Daybreak - How India's rich are finding returns in the country's court backlog

Episode Date: September 23, 2026

Make The Ken's Daybreak X First Principles Autumn Playlist here.India has roughly 54 million cases stuck in its courts. Inside many of them is money someone is owed but can't afford to chase. What if you could invest in that? Back the case, pay the legal bills, and take a cut if it wins. In the US and the UK, this is already a multi-billion-dollar asset class. In India, a handful of funders are trying to build it. But they've run into a strange problem. The same backlog that makes the idea so attractive is also what makes it so hard. Because here, of course you are betting on whether a case wins…but more importantly, you're betting on when.In a recent edition of our weekly newsletter Ka Ching, The Ken reporter Mutasim Khan looked at who's making this bet, who's putting up the money, and who it's actually helping. Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

I have something to ask of you before we start. You know, there is a word for the particular kind of autumn season that we experience in India. It's called Sharath. And Tagore came back to it again and again in his work. And it has very little to do with a Hollywood-inspired image that we have of red leaves and yellow leaves and pumpkin-spice latte. Sharath is the season that comes after the rain. The sky suddenly looks bigger, the colours look brighter. if you pass by any river bank, you will see white cash flowers blooming, glistening in the sunlight.

There is this refreshing feeling that the world has been washed clean. And that is the feeling that we're chasing. For the first time, my colleague and the Ken's CEO, Rohan, who writes our wonderful Sunday newsletter First Principles and I, from Daybreak, are making an autumn-inspired playlist built by you. So, tell us, what does autumn feel like? where you are. What's the little thing that tells you that it has arrived? And what is the one song that sounds like autumn to you? Tell us why that song matters to you as well. We might read your

answer on daybreak or even feature it on first principles. It won't take more than three minutes, I promise. The link is in the show notes. I can't wait to hear from you. And now on to today's episode. Did you know that India has roughly 54 million cases stuck in its quotes? And inside many of them is money, somebody is owed but cannot afford to chase. So, what if you could invest in that case? I mean, back it, pay the legal bills and then take a cut if the case wins. In the US and the UK, this is already a multi-billion dollar asset class. In India though, a handful of funders are trying to build it now. But they have run into a strange problem. The same backlog that makes this idea so attractive is also what makes it so hard. Because here, of course you are

betting on whether a case wins, but more importantly, you are betting on when it wins. In a recent edition of our weekly newsletter, Kaching, my colleague, the Ken reporter, Matasim Khan, looked at who is making this bet, who's putting up the money, and who is it actually helping. And today, I'm reading out his piece for you. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Da Sharma, and I don't chase the news cycle. Instead, every day of the week, my colleague Rachel Vargis and I will come to you with one business story that's worth understanding and worth your time.

Today is Thursday, the 24th of September. Kundan Shahi wanted to establish India's first litigation fund. This was back in 2019, right when new and quirky concepts. Non-fungible tokens, NFTs, fractional art, whiskey casks, and even sneakers were beginning to institutionalize into investment-grade asset classes. Shahi thought lawsuits were the obvious next candidate, and in India, more obvious than most places. The country suffers from one of the world's largest judicial backlogs, approximately 54 million pending cases, and inside many of them is big money that one party owes another, that the claimants

cannot afford to pursue through years of litigation. An investor could identify favorable cases. fund the legal proceedings and keep a percentage of the claim if they won. Pool enough of these claims together and it looks something like a private equity fund, except the underlying asset is the claim to a future payout rather than ownership in a company. Cut to January 26 and Shahee's litigation company Legal Pay has committed 100 crore rupees over the next 18 months to financing commercial and insolvency disputes. The firm has already worked with the likes of Zepto, PWC and Deloite, and claims to deliver returns exceeding 30% internal rate of return, or IRR, to its investors.

India's legal expense market is worth at least $20 billion annually and growing at 10 to 12% CAGR, Shahi estimates. From the US and UK and Hong Kong to Singapore and Australia, third-party litigation funding has matured into a full-fledged asset. class, with the former president of the UK Supreme Court calling it the lifeblood of the justice system. But right now, India's litigation funding market is constrained by the very conditions that made it attractive in the first place. Fundos pitch litigation funds as private equity returns with none of the correlation to public markets. Burford Capital, listed on the NYSE and LSC, manages a $7.5 billion portfolio of legal claim. and claims to have delivered a 26% IRR on concluded cases over 15 years.

Tempting, but high returns also necessarily involve higher risk. Unlike most other investments, litigation investing comes with a binary risk profile. If the claimant wins the case, the investor wins big. But if the claimant loses, the investor loses all the money. Yet, for funders operating in India, that binary outcome is only half of the equation. In India, you have to underwrite time as much as you underwrite the law, explained Shahi. Even with the high risk, legal pay had started off with the idea that this asset class could be made available to retail investors offering interim financing bonds as little

as $10,000. Shahi has since concluded that this is not an asset class for retail yet. The most obvious risk in any lawsuit is its merit, which is, can you actually win? In India, the harder question is when? Even cases built on ironclad facts and precedents can sit in courts for years, sometimes even decades. India's massive case backlog makes this inevitable. The World Bank ranks India 163rd out of 190 countries on the time required to enforce a commercial contract and this reality fundamentally shapes how litigation funding behaves as an

asset class. For any fund, time is money, quite literally. 100 rupees of profit on a 100 investment earned in two years yields an IRR of 41%. The same 100 stretched across 10 years yields barely 7%. This peculiarity of time as risk makes India's litigation financing market unique and also not suitable for retail investors. The time risk makes this asset class illiquid, which means it requires patient long-term capital, says Kundan Shahi. Consequently, legal pay's investors are primarily family offices and high net worth individuals. To manage this risk, legal pay deliberately focuses on relatively late stage matters where legal issues have already been substantially examined by the courts and there is better visibility on the path ahead. But even after obtaining a favourable

order, the losing side will almost certainly appeal to higher courts, delaying actual payouts by years, all while the meter runs on legal fees. Fight right, another of India's handful of litigation funders has leaned into a different niche to make the time-to-recovery maths work. Land. If a piece of land is under dispute, the value of it is likely to appreciate over time, says Vishal Mangal, the firm's co-founder and COO. So, even if the case drags on, the underlying asset is growing. The company also funds monetary claims, but it focuses on land-related disputes. This way, a funder can therefore afford to wait longer and is insulated from the timeline risk. Fightright currently reports handling claims under management exceeding more.

1,000 crore rupees. Despite the nature of it, none of India's litigation funds are technically funds in the regulatory sense. A privately pooled investment vehicle only becomes a fund when registered with the Securities and Exchange Board of India, Sebi, as an alternative investment fund or AIF. This designation brings rules around minimum investor commitments, fund size, deployment timelines and disclosure requirements. Registering as an AIF would impose constraints on timelines and returns while inviting greater regulatory intervention, none of which is desirable to the companies by default. Private equity, venture capital and other types of funds have no choice.

Pooling investor money into asset classes requires AIF registration. But third-party litigation finance operates outside this framework. Seby, needle has a well-defined AIF category. for it, nor any specific rules governing it as an asset class. This regulatory ambiguity has allowed high net worth individuals and family offices to participate through private companies and special purpose vehicles or SPVs on a case-by-case basis without registered vehicles. However, institutional capital, particularly from abroad, generally cannot access these structures.

This may be changing. In May 26, Five Rivers Capital, a Mumbai firm backed by a global legal finance company surfaced as the first Indian litigation finance vehicle registered with Sebi as a category, category 2AIF. The firm is reportedly in talks to raise about $20 to $50 million, though it has yet to close the fund or deploy any capital. Proponents of regulation, such as Bayal Chavla, the founder of an all-women dispute law firm and a pro bono lawyer in the Delhi High Legal Services Committee panel argues that the

case for regulation goes beyond just the economics of the asset class. Instances of third-party funding of disputes through informal channels is not unknown, she says. For property disputes, especially predatory lenders, step in to fund vulnerable claimants who can no longer afford legal battles, offering financing at exorbitant interest rates, or by lending against disputed property at a fraction of its value. A regulated market with clear rules, Chavla contends, would push out predatory arrangements and let more transparent capital in. Chavla's advocacy for regulation also addresses the larger promise of third-party litigation funding,

that is, access to justice. The idea that a claimant with a strong case shouldn't be forced to abandon it simply because she cannot afford the years and legal fees required to see it through. A regulated market would draw in more capital willing to back these cases, helping claimants achieve fair outcomes. As litigation funds currently operate in India, the incentive structures don't fully align with the access to justice narrative. Legal pay, by Shahi's own admission, largely funds commercial disputes between large corporates.

These are the Zepto's and Deloie. of the world, companies that could afford to fight if they wanted to, but would rather not risk the capital or endure the weight. The absence of regulation also explains why litigation funding has not scaled in India as an asset class. The uncertainty around what funders can do and how the Sebi framework might eventually treat such activities keeps broad institutional investors from allocating capital to the space. Elsewhere, as in the US, once the sector matured, capital began to trickle down. Crowdfunded and retail-facing platforms have emerged alongside institutional funds,

allowing ordinary investors to commit a few thousand dollars into portfolios of legal claims. A separate consumer funding industry worth several billion dollars invests directly with individual plaintiffs. The base market grew large enough to reach the layers underneath. Regulations, should they arrive, would move India closer to a market, where the strength of one's case matters more than the depth of another's pocket. That's all for today. Thank you for tuning in and please don't forget to fill in the autumn playlist form.

Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the can.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleagues Niktha Sharma and edited by Rajiv CN.