Limited Time Offer — Unlock an 11% USD Yield By Investing in Legal Finance & Private Credit
Key Points
- Altify’s legal finance security offers an 11% annualised USD yield, with quarterly interest payments, and the option to redeem at any time with 14 days’ notice*.
- Start investing with approximately R1,800 ($100).
- As a limited time launch promotion, all new Altify investors enjoy zero fees for 3 months.
Did you know you can fund law firms to cover legal expenses and earn double digit dollar returns?
Welcome to the world of legal finance investing, a rapidly growing $39 billion industry where investors provide capital to law firms or litigants. In return, investors earn a fixed interest rate of return or, in some cases, a share of any awarded damages if the case is won.
This expanding investment category falls under one of the most talked about investment asset classes of 2024 called private credit, also known as private debt. This sector involves investors lending to companies and projects not listed on public stock markets, allowing investors to earn returns from interest payments. Unlike traditional bank loans, private credit provides flexible financing solutions to businesses that may struggle to access funding through conventional channels.
Legal Finance falls into this category as law firms don’t generally have property or machinery that they can use as collateral for bank loans. Instead, they’ve got ongoing legal cases that have payoffs in the future requiring specialist legal lenders. This has resulted in legal finance catching the attention of wealthy and sophisticated investors.
And for good reason — while stocks and bonds form the foundation of most investment portfolios, it’s often lucrative hard-to-get alternative investments, like private credit and legal finance, that add the distinctive edge, enhancing overall value. You can see this below when looking at the long term performance of private credit against public stocks.
How Investing in Legal Finance Works
Much like how an investor can bankroll a company in exchange for a slice of the profits, an investor can bankroll a law firm in exchange for a fixed return or a slice of the winnings of their underlying cases.
Legal finance varies in risk. High-profile cases, like patent infringement or breach of contract, are complex, high-risk and can take years to resolve. Specialist funds take on these cases, seeking high returns—often over 50% of awarded damages.
In contrast, smaller consumer claims, such as personal injury, financial mis-selling and housing disrepair cases, are far lower risk with more predictable outcomes due to a strong legal precedent. To handle these claims effectively, law firms need funding to cover the costs of running multiple cases at high volumes, as they rely on shorter settlement periods and high confidence in successful outcomes.
Why is Legal Finance Useful?
Imagine you rent a house, and over time, essential maintenance is neglected by the landlord. The heating breaks down and there’s a persistent leak in the roof causing damage to your belongings—issues you’ve repeatedly reported but are still unresolved.
You could pursue a legal case against the landlord to address these problems and receive compensation. However, the cost of legal action is too high, so you continue to live in substandard living conditions.
This is where legal finance can be valuable as a law firm or specialist legal funder could elect to support you, fully funding this lower-risk case, allowing you to pursue justice and receive the necessary compensation.
In more developed markets, like the UK, law firms can reduce their risk when funding a case by taking out an insurance policy on each low-risk case. This insurance is called After-the-Event (ATE) insurance and it ensures that if a legal case is unsuccessful, the insurance covers all disbursements and fully repays the law firm.
However, there’s a recurring challenge as many law firms struggle to maintain the capital required to fund hundreds of smaller cases.
A Clever Solution to a Big Problem
In 2020, Louisa Klouda, CEO and founder of Fenchurch Legal, noticed a gap in the UK market while working in corporate finance. Smaller law firms were struggling to cover expenses while waiting for settlements, limiting their ability to take on more cases.
Fenchurch Legal’s solution was simple: apply an asset-backed lending model to the litigation funding industry whereby they lend directly to vetted UK law firms, specifically for third-party pre-litigation disbursement costs i.e court fees, expert witness reports and ATE policy premiums.
The catch? Every case must have ATE insurance, ensuring that if a case fails, the insurance repays all of the costs to Fenchurch Legal. This way, Fenchurch significantly reduces their investment risk, earning a fixed return on their invested capital, regardless of the case outcome.
In addition to ATE insurance, Fenchurch Legal has implemented multiple layers of security to protect investor capital. These include Case Charges, Debentures, Personal Guarantees, and a diversification strategy that spreads risk across various claims, case types, and law firms, reducing the impact of any single case outcome.
This lower-risk-mitigated approach has been a success, prompting Fenchurch Legal to seek additional capital to meet the growing demand from law firm clients.
Ready to Invest in Legal Finance With Fenchurch Legal?
Altify, a regulated Financial Service Provider (FSP 53289), backed by JSE-listed Sabvest, is transforming access to lucrative alternative investments through its user-friendly app and online platform.
In partnership with Fenchurch Legal, Altify has launched the world’s first legal finance security token, called ALFI.
ALFI, short for Altify Legal Finance, has been launched on the Bitcoin Liquid Network, a layer-2 blockchain that runs on top of the Bitcoin blockchain.
Backed 1-for-1 by Fenchurch Legal’s USD bonds, ALFI tokens offer investors quarterly interest payments in Tether stablecoin USDT and an attractive 11% annual yield.
The ALFI security token offers investors a simple and cost-effective way to gain exposure to hundreds of senior secured loans made by Fenchurch Legal to vetted UK law firms.
The major advantages for Altify’s clients investing in ALFI include:
- Low Minimums
Altify clients can start investing with as little as R1,800 (the equivalent of $100). - Early Redemptions
Altify clients have the flexibility to redeem their ALFI token for cash before the end of its term with just 14 days’ notice,* subject to an early redemption fee. - Non-Correlated Investment
Unlike stocks or property, legal finance is unaffected by economic cycles. Case outcomes depend on legal merit rather than market conditions, making ALFI an appealing option for diversifying portfolios and balancing out market volatility. - Risk Mitigation Insurance
ATE insurance allows legal finance investors to protect their capital, minimising the downside risk if cases are lost. - Fixed USD Income-Generating
As a USD-denominated investment, investors are protected against any rand depreciation with fixed regular interest payouts. - Low Fees
Altify charges no performance fees, only a 0.55% annual management fee which is deducted from the quarterly interest payments.
Learn more about The Legal Finance Token here.
Key Investment Stats
Altify & Fenchurch’s Partnership
Sean Sanders, CFA Charterholder and CEO of Altify, highlights the benefits for Altify investors:
“Fenchurch has an exceptional track record in lending to UK law firms and delivering stable investor returns. We’re proud to provide our users access to one of the top diversification opportunities available, starting from as little as $100.
Legal finance operates independently of economic trends, making the ALFI token a protective shield against stock or crypto market swings.
The old saying, ‘only the lawyers win in legal disputes,’ no longer holds true—now, both the lawyers and ALFI investors come out on top.”
Altify Investment Promotion
In celebration of this industry-first launch in South Africa, Altify is offering new ALFI investors zero fees for the first 3 months†.
Opening an Altify account is free, and verified investors can start small with a minimum investment of just $100 (≈ R1,800) and then add to their investment when they’ve tested out the platform and are feeling comfortable.
Closing Thoughts
Whether you’re an experienced investor or just starting out, Altify’s ALFI tokens provide access to an attractive income-generating investment denominated in USD that is uncorrelated with other investment markets.
For those seeking diversification and a steady income stream, this could be an opportunity worth exploring.
Note:
*You can apply to redeem your ALFI tokens before the maturity date with 14 days’ notice. However, early redemptions are subject to market conditions and cannot be guaranteed. If your request is approved, a 5% early redemption fee will apply to the total invested amount, including accrued interest.
Promotional terms and conditions apply which can be viewed here.
Important Risk Information
Investors are solely responsible for their investment decisions. Given the risks associated with private credit, including illiquidity, borrower default, and market volatility, you should assess your financial circumstances before engaging in these transactions. Private credit carries risk, with the potential for both significant gains and losses. Investing in private credit may result in a total loss of capital.
Please refer to the General Risk Disclosures and Private Credit Risk Disclosures on Altify’s website for more information. Investments should only be undertaken by individuals who fully understand these risks.
For additional details, please visit www.altify.app.
Comments