff. Institutions are usually not keen on taking on prestigious law firms or spending their money on long-drawn-out court cases. It is likely that big companies are willing to settle early on, especially if they have weak cases.
There were many hoops to jump through for individuals, though. Requirements included that one needed to be an accredited investor, had an income of at least $200,000 per year, and have a net worth of over $1 million. This makes the entry barriers unfairly exclusive.
Liti Capital and Litigation Finance
Liti Capital is an investment company backed by Swiss law, and they are specialized in Litigation Finance. Litigation Finance in turn is part or a subset of private equity (PE), which can be seen as an alternative way of private financing. The involved capital is typically not listed on any exchange.
This is where Liti Capital is slightly different. With blockchain technology, they created an opportunity for retail investors in an entirely new way. By connecting the blockchain with litigation, retail investors now have access to equity token offerings (ETO). With their cryptocurrency token, the $LITI token and $wLITI token, investors can become part of Liti Capital and engage in private equity. Involvement doesn’t require hundreds of thousands of US Dollars anymore but only an investment in the $LITI tokens. Investors can now make a difference by making legal justice available and accessible.
In contrast to most other cryptocurrencies, the $LITI and $wLITI tokens are tied to true assets. The LITI token is not like an investment in a crypto coin, but rather an equity token offering. There are only four ETOs approved so far in Switzerland. Such an equity token offering is a new method in the crypto space. Funds are raised via tokenizing the company’s assets. These tokenized equities can be in the form of a share in the company or by participating in an investment fund.
The $wLITI tokens are ERC20 tokens, which are compatible with the Ethereum blockchain, and the ‘w’ stands for ‘wrapped’. This means that they represent a value that is fixed to the $LITI token. Owning cryptocurrency can be compared to owning stock in a company, except those assets are digital.
What is an Equity Token Offering (ETO)?
An ETO is unique as an interesting proxy for investors who are opposed to riskier investments. Rather than entering and participating in a potentially volatile crypto market, following every move that Bitcoin makes for the better or the worse, they follow the performance of the company — in this case, Liti Capital. Being a Swiss-based company, Liti Capital must abide by Swiss laws. This in turn offers more protection for investors because Liti Capital complies with European and US regulations.
Investing in litigation can be an appealing opportunity to diversify an investment portfolio for retail investors. Due to steep financial entry barriers, this was not available before Liti Capital’s entry into this market. With blockchain technology, it is possible to offer equity in the form of digital assets, or rather, cryptocurrencies.
Litigation funding is an investment that consistently outperforms all others, including gold, bonds, and real estate. With impressive ROIs, investments also bring justice within everyone’s reach.
Find out more at www.liticapital.com
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