Why we invested in Arbilex - a high stakes litigation finance startup

Isabel Yang believes high stakes litigation finance can be a multi trillion dollar asset class. We at Draper Startup House Ventures agree with her. This is why we've backed her company Arblilex.

We generally don't think of law as a quantitative discipline or lawyers as data experts, but Arbilex is creating a new industry bringing the legal discipline into the data landscape by providing a marketplace for litigation finance data.

Trained as a Harvard lawyer and a statistician, Isabel brings a unique perspective to the data science industry. Some might refer to her as a 'legal realist' which is a philosophy in law which says that the prophecies of what the court will do, in fact, and nothing more pretentious is actually what we should think of as the law.

Wearing her data science hat, she looks at a judge's legal decisions as pattern spotting and adherence to historical tendencies and traditions that can be quantified using data. She sees legal cases as just any private asset class which produces a stream of cashflows that have uncertainties that can be modeled, priced and returns quantified.

For a lawyer, Arbilex is a data driven extension that augments their industry expertise. Anytime someone goes to a lawyer the first question is usually around the chances of success for a particular case. Arbilex offers the answer by offering the most extensive historical data to actually back up the lawyers judgement. For the first time they have the quantitative universe to support their judgements.

For an investor, anytime there is a high stakes litigation it is usually a market moving event. With Arbilex's data investors can get ahead of it and and use the same predictive insights that lawyers use to advise their clients to generate some band of uncertainties to think about how this pending lawsuit will influence the markets.

Arbilex's data sets have already achieved very strong milestones:

• $30 billion+ worth of cases sourced, vetted, or priced
• 9 million+ cases in the training dataset
• 95% average out-of-sample win rate for cases predicted to have a chance of success over 90%
• 89% average out-of-sample win rate for cases predicted to have a chance of success over 75%
• 78% average out-of-sample win rate for cases predicted to have a chance of success of 50%

Current offerings are:

Ai Augmented Case Rating - Arbilex has been working on the application of machine learning to litigation outcome predictions since 2019. The models are built in house, optimised and selected based on out-of-sample performance metrics. The Ai predictions have given clients an unparalleled quantitative edge over their competitors who use solely qualitative approach of case assessments.

High Velocity Origination - Arbilex Funding Exchange (AFX) offers a continuous, Ai-rated case pipeline that is available by subscription. The Ai rates new case filings in seconds, empowering clients to accurately assess top of funnel deal flows, at an unprecedented scale.

Private Marketplace - Arbilex works closely with both investors seeking litigation finance opportunities and claim holders seeking capital for their cases.

Reach out to Arbilex today at [email protected] to discuss how they can support your organisation's unique litigation data and/or financing needs.