The Litigation Grind: 42 Cases, 7 Years, 1.25% IRR
An eight-member investor group put $2.3M into 42 commercial lawsuits on a retail platform and came out roughly where it started. The win rate was defensible. The pricing wasn’t — the platform won deals by undercutting bigger funders on the cases those funders had already turned down, and that inversion is the whole result.
The Bottom Line
Between 2017 and 2020, my investor group put $2.3M into 42 commercial litigation cases on LexShares.
We barely broke even.
| Total Invested | $2,331,000 |
| Members | 8 |
| Cases | 42 |
| Record | 20 wins, 15 losses, 7 pending |
| IRR | 1.25% |
| Resolved MOIC | 1.05x |
On resolved cases the group got back $1.05 for every dollar invested — barely positive, after more than seven years of holding assets nobody could sell. The last resolution, Passport Patent in January 2026 at 1.84x, is what pushed several members from underwater to breakeven. A nine-year-old patent case arriving at the end was the difference between a bad outcome and a slightly worse one.
My Portfolio
I invested $1M of the group’s $2.3M — about 43% of the total, and the core of my all-in bet on litigation finance. My 4.98% beat the group’s 1.25%, and I want to be careful about claiming credit for that. We all stopped investing after Q1 2020, so it isn’t that I timed the exit better. What separated us was position sizing, not selection: some members concentrated heavily in cases that went badly, and I happened not to. Spreading $1M across 17 cases is a decision I can defend. Which 17 cases is mostly not.
| My Portfolio | Group Total | |
|---|---|---|
| Invested | $1,000,000 | $2,331,000 |
| Cases | 17 | 42 |
| Record | 9W-4L-4P | 20W-15L-7P |
| IRR | 4.98% | 1.25% |
Wins (9 cases, $420K invested → $699K returned)
| Case | Invested | Returned | MOIC |
|---|---|---|---|
| Toy Licensing | $25,000 | $64,135 | 2.57x |
| Passport Patent | $25,000 | $45,897 | 1.84x |
| NFL Fraud | $75,000 | $134,295 | 1.79x |
| Trade Secrets | $150,000 | $263,269 | 1.76x |
| Roundup | $25,000 | $42,399 | 1.70x |
| Medical Finance Fraud | $30,000 | $50,703 | 1.69x |
| Fuel Injection Patent | $30,000 | $33,710 | 1.12x |
| Trademark | $50,000 | $54,970 | 1.10x |
| Software Contract | $10,000 | $10,000 | 1.00x |
Losses (4 cases, $350K invested → $150K returned)
| Case | Invested | Returned | What Happened |
|---|---|---|---|
| Transit Lease | $82,500 | $0 | Rejected $5M settlement, lost at trial |
| Commercial Lease | $50,000 | $0 | Lost at trial, lawyer withdrew, appeal dismissed |
| Counterfeit Equipment | $47,500 | $0 | Spoliation sanctions |
| Knights of Columbus | $170,000 | $149,937 | Won trial, but $500K verdict vs $100M claim |
Performance by Vintage
| Year | Record (W-L-P) | IRR | Notes |
|---|---|---|---|
| 2017 | 5-4-2 | -2.81% | Early deals, mixed results |
| 2018 | 6-3-3 | 4.68% | Best vintage |
| 2019 | 6-8-2 | 0.75% | More losses than wins, but late resolutions helped |
| 2020 | 3-0-0 | 17.48% | Small sample, all resolved positive |
The vintage column argues against the obvious explanation. 2019 had eight losses against only six wins and still finished barely positive, rescued by late-resolving cases like Passport Patent at 1.84x. Meanwhile 2020 posts 17.48% on three cases. Neither number reflects a change in underwriting quality — the good vintages are the ones where something resolved quickly, and the bad ones are where cases sat. Duration, not selection, is doing most of the work in that column. That’s the first sign the problem was built into the pricing from the start rather than something that went wrong later.
What Went Wrong
LexShares was a crowdfunding platform that sold stakes in individual litigation cases, and later launched pooled funds alongside it (Marketplace Fund I and II). Our group bought individual cases rather than fund units, which turned out not to matter much — the same underwriting produced both, so the funds and the marketplace failed in the same ways.
The scale of the shortfall only becomes clear next to what disciplined funders achieve:
| Metric | LexShares (Our Group) | Disciplined Funder Standard |
|---|---|---|
| Success Rate | 57% (20W / 35 resolved) | 80%–92% |
| MOIC (resolved) | 1.05x | 1.8x–2.5x |
| Acceptance Rate | Unknown (appeared high) | <5% |
| Net IRR | 1.25% | ~20% target |
Benchmarks: commercial litigation finance funds generally target roughly 2x net MOIC and about 20% net IRR. One middle-market funder reported a 92% success rate and 1.8x MOIC on realized investments while funding just 3% of cases reviewed. Burford Capital’s concluded investments, inception through 2024, show a 26% IRR and an 87% ROIC — roughly 1.9x — across $3.3B of realizations, but those are asset-level figures before fund fees and carry, so they overstate what an investor receives. The 1.05x in the left column has no such gap: it is simply what came back.
Every line is a miss, and the first two multiply: win rate times multiple is the whole return. A 57% win rate is not fatal on its own — it’s roughly what honest underwriting of contested commercial cases produces. It’s fatal in combination with the multiples LexShares actually delivered. Winners clustering at 1.8x need a 56% win rate just to return capital, which put our 57% almost exactly on breakeven with nothing left over for the years of waiting.
Run it the other way and you can see what the discipline is for. At the same 57% win rate, deals structured for 3.5x return 2.0x blended. Sophisticated funders don’t underwrite to 3.5x because they expect every case to triple — they do it so a coin-flip win rate still pays. Pricing is where the margin for error lives, and this book had none.
Wrong Expertise at the Top
LexShares was founded in 2014 by Jay Greenberg, who had headed Deutsche Bank’s technology investment banking group, and Max Volsky, who became Chief Investment Officer. Neither had built a career underwriting commercial disputes, and the problem was not inexperience. It was the wrong experience: Volsky’s deep track record was in consumer litigation finance, not commercial.
He was a genuine pioneer of the field — he’d overseen more than 10,000 legal-claim investments since 1999, ran a separate litigation finance firm, and wrote the first book on the subject. Read as a credential that number is overwhelming. Read as a description of a business model it’s a warning, because a five-figure investment count is a consumer-volume signal: it comes from lawsuit advances and pre-settlement funding, where claims are numerous and settlement ranges predictable. Commercial litigation is the opposite — low-volume, high-variance, idiosyncratic. The credential that made him credible to investors was evidence he’d spent his career in the other business.
The two businesses require opposite kinds of underwriting:
- Consumer: High volume, predictable settlement ranges, insurance company defendants with settlement incentives
- Commercial: Low volume, highly variable outcomes, well-resourced corporate defendants with no routine settlement incentive — they settle only when the cost-benefit favors it
Consumer funding is an actuarial exercise: underwrite the average, accept that individual claims are noise, and let volume do the work. Commercial funding has no average to underwrite — each case is its own instrument, and there is no next thousand to smooth it out. Applying the first discipline to the second produces systematic overvaluation, because the whole method assumes a distribution that isn’t there.
The fair version of the other side is that the volume instinct is probably why the platform existed at all. Building retail access to litigation finance takes someone who thinks in throughput, and in 2014 nobody else was building it. The habit of mind that made LexShares possible as a platform is the one that made it unreliable as an underwriter.
Weak Case Selection
The selection problem showed up as a pattern of cases that should never have cleared an underwriting screen:
- Distressed plaintiffs: The Commercial Lease case involved a landlord whose bank was foreclosing on his building while he sued his tenant
- Uncollectable defendants: In April 2020, after oil prices collapsed, LexShares offered a deal with an energy industry defendant whose financials looked terrible. I passed. They funded it anyway.
- Government defendants: Multiple cases against entities with no settlement pressure and willingness to fight indefinitely
- Irrational plaintiffs: The Transit Lease plaintiff rejected a $5M settlement offer and lost everything at trial
What links those four is that none is a complaint about legal merit. Sophisticated funders underwrite three distinct risks — liability (will the plaintiff win?), damages (how much?), and collectability (can the defendant actually pay?). LexShares focused almost exclusively on the first. A plaintiff whose building is being foreclosed on may not survive long enough to collect; a defendant with wrecked financials may win you a judgment worth nothing; a government defendant can litigate long enough that any eventual recovery stops being worth the wait; and a plaintiff who turns down $5M has a veto over your outcome that no amount of case strength offsets. Every one of those can sit behind a claim that would win on the law. They were buying good arguments, not good investments.
The strongest defense here is that a retail platform never sees the deal flow an institution does. A plaintiff who can raise money from Burford doesn’t go to a crowdfunding site, so the pool LexShares chose from was picked over before it arrived. That explains the raw material. It doesn’t explain funding the energy defendant anyway.
Worse Cases at Lower Prices
A LexShares representative told me directly how the platform won business against larger funders: it priced below them. A plaintiff could raise money more cheaply from LexShares than from an established litigation funder, and that was the pitch. This is one conversation and I have no document for it, so I’d treat it as an anecdote if the portfolio didn’t line up with it so exactly.
Cheap capital for the plaintiff is the same thing as a thin return for the investor. A funder’s price is its share of the recovery, so every discount granted to win a mandate comes out of the only upside an investor has. That is the mechanism behind a book whose best outcomes still didn’t pay.
Put that next to the selection problem and the two stop being separate failures. They were taking cases institutional funders had declined and charging less than those funders would have charged. Risk pricing is supposed to run the other way — weaker claim, wider multiple, the same way weaker collateral demands a higher coupon. Here both moved together, so the worse the case, the less they were paid for taking it.
Competing on price isn’t irrational in itself. A new entrant with no track record has few levers, and price is the most available one. It is simply the wrong lever for this asset class, and it also undercuts the deal-flow defense: if you know your pool has been picked over, the correct response is to widen your pricing, because you are underwriting claims that better-resourced funders already examined and passed on. Undercutting them instead is the one adjustment that turns a difficult pool into an unprofitable one.
A lender has room for that trade and a litigation funder doesn’t. Shave a spread by 200 basis points and you still hold collateral and a claim in bankruptcy. Shave your multiple and you have cut the only compensation that exists for the cases returning nothing at all.
Overvalued Settlements
Even the cases that worked didn’t work very hard:
- No 3x returns — the best was Toy Licensing at 2.57x
- Wins clustered at 1.5x–2x — NFL Fraud 1.79x, Trade Secrets 1.76x, Roundup 1.70x
- Many “wins” barely profitable — Trademark 1.10x, Fuel Injection Patent 1.12x, Software Contract 1.00x
It got worse after the fact, on top of a price that was already thin. Plaintiffs frequently settled for far less than projected and then came back to negotiate the funding terms downward — and LexShares accepted. Each concession was individually defensible: a reduced return beats a plaintiff who walks away or goes under. The aggregate effect was a book with its upside shaved off and its downside fully intact. Nothing I held reached 3x, while three of my cases returned exactly zero. Concessions were available on the upside and never on the downside.
No Time for Retail Due Diligence
Deals filled in under an hour once published. By the time I got access, read the summary, and started paperwork, one deal was already full. That timeline makes independent diligence structurally impossible, not merely inconvenient — there is no version of checking a defendant’s finances or pulling a docket that fits inside 60 minutes. The platform’s scarcity was doing double duty: it moved capital quickly, and it guaranteed that nobody who moved that quickly had verified anything.
Declining Win Rate
In December 2017, LexShares reported 10 wins out of 11 resolved (~90%) and expected 75% going forward. Then they stopped releasing stats. By early 2020, only two of the last nine resolved cases netted a profit — four were total losses.
To be fair to them, 11 resolved cases is far too small a base to mean anything, so the ~90% was closer to noise than to a claim. What matters is what happened to disclosure once the noise turned unflattering. Reporting stopped at the high-water mark and never resumed, which left the early figure doing promotional work for years after the portfolio had moved against it.
Fund-Specific Problems
The pooled funds layered structural problems on top of the underwriting ones:
- Deal-level carry: They calculated carried interest on each individual case, not at the fund level. Fund I reported -7% IRR in 2024 (now improved to ~4% on resolved cases as of Q3 2025) — but still collected carry on winners throughout. Standard fund-level carry would net winners against losers; deal-level carry meant LexShares collected on every winning case regardless of overall fund performance. Industry standard: 20% carry subject to 8% preferred return with 100% GP catch-up, calculated at the fund level.
- Cash drag from 100% upfront capital calls: Fund I called all committed capital on day one, then took more than two years to deploy it — so investor cash sat idle in the fund instead of staying productive until it was needed. (Charging the management fee on committed capital during the investment period is itself standard practice; the problem here was calling everything upfront rather than as deals closed.) Investors complained as early as 2019. Sophisticated funds call capital just-in-time, tranched against deployment, so uncalled commitments keep working for the investor.
- Fee creep: Carried interest rose from 20% to 25% on the pooled funds (Fund I to Fund II) — and from 20% to 30% on direct case investments.
- Inflated IRR reporting: LexShares calculated IRR from the date of fund disbursement to plaintiffs, not the date of capital commitment. With three to four weeks of lag, this inflated their reported numbers. They also never provided MOIC — only IRR.
- Inflated returns: The Fund II pitch reported 52% median IRR and 69% win rate. Our group caught them inflating return multiples in the pitch deck — stated vs actual returns differed by 0.1x–0.2x per case. The win rate dropped to 63% within a week of launch after a case resolved.
- Gross vs Net: More recently, investor letters started reporting gross IRR and MOIC rather than net returns — the numbers investors actually receive after fees. Another way to make performance look better than reality.
One defense of these funds is legitimate and worth stating plainly. Early negative returns aren’t unusual in litigation finance — the J-curve effect, where management fees are charged before investments resolve, can show a negative IRR while the underlying book is performing fine. That defense would explain Fund I’s -7%. It doesn’t explain a 1.05x on resolved cases, which is the number the J-curve is supposed to eventually rescue. The problem wasn’t timing. The underlying investments were weak.
Track Record Opacity
LexShares refused to provide detailed track record data until each fund opened — convenient timing, since it withheld the numbers during the only window in which reading them could have changed anyone’s mind. When investors repeatedly asked for case-level statistics in 2018–2019, the company deflected, saying historical data would only be available when the next fund launched. That left three options: wait indefinitely, invest blind in individual deals, or trust the curated statistics LexShares chose to release.
There is a legitimate version of this. Securities rules genuinely constrain when and how a manager circulates performance figures, and a fund that isn’t raising has no duty to publish anything. What that doesn’t explain is why the data appeared precisely when the company wanted money and vanished the rest of the time. The release schedule was the sales cycle, which inverts what disclosure is for.
When Fund II launched in June 2020, our group evaluated it and passed. They had fixed the capital call issue — 10% upfront instead of 100% — but refused to change the deal-level carry. That refusal was the answer to the only question that mattered: they were willing to fix the problem that cost investors yield, and not the one that paid the manager on cases the fund lost money on. We stopped investing after Q1 2020.
What’s Left
I still have four cases pending ($230K invested). The group has seven. The probabilities below are my own estimates, not the platform’s, and they are the least reliable numbers in this post — every one of them is a guess about a court.
| Case | Invested | Prob. | Status |
|---|---|---|---|
| Bovine Pharma | $75K | 65%–75% | Hearing Jan 12–19, 2026 |
| Surveillance Patent | $100K | 60%–70% | All 7 IPRs denied, patent validated July 2025 |
| ICSID Arbitration | $50K | 20%–30% | Hearing Sept 2026; claimant bankrupt |
| Tribal Contract | $5K | 25%–35% | 8 years of jurisdictional battles; got $1.8K back |
Bovine Pharma ($75K → ~$233K, Q2–Q3 2026): Hearing Jan 12–19, 2026 after 11 years of litigation. Product works (clinical trials proved efficacy in 2023), breaches are documented. Binding arbitration means no appeals — decision expected within months.
Surveillance Patent ($100K → ~$340K, Late 2026–2027): Survived every validity challenge — seven IPR petitions denied and claims 1–10 of the ’980 patent twice confirmed in USPTO reexams (latest July 2025). After a long stay, the court has resumed proceedings for a limited portion of the case and ordered supplemental briefing on the pending partial summary judgment motion, with deadlines running through early 2026. Other parts of the case remain stayed. Strong on liability; damages are the question.
ICSID Arbitration ($50K → ~$250K, 2027–2029): The riskiest case. First claim dismissed because wrong party filed. Claimant is bankrupt. But insurers providing $2M security suggests the lawyers see merit. Hearing September 2026.
Tribal Contract ($5K → ~$17K, 2028+): An eight-year jurisdictional nightmare that just reset. At least I got 36% back ($1.8K) from a sanctions award.
Outlook
Platform: Effectively dead, and it died quietly rather than dramatically. LexShares lost its chief executive in June 2024, cut its payroll from ten employees to five, scrapped its planned third fund, and by August 2024 described itself as being in “harvest mode” — managing what it already held rather than raising anything new. The stated reason was pandemic-era court delays pushing resolutions past forecast, which is true and incomplete: delay is painful in proportion to how thin your multiples already are. Management said at the time it hoped to resume fundraising by late 2025 or early 2026. That window is now here and nothing has been announced. In December 2025 the company settled a discrimination suit brought by a former chief executive, on undisclosed terms. Fund I has distributed about 80% of committed capital, with 68% of deployed capital fully resolved, and the resolved portion tracking just under 4% net IRR — better than the -7% reported in 2024, and still a poor result after eight years.
My portfolio: $849K already returned on $1M invested. If Bovine Pharma comes through (65%–75% likely), I end up just under 1.1x MOIC. Add Surveillance Patent and it reaches about 1.4x. Not the 2x–3x originally projected — and in the context of my broader net worth, a meaningful concentration that quietly underperformed for the better part of a decade.
Group: The remaining seven cases could push final returns meaningfully higher — but even in the best case, more than seven years of illiquidity for single-digit returns is not a trade worth repeating.
My Share of the Blame
It would be easy to make this entirely LexShares’ fault. It isn’t. I chose the platform, funded 17 cases across three years, and most of the red flags I catalogued above were visible in real time — the acceptance rate that looked suspiciously high, the deals that filled in under an hour with no room for diligence, the company that stopped releasing stats in 2018 and deflected every request for case-level data. I noted those things and kept wiring money anyway, because each individual deal read well and the fear of missing the next one was louder than the pattern forming underneath. I did say no once, to the April 2020 energy-defendant case, and I was right — though by then the group was already winding down, so the credit belongs as much to fatigue as to judgment. The problem wasn’t that I couldn’t see it. It’s that I didn’t act on what I saw, often enough.
The cleaner way to put it: I outsourced underwriting to a counterparty whose incentives I had never examined, and let “the deal looks good” stand in for “the underwriter is good.” I made the identical error on a YieldStreet law-firm loan that cost me $87,723, where the collateral I was studying mattered far less than the originator’s reason for selling it. I studied the asset both times and never once studied the party selling it to me.
The Lesson
The asset class works; the underwriter didn’t. Commercial litigation funds generally target something like 2x net MOIC and 20% net IRR, and the ones that get there do it through practices LexShares inverted almost item for item: decline the overwhelming majority of what you review, staff underwriting with commercial litigators rather than consumer-finance veterans, price for a multiple high enough to absorb a mediocre win rate, and take carry at the fund level so the manager’s pay tracks the investor’s outcome. One of those inversions was deliberate: undercutting larger funders was how the platform won deals, so the thin multiples weren’t a misjudgment about case values so much as the business model working as intended.
The failure was structural, not unlucky. A 1.25% group IRR across 42 cases is too consistent to be variance. It’s what you get when consumer underwriting meets commercial cases, when selection ignores damages and collectability, and when the fee structure pays the manager per winning case rather than per profitable fund. That last one deserves the emphasis: the manager could be paid well on a portfolio that lost money, which is not a conflict of interest so much as the absence of a shared interest.
Duration was the silent tax. Nothing in the numbers above is as costly as the calendar. Even the wins took years, and a 1.8x that arrives in year seven is a single-digit annual return that has also denied you the use of the money throughout. Underwriting to a thin multiple and hoping for speed is a bet on court schedules, which is the one variable in this asset class that nobody controls.
The opportunity itself was real, which is the frustrating part. LexShares worked the $0.5M–$4M funding range, backing claims seeking $5M–$40M — genuinely underserved, because diligence costs don’t scale down and the largest funders concentrate on bigger tickets. That gap was a legitimate edge available to a disciplined underwriter. It’s still there. It just wasn’t captured by this one.
Learning about litigation finance through LexShares was worth the tuition. Trusting them as the underwriter was the expensive part.
Sources: LexShares case updates through Jan 2026; public court filings and PACER docket activity for pending cases through Dec 2025; Fund I data from investor reports (Q3 2025); investor group tracking data. Platform wind-down details from Bloomberg Law (Aug. 19, 2024) and the company’s Dec. 30, 2025 announcement. Founder backgrounds from contemporaneous 2014 launch coverage and company bios. The platform’s pricing strategy against competing funders comes from a conversation with a LexShares representative, recounted from memory and undocumented. Benchmarks from a middle-market funder investor presentation (2024) and Burford Capital annual reports; fund return targets are industry norms rather than any single manager’s figures. Case statuses and resolution estimates are current as of publication; pending matters move.
Commentary and personal experience — not investment, legal, or tax advice. Investing carries risk, including total loss of capital. Always do your own due diligence.
