Eva Shang explains litigation finance, where investors fund lawsuits in exchange for a cut of the winnings. She uses a scenario where a plaintiff owed $10 million in an acquisition faces legal bills of hundreds of thousands to a million dollars, showing why plaintiffs often need outside money to afford the fight.
The premise behind litigation finance is that it's essentially an investment into the outcome of a case itself. So I'll take a pretty prototypical example of how it works. Let's take Legalist as a company, and let's say that we were to be acquired by BlackRock, a much larger company. And let's say that in the course of that acquisition process, BlackRock promises to pay us $10 million. After we get acquired, I've signed my entire company over. They then renege on that and don't pay $10 million. Now, Well, as a plaintiff, not only am I out $10 million, I also need to pay $100,000, a few hundred thousand, a million dollars for legal fees out of money that I haven't made.
