Companies that seek profits by funding lawsuits are using generative AI to assist in locating potential cases to invest in, despite skepticism about the effectiveness of the technology. Alternative asset management firm Legalist Inc., for instance, utilizes a proprietary algorithm aptly named “the truffle sniffer” to search for cases by focusing on variables such as the court, judge and case type. Eva Shang, Legalist’s CEO, explained how integral AI is to their sourcing process – a factor that has no doubt fueled their growth to a noteworthy $901 million under management since their inception in 2016.
This trend is increasingly common in the $13.5 billion litigation finance industry, where investors fund lawsuits, taking a portion of any successful awards. Another significant player leveraging AI is Qanlex, whose algorithm named Case Miner, screens, ranks, and contacts potential clients in Latin America and Europe.
However, the use of artificial intelligence in this context is far from flawless. Due to the lack of publicly available data, especially regarding confidential settlement amounts, predicting a case’s value can be a complex process. Companies like Qanlex and Legalist, while using AI to generate initial leads, use human teams to conduct due diligence, verify the case’s merits, and assess its financial viability before committing capital.
On the other hand, UK-based Apex Litigation Finance, utilizing AI more as a filtering tool, primarily to help identify cases they do not want to invest in. Maurice Power, Apex CEO, echoed a sentiment common in AI-enthusiastic circles: the value of AI’s predictive analytics is directly proportional to the quality of data available to it.
Even with AI’s current limitations, its role in the litigation finance sector shows potential for growth. Firms like Parabellum Capital and Burford Capital experiment with AI for automating case management processes and retroactive analyses on closed cases, respectively. Although skepticism persists about the use and efficiency of AI in litigation financing, it’s clear that AI’s role in this field is evolving and likely to continue expanding in the future.