42 Cases, 8 Investors, One Platform’s Collapse
How my investor group barely broke even on a litigation finance crowdfunding platform
The Bottom Line
My investor group put $2.3 million into 42 commercial litigation cases on LexShares from 2017-2020.
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 7+ years. The final resolution of Passport Patent in January 2026 (1.84x) pushed several members from underwater to breakeven.
My Portfolio
I invested $1M of the group’s $2.3M — about 43% of the total. My results were better than the group average, but that’s mostly luck. We all stopped investing after Q1 2020. Some members concentrated heavily in cases that went badly — that’s the real difference, not timing.
| 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 |
| Wealth Manager | $75,000 | $134,295 | 1.79x |
| Cosmetics | $150,000 | $263,269 | 1.76x |
| Herbicide | $25,000 | $42,399 | 1.70x |
| Medical Finance | $30,000 | $50,703 | 1.69x |
| Fuel Injection | $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 | $82,500 | $0 | Rejected $5M settlement, lost at trial |
| Office Lease | $50,000 | $0 | Lost at trial, lawyer withdrew, appeal dismissed |
| Counterfeit | $47,500 | $0 | Spoliation sanctions |
| Fraternal Org | $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 |
2019 had 8 losses vs only 6 wins. Late-resolving cases like Passport Patent (1.84x) pulled the vintage from negative to barely positive.
What Went Wrong
LexShares was a crowdfunding platform for individual litigation cases. They also launched pooled funds (Marketplace Fund I and II). Our group invested in individual cases — but the platform and funds shared the same underlying problems.
Overestimated Case Values
LexShares consistently overvalued cases at underwriting. Look at the resolved cases:
- No 3x returns — the best was Toy Licensing at 2.57x
- Wins clustered at 1.5-2x — Wealth Manager 1.79x, Cosmetics 1.76x, Herbicide 1.70x
- Many “wins” barely profitable — Trademark 1.10x, Fuel Injection 1.12x, Software Contract 1.00x
The problem wasn’t just case selection — it was valuation. Plaintiffs frequently settled for far less than LexShares projected, then negotiated with LexShares to accept reduced returns. When your best outcome is 2.57x and most wins are 1.5-1.8x, you have zero margin for error on the losses.
Wrong Expertise at the Top
LexShares was founded in 2014 by Jay Greenberg and Max Volsky. Volsky served as Chief Investment Officer and led case vetting. The problem: his background was in consumer litigation finance, not commercial.
When pressed in 2019, LexShares confirmed that Volsky’s prior company LawMax (1999-2008) funded mainly personal injury claims — that’s where the “10,000 legal claims” came from. He only began focusing on commercial funding exclusively in 2011, giving him just 3 years of commercial litigation experience before founding LexShares in 2014.
Consumer litigation (personal injury, mass torts) and commercial litigation (contract disputes, IP, business torts) require fundamentally different underwriting:
- Consumer: High volume, predictable settlement ranges, insurance company defendants with settlement incentives
- Commercial: Low volume, highly variable outcomes, corporate defendants who may fight to the end
Applying consumer litigation heuristics to commercial cases led to systematic overvaluation — and the 2019 results were the inevitable consequence.
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 2 of the last 9 resolved cases netted a profit — 4 were total losses. LexShares defined “success” as return of capital; by industry standard (return of target IRR), success was around 20%.
Underwriting Failures
LexShares funded cases that institutional funders would reject:
- Distressed plaintiffs: The office lease case — the landlord’s bank was foreclosing on the building while they sued their tenant
- Defendant risk: In April 2020, after oil prices collapsed, they 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 to the end
No Due Diligence Time
Individual deals on the platform filled in under an hour. I tried to invest in one — by the time I got access, read the summary, and started paperwork, it was full. Given the results, most investors probably skipped due diligence entirely.
Plaintiff Risk
Some cases “won” but investors still lost:
- One plaintiff settled for a court order instead of cash, claimed they didn’t owe anything. LexShares won arbitration — then plaintiff filed bankruptcy.
- A law firm loan returned principal, but the borrower defaulted on all interest.
Fund-Specific Problems
The pooled funds had additional issues:
- Deal-level carry: They calculated carried interest on each individual case, not at the fund level. Fund I reported -7% IRR — but still collected carry on winners. It’s not a real 2.5%/25% — it’s effectively 2.5%/50% because they get 25% of all winners while losses don’t offset.
- Cash drag: Fund I called 100% of capital on day one, then took 2+ years to deploy while charging management fees on uninvested capital. Investors complained about this as early as 2019.
- Fee creep: Between Fund I and Fund II, carried interest increased from 20% to 30%.
- Inflated IRR reporting: LexShares calculated IRR from the date of fund disbursement to plaintiffs, not the date of capital commitment. With 3-4 weeks of lag, this inflated their reported numbers. They also never provided MOIC — only IRR.
- Inflated ROIC: When Fund II launched in June 2020, they reported 52% median IRR and 69% win rate. Our group caught them inflating ROIC numbers in the pitch deck — stated vs actual returns differed by 0.1-0.2x 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.
Track Record Opacity
LexShares refused to provide detailed track record data until each fund opened — convenient timing that prevented proper due diligence. 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. This forced investors to either (1) wait indefinitely, (2) invest blind in individual deals, or (3) trust the curated statistics LexShares selectively released.
When Fund II launched in June 2020, our group evaluated it and passed. They fixed the capital call issue (10% upfront instead of 100%), but refused to change the deal-level carry structure. We stopped investing after Q1 2020.
What’s Left
I still have 4 cases pending ($230K invested). The group has 7.
| Case | Invested | Prob. | Status |
|---|---|---|---|
| Bovine Pharma | $75K | 65-75% | 10-day 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): 10-day 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 — 7 IPR petitions denied, reexamination survived. Government filed no opposition to lifting the stay. 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 8-year jurisdictional nightmare that just reset. At least I got 36% back ($1.8K) from a sanctions award.
Outlook
Platform: Effectively dead. In August 2024, LexShares cancelled Fund III and laid off most staff, entering “harvest mode.” Fund I exercised a one-year extension after 7 years — still has ~45% of capital in deals they can’t liquidate. In December 2025, the company settled a lawsuit with former CEO Cayse Llorens.
My portfolio: $849K already returned on $1M invested. If Bovine Pharma comes through (65-75% likely), I end up around 1.15-1.2x MOIC. Add Surveillance Patent and it could hit 1.4-1.5x. Not the 2-3x originally projected, but not a disaster.
Group: Now slightly positive at 1.25% IRR with 1.05x MOIC on resolved cases. Not great for 7+ years of illiquidity, but the remaining 7 cases could push final returns meaningfully higher.
The Lesson
Litigation finance as an asset class works. Institutional funders (Burford, Longford, Parabellum, Statera) generate 20-30%+ IRRs with proper underwriting.
LexShares underperformed. The 1.25% group IRR and platform collapse prove it wasn’t bad luck — it was systematic failure in case selection, valuation, and underwriting. Max Volsky’s consumer litigation background didn’t translate to commercial cases. The fund’s fee structure made it worse: deal-level carry meant managers made money even when investors barely broke even.
Learning about litigation finance through LexShares was valuable. Trusting them as the underwriter was the expensive mistake.
Sources: LexShares case updates through Jan 2026; investor group tracking data; Bloomberg Law (Aug 2024).
