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Litigation Finance in India: How Funders Back Legal Claims | Kundan and Kashish, LegalPay

Kundan and Kashish, the CEO and CIO of LegalPay, explain how litigation finance works in India. They cover underwriting, investor structures and why they focus on commercial claims between businesses.
Kundan and Kashish, LegalPay on The Builders Club Startup Founders Podcast
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Imagine a business that is owed crores but cannot afford the years of legal fees needed to collect. That is the gap Kundan and Kashish, the CEO and CIO of LegalPay, set out to fill with litigation finance in India.

In this Builders Club Water Cooler conversation, the co-founders explain how a third party funds a legal claim, how they decide which cases to back and how investors can access the asset class.

What is litigation finance and how does it work in India? LegalPay’s core thesis

Kundan describes litigation finance as a practice where a third party invests in a legal claim. If the claim succeeds, the funder takes an agreed share of the recovery, and if it fails, the funder recovers nothing. The investment is non-recourse to the client.

LegalPay focuses on commercial claims between businesses, backed by heavy diligence and data. Kashish added that the model turns a previously private, family-office asset class into something more structured and accessible for investors.

  • Third-party funding. The funder pays costs and shares in the recovery only if the claim wins.
  • Businesses, not individuals. LegalPay avoids disputes between individuals and low-value cases.
  • Layered diligence. Legal, financial and lawyer-quality checks, plus a tech scoring model.
  • Structured investor pools. Capital goes into separate vehicles spread across several cases.

How did Kundan and Kashish start LegalPay?

Kundan said he is neither a lawyer, a finance professional nor a technologist. He came from a village in Bihar, worked in a data and process outsourcing firm supporting US insurers and learned about risk and underwriting there. After an accident gave him time to think, he left to start a legal-tech venture that tested litigation funding and shut in 2018, and he started LegalPay in late 2019.

Kashish, who has experience at Goldman Sachs and PwC and had his own food and beverage startup, was LegalPay’s first hire. Kundan brings the legal-system knowledge and Kashish the investing and strategy side.

How does litigation funding work for a business?

Kundan explained that litigation funding is a pain point for businesses that have a strong claim but not the cash to pursue it. A funder invests, and if the claim wins, shares in the recovery.

He said the Supreme Court of India has recognised that litigation funding is not barred, with only lawyers prevented from funding cases. The founders spent a long time convincing lawyers and others that it was legitimate.

  • The funder carries the cost, so the client does not need to pay up front.
  • The investment is non-recourse, so a lost case means no repayment.
  • Commercial terms are agreed in advance, not changed as a case nears closure.
  • The funder should not influence the bench or push the client to settle.

How does LegalPay decide which cases to fund?

Kundan listed four underwriting criteria: the merit of the claim, the chances of recovery, the skill of the legal team and the timeline. They generally prefer cases that should resolve in around three years. Kashish said they test the lawyer as well as the case, much like judging the jockey, not just the horse.

Kashish described a three-level diligence process, a 15-point-plus tech scoring model and an approval panel of experienced lawyers and professionals.

  1. Legal diligence, with documentary proof rather than personal testimony.
  2. Financial diligence of both the plaintiff and the opposing party.
  3. Review of the lawyers and their record on similar cases.
  4. Scoring by the in-house model, then review by an approval panel.

Why focus on B2B cases and not individuals?

The earlier venture went after all kinds of cases, and Kundan said that experience taught them what not to do. LegalPay avoids small claims and disputes where the parties are individuals, because claims, recovery and securitisation are easier to establish when the parties are businesses.

He added that businesses care about reputation and tend to settle. They stay with high courts, the Supreme Court and arbitration, where proceedings are more time-bound and transparent.

How can investors access this asset class?

Kashish said family offices and high-net-worth investors have long used litigation finance informally, and LegalPay formalises it through structured pools. They had also just launched a fund for upper-retail investors with ticket sizes from 25,000 rupees, which invests in arbitration cases.

Capital goes into separate limited liability partnership structures, and investors are the owners of the underlying assets rather than LegalPay holding their money. Each pool spreads money across about six to ten cases. The team described the returns and timelines they target, but these are their own figures and not advice.

How does LegalPay make money?

Kundan said LegalPay follows a private equity style model, with a 2 percent management fee on commitments and a 20 percent carry.

Is litigation finance regulated in India?

Kundan said there is no specific regulation, so the company self-regulates and follows the public policy limits recognised by the Supreme Court. He cited the push to make India an arbitration hub and said many Indian parties choose Singapore partly because funding is available there.

Kashish added that regulation in India often follows an industry for years, as with wallets and e-pharmacies, and LegalPay aims to follow global best practices so it is ready.

Further reading and sources

Frequently asked questions

What is litigation finance?

Litigation finance is when a third party funds a legal claim in return for a share of the recovery if it succeeds. In LegalPay’s model, the investment is non-recourse, so the client owes nothing if the claim fails. It is aimed at claimants with strong cases but limited cash.

What kinds of cases does LegalPay fund?

Per Kundan, LegalPay focuses on commercial claims between businesses, typically in high courts, the Supreme Court and arbitration. It avoids disputes between individuals, and cases that should take well beyond three years. It does not take on cheque-bounce or family matters at present.

Can retail investors invest in litigation finance?

Kashish said LegalPay launched a pool for upper-retail investors with tickets starting at 25,000 rupees, spread across several arbitration cases. Cases can fail and money can be locked in for years, so read the terms and take independent advice. This is not investment advice.

Conclusion

Kundan and Kashish show how a founder from outside an industry can build in a complex one by combining domain depth, disciplined underwriting and a clear niche. Their focus on business claims and diversified pools is what makes the model work.

If you are in a regulated or unfamiliar space, define what you will not do, build a repeatable diligence process and be open about the risks.

Want more conversations like this? Join The Builders Club, our community of 35,000+ founders and CXOs, and explore more episodes of the Startup Founders Podcast.

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