LitFin Capital a.s. (more information here), which specializes in complex litigation financing with a focus on competition damages in excess of EUR 40 million. LitFin is currently financing cases with a total claims value in excess of EUR 3.5 billion. With its own experienced team of lawyers and economists, LitFin provides its clients not only with financing but also with extensive expertise. LitFin has a proven external network of excellent trial lawyers and renowned economists to evaluate, analyse, process and, if necessary, litigate claims. 

The industry is still emerging in Europe (outside the UK) and LitFin has a competitive advantage in timing and limited competition. With the activities of the European Commission, regulators and the courts, many opportunities are on the horizon, particularly in the area of competition infringement. The massive consolidation of companies in various sectors has created a number of multinational conglomerates, which are now under very intense assessment of their impact and effect on competition. It is therefore certain that many cartels or infringement decisions will continue to be uncovered in the coming years. By 2025, the European market is expected to grow to 16% of the world market at an annual growth rate of around 9%. 

LitFin focuses primarily on cases where there is already an undisputed court/regulator decision within the competition law framework (the so-called follow-on principle). The advantage of these cases, which account for more than 90% of our investment portfolio, is that LitFin does not have to prove to the courts that there has been an infringement (i.e. the existence of a cartel or abuse of a dominant position), but focuses primarily on the damages and the submission of supporting documents. Thanks to this, LitFin manages to achieve a long-term average investment success rate of 89%. However, LitFin also handles a number of group and individual cases in other sectors, such as healthcare and insolvency. LitFin SICAV a.s. will also contribute to the financing of such cases. 

It all starts with monitoring of the various regulatory authorities that are involved in competition law. Once, for example, the European Commission proves the existence of a cartel and the defendants are sentenced, that is the moment LitFin starts to evaluate the economic viability of the case. If the first round of evaluation is positive, the case and its outputs are forwarded to LitFin’s partners for review. Once it is approved that LitFin will allocate its resources to the case, a working group is formed under the leadership of a dedicated project manager. Beyond the monitoring of regulatory decisions, LitFin then has a wide network of affiliated law firms across Europe that regularly provides LitFin with potential cases. 

Litigation funding through investment funds is practically non-existent in continental Europe. There are only a few closed-end investment funds that are open only to high-net-worth investors in Switzerland, Luxembourg or the UK. Creating the first European fund for qualified investors with a focus on litigation finance was a unique opportunity for LitFin. 

A key advantage is the low correlation with financial markets, as litigation outcomes are not affected by their volatility, meaning litigation funding can provide stable returns even during economic downturns. In addition, these funds offer valuable diversification because returns depend on case outcomes, not economic cycles. 

Litigation funding presents an interesting opportunity for investors seeking high returns with a unique risk profile. Returns are generated through the investment in lawsuits, which yield significant rewards from closed settlements. With an average internal rate of return (IRR) of around 20-30%, litigation finance funds can outperform many traditional investments. 

Investing in litigation funding is also consistent with the pursuit of justice because it allows victims to continue their litigation even when they lack sufficient funds.