I know I'm pretty dumb, but I can't figure out what I'm missing here. I see they use data (somehow) to determine what cases are worth investing in. It seems most of the cases are about business civil suits. They provide capital to move a case to closure. But how is that different from say a contingency basis from a regular large firm? I did see some DIP cases, so I think I understand how they could be a benefit there, but then why is it such a small part?
I haven't heard of Legalist & don't understand their model, but there are a few public companies that do litigation financing. Different models can be possible in different countries depending on the regulations.
For public companies in this space you can the read annual reports / analysis to get more of a feel for how they work as businesses.
Another model in the UK (unsure if this works in the US): it is possible for an investor to completely buy ownership of a legal claim (e.g. investor receives any money recovered through settlement or awarded by courts, and end up in control of the case & the corresponding costs). This is arguably superior for the funder to financing a case as it gives the funder more control.
Cases that might be better potential investments: can be resolved quickly, claim has merit and is likely to succeed if it goes to court, case has a greater chance to settle quickly and inexpensively without needing to go to court, defendant has sufficient assets somewhere that can be readily recovered (e.g. in same country not obfuscated behind layers of offshore tax havens)
A well run company doing this kind of thing should achieve attractive cash returns on invested capital, but will carry a portfolio of hard-to-value illiquid investments in lawsuits with maintenance costs.
By using data/statistics/software it may be possible to better estimate which cases are good investments / better manage risk of the overall portfolio of cases / reduce amount of human labour inputs required.