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SoftBank Investment Director Leaves for Litigation Finance

This is the latest signal of the lawsuit-underwriting industry’s growth.

The latest signal that the litigation finance industry is growing comes in the form of an ex-SoftBank employee.  

Legalist — an algorithm-deploying litigation finance firm that works with small businesses — announced late Wednesday that it had hired former SoftBank investment director Sean Liu as chief financial officer.  

The new hire comes amid a wave of popularity for litigation finance: serial entrepreneur Jules Kroll launched a firm earlier this month, while industry heavyweight Burford Capital disclosed a bevy of new hires last year.  

According to Legalist, Liu will help the firm to deploy its second fund: $100 million it raised earlier this year, bringing its total assets under management to $110 million. Legalist hopes to bankroll between 100 and 200 cases over the next two years, chief executive officer Eva Shang said by phone Thursday. 

The fund charges clients a once-standard 2 percent management fee and 20 percent performance fee, with LPs ranging from endowments to insurance companies and family offices. 

The firm focuses on commercial litigation in mid-market cases that require less than $1 million. It uses algorithms to scrape state and federal court records to source investments, its announcement said.  

“Our commercial cases look very different from other firms’ commercial cases,” Shang said, adding that Legalist takes on a lot of breach of contract cases. Its algorithm scrapes data on what courts and judges are in charge of cases, lawsuits’ progress, and whether they survive certain motion hurdles. 

[II Deep Dive: Serial Entrepreneur Jules Kroll’s Latest Venture: Litigation Finance

“If you have an enormous case, it will either have a huge payout or not make money,” Shang said. “For us, the cases are much more standardized. We are more easily able to achieve diversification.”

According to Shang, she and Liu worked together previously at Vy Capital, where he was an investor. Liu then went on to work at SoftBank for a year, his LinkedIn profile shows.

While at SoftBank, Liu helped set up its Shanghai office and make investments in China, per Legalist’s announcement. At Vy, he worked in a similar role, facilitating investments in the United States and in China.  

Before joining Vy Capital, Liu worked for Silver Lake Partners as an investment associate, the announcement said.  

A spokesperson for SoftBank did not immediately respond to an email seeking comment. 

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