Companies that seek profits by funding lawsuits are using AI to help find cases to invest in, even as skepticism lingers about the tool’s usefulness.
Legalist Inc. built an algorithm called “the truffle sniffer” to search for lawsuits by focusing on variables such as the court, judge and case type. The tool was essential for the alternative asset manager’s growth, with $901 million now under management after its 2016 founding.
“The AI is a really crucial part of sourcing,” said Eva Shang, Legalist’s chief executive officer. She co-founded the company with the help of a $100,000 grant from billionaire Peter Thiel’s foundation after dropping out of Harvard.
Whether companies use AI to decide which cases to fund, or simply for research, the tool is becoming increasingly common in the $13.5 billion litigation finance industry, in which investors fund lawsuits and take a portion of any successful awards.
Litigation funder Qanlex created software called Case Miner to screen, rank and compare cases in Latin America and Europe. Case Miner then automatically reaches out to potential clients deemed most attractive.
Born out of funding from the Harvard Innovation Lab in 2020, Qanlex is “more of a technology company than investment fund,” said co-founder Fernando Folgueiro.
During the pandemic, the founders realized that international courts were increasingly putting dockets online, creating an opportunity to fund cases in untapped markets. The company invests from $100,000 to $3 million per case, and it tends to favor breach of contract cases.
Case Miner has been so successful that company leaders at times have had to halt using the tool because they could not handle the amount of leads it created for them, said co-founder Yago Zavalia Gahan, who is also an engineer and programmer.
Read the full article on the Bloomberg Law.