US: Data-driven legal financing start-up wins funding amid ethical concerns

Legalist uses an algorithm designed by two Harvard undergraduates to determine whether a case can win.

The company then offers to fund the suits most likely to succeed in exchange for up to 50 per cent of the financial recovery from the suit.

The final decision on which cases to back is made by the co-founders.

The algorithm analyses 58 different variables including who the presiding judge is and the number of cases the judge is working on.

The project has attracted controversy due to the grant funding from Peter Thiel’s foundation after Mr Thiel - the billionaire co-founder of PayPal - was revealed to have secretly funded a $135 million lawsuit that saw media outlet Gawker.com close its doors.

However, one of the start-up’s co-founders has promised that the company will not fund lawsuits against the media.

Co-founder Eva Shang told The Guardian: “We’re not funding criminal cases, nor would I be funding any suits against the media.

“Litigation financing as a field is growing so fast, but the one area it’s not actually getting to is small businesses.”

Ms Shang said she accepted the Thiel fellowship because of money concerns and had not anticipated the public backlash.

Ms Shang and fellow co-founder Christian Haigh are reportedly considering the creation of an “advisory board” that can consider each case in order to mitigate ethical concerns.