He is the co-founder and CTO of Legalist, the first technology-enabled litigation finance company. A Harvard dropout, Christian Haigh leads the engineering team at Legalist, which uses machine learning on over 1.5 billion data points to invest in lawsuits. Legalist, a Y Combinator graduate, has successfully invested and recovered positive returns on several prior litigation investments and recently closed a $10.25 million investment fund.
Litigation finance is where a third party pays for a plaintiff’s legal fees in exchange for repayment if the case is successful. If the case loses, then the funder is not paid back. Although litigation finance is a fast-growing new asset class, few funding companies use data-driven practices to make investments. That is the innovation that Legalist brings: using millions of court records, we use data science algorithms to assess which cases are likely to win, and to invest in them.
I’ve always had an interest in data science, and I love that litigation finance is at the intersection of finance, legal, and tech. Our original product that Legalist started Y Combinator with a litigation analytics tool for lawyers, which uses similar data-sources and technology that we use in-house today, but offered to lawyers in their own practices. Litigation finance seemed like a way to apply our expertise in legal tech more directly to our business.
To be clear, I’m a Harvard dropout. I did not quite make it to graduation, unfortunately. I’ve always been a bit of a maverick, even before the dropping out to start a company. I’m originally from the UK, and I went to boarding school, whereas you can imagine, I got up to all sorts of shenanigans. When I was 11, I started my first business, which was smuggling chocolate bars into my boarding school dorm after Christmas holiday, and selling the chocolate off in small pieces to my classmates at a huge markup. I also learned to play the organ so that I could tell my teachers I was going to music lessons when I secretly snuck off to play video games. All that said, learning to forge my own path was probably one of the most important lessons for being an entrepreneur — and more important than anything I could have learned in class.
Although litigation finance in theory promotes access to justice by providing capital to plaintiffs, in practice, it’s departed from its David vs. Goliath roots and started to look more like Goliath vs. Goliath. As litigation finance grows as an industry, the kinds of plaintiffs that receive financing are more often Fortune 500 companies than small businesses. By using automation and analytics to streamline the litigation finance process, we’re able to fund small business clients who need money for smaller cases that wouldn’t necessarily appeal to the large funders. Our fundamental mission is to promote access to justice, and in litigation finance, as in so many other sectors, technology helps democratize that resource.
Litigation finance is relatively new as an industry. Unfortunately, one of the regulatory issues faced by litigation funders is the sheer uncertainty and lack of case law that documents best practices. While the weight of case law supports litigation funding as ethically robust and protected under work product doctrine, many states have not issued any opinion on the matter. I’d like to see that process sped up and reach its inevitable conclusion, so our customers can have more certainty.
When Legalist first launched, other litigation funders scoffed at the idea that legal analytics could play a role in underwriting. Yet if you look around at every other financial asset class, analytics are indispensable, and there’s no reason investing in legal outcomes should be exempt. Recently, we’ve seen other funders debut their own analytics engines, so it’s apparent that the industry is gradually adopting many of these tools to help streamline the investment process. The end result will be an industry that is faster and more responsive to the need of plaintiffs and attorneys.
Peter Thiel’s funding of Hulk Hogan certainly drew attention to the industry, but it’s a bit of a red herring in terms of educating the public on how litigation funding is actually being done. The reality is that defamation cases like Hulk Hogan’s are extremely rare and difficult to fund — the vast majority of funding is centered around boring breach of contract cases. Brokers being left out of deals, small businesses having nonpayment from their clients, breached vendor agreements. That said, it’s important for people to know that they have access to legal recourse without having to shoulder the entirety of the legal fees, so we’re happy that Hulk Hogan’s case spread awareness of the industry as a whole.
The biggest divide in the litigation finance industry is between commercial and consumer litigation funding. Consumer litigation funding companies generally advance small amounts of just a few thousand dollars, usually to cover personal living expenses for plaintiffs. Commercial litigation funding companies, by contrast, usually fund legal fees and costs for the actual litigation. As a commercial funder, we see ourselves as actually helping the case succeed, rather than just loaning against the final amount. We’re proud of our role in helping see the case to the end!
“AI in legal tech is frankly, long overdue. We see so many lawyers who would be able to litigate better if they opened their practices to new technology like ROSS, which would help them do their jobs better.”
Our most common cases are small business breach of contract cases: cases where a business owner sues a client for nonpayment or a vendor for delivering goods that weren’t to specification. But if we’re going to talk about the most impactful cases: after the success of our #MeToo Tales campaign, where we helped pair sexual assault victims with attorneys and later considered their cases for funding, the stories of horrific assaults we heard definitely made an impact on me. We’re incredibly proud to be supporting those victims in their fight for justice.
Believe it or not, litigation finance actually originated in the UK, where it has a long and established history. Given its prevalence in Europe and its relative late entry into the States, I think it’s clear that litigation finance has a long and promising road ahead.
AI in legal tech is frankly, long overdue. We see so many lawyers who would be able to litigate better if they opened their practices to new technology like ROSS, which would help them do their jobs better. In litigation finance, the funders are also gradually catching on that if lawyers can use AI to win their cases, litigation finance companies can use AI to figure out which ones will win.
I’m simultaneously excited and freaked out by the possibility of immersive, VR movies like in Ready Player One.