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A litigation finance stock market?

A litigation finance stock market? A law firm plans to launch one on Avalanche. 

Great idea and innovation. However I would like to think about a moral hazard issue which might come along with it. The article well describes that opening litigation financing from Pro’s to the public actually has difficulties to fairly assess the risks.  How could a risk scoring system for such new biz look like. And will they build on a DAO based decentralized marketplace?

Currently crypto/ecosystem defi firms are using traditional risk scoring systems. And this approach is not effective as the asset class for crypto, stable coins, coins, defi products and others are being treated similar 4 times the actual value as per UK report and treasury risk management. I guess it’s fair that we apply a unique risk scoring system for crypto, defi products. In addition, an ecosystem to have the true, fair and exact asset class risk scoring classification would be great.  I personally think it will take another 3 years to agree on a standardized approach going forward.

The disruption will include a further step of bridging between business continuity, disaster recovery, resilience vs winding down. Interim and differentiation arrangement between BC and WD.

Of course this is very much like Catastrophe (Cat) Bonds, you’re taking a pretty big flier. With the chance for substantial (20%) or complete losses (100%.)

Also to find a way to explain to the general public how this idea works. For example, even I cannot claim I understand, how would an outdated lawyer see the benefits of this?

The engineering is amazing, how do we democratize such solutions?

In conclusion, it is an interesting concept, but a challenge to adequately disclose the risks. In order to comply with the securities laws and not violate the confidentiality required by the attorney ethics canons.

Read more about this brand new asset class, Initial Litigation Offerings, in the ABA Journal:

https://www.abajournal.com/web/article/why-a-new-york-law-firm-wants-to-create

A litigation finance stock market?