Inside Brazil’s emerging market for legal assets

Brazil is home to one of the world’s largest judicial systems, a growing restructuring market and an expanding pool of investors looking for uncorrelated opportunities, but litigation finance and special situations investing remain relatively underdeveloped compared with markets such as the United States, the United Kingdom and Australia. In a new book co-authored with João Gabriel Rodrigues, Special Situations: Legal and Financial Opportunities in Distressed Assets, Daniel Kalansky examines how legal disputes, insolvencies, distressed assets, regulatory claims and complex commercial conflicts can become investable opportunities. Drawing on examples ranging from MagCorp and Akhmedov to Mariana, Dieselgate and the UK Post Office scandal, the book explores how law, finance and enforcement strategy are beginning to converge in Brazil and across the global disputes market. We spoke to Daniel about why these stories matter, what they reveal about Brazil’s emerging legal assets market and how investors are beginning to approach litigation finance and special situations in Latin America’s largest economy.

1. Your book uses landmark disputes from around the world to explain special situations investing and litigation finance. What made these stories the right way to introduce the topic to a Brazilian audience?

We chose landmark disputes because special situations and litigation finance are best understood through real stories. These are not abstract financial products. They involve creditors, victims, companies in distress, hidden assets, enforcement battles, regulatory failures and long legal processes that, when properly analyzed, may contain economic value.

For a Brazilian audience, this narrative approach was important. Brazil has a very sophisticated legal market, but the idea of treating legal claims, judgments, distressed credit and complex disputes as investable assets is still developing. Cases such as MagCorp, Akhmedov, Mariana, Dieselgate, Merricks v Mastercard and the UK Post Office scandal show that legal disputes can become financial opportunities when there is a strong claim, a credible path to enforcement and a disciplined strategy for transforming legal rights into recoverable value.

The book is not only about litigation finance. It is about the convergence of law, finance and strategy. These stories help readers see that special situations investing is often born in moments of conflict, distress or complexity.

2. The MagCorp litigation involved a decades-long fraudulent transfer fight and a recovery of more than US$200 million. What does that case teach investors about patience, enforcement strategy and the value that can exist inside complex creditor claims?

MagCorp is a powerful example of how value may remain trapped inside a claim for many years before it is ultimately unlocked. At first glance, a creditor claim in a complex insolvency or fraudulent transfer dispute may appear illiquid, uncertain or too difficult to pursue. But the MagCorp case shows that, with patience, legal persistence and a sophisticated enforcement strategy, these claims can become highly valuable assets.

The main lesson is that litigation value is not only created by winning the case. It is created by understanding the defendant’s conduct, the asset trail, the available remedies, the procedural leverage and the probability of actual recovery. In special situations, a judgment without enforcement is only part of the story. The real question is whether there is a credible path from legal entitlement to cash recovery.

For Brazilian investors, the case is particularly relevant because it highlights opportunities that may exist within insolvency and restructuring proceedings. Brazil has a large and increasingly sophisticated restructuring market, yet many investors still focus primarily on traditional distressed debt strategies. Cases like MagCorp demonstrate that significant value can also be created by financing complex recovery and enforcement efforts within insolvency proceedings. One of the objectives of the book is to show that opportunities of this nature already exist in Brazil and may become an increasingly important segment of the special situations market.

3. The Akhmedov divorce dispute is often discussed as one of the largest asset recovery battles in history. From a Brazilian perspective, what lessons does it offer about tracing assets, enforcing judgments across borders and turning legal claims into recoverable value?

The Akhmedov case is fascinating because it shows that even a very large judgment can be extremely difficult to monetize if assets are hidden, moved or placed behind complex structures. From a Brazilian perspective, this is highly relevant. Many disputes involving Brazilian parties, families, companies or debtors have an international dimension, whether through offshore vehicles, foreign accounts, trusts, real estate or assets located in multiple jurisdictions.

The lesson is that enforcement must be treated as a central part of the investment thesis from day one. It is not enough to analyze the merits of the claim. Investors and lawyers must ask where the assets are, who controls them, what jurisdictions are relevant, which courts may assist, and how pressure can be built across borders.

Akhmedov also shows that asset recovery is both legal and strategic. It requires coordination among jurisdictions, forensic investigation, timing, negotiation leverage and often funding. In that sense, the claim becomes an asset only when there is a realistic strategy to convert it into recovery.

The international asset recovery industry is still developing in Brazil. Many market participants remain unfamiliar with the investigative and enforcement tools available to conduct global asset tracing exercises. These tools can be critical not only in family disputes, but also in cases involving defaulted debt, fraud, insolvency and complex cross-border commercial disputes.

For Brazilian investors, the case is particularly relevant because it highlights opportunities that may exist within family law.

As Brazilian claimants increasingly pursue assets across multiple jurisdictions, the ability to combine legal strategy, forensic intelligence and international cooperation will become increasingly important. This was one reason we decided to dedicate a chapter of the book to international asset recovery.

Our law firm was selected as the Brazilian member of the International Fraud Group (IFG), a global network of leading asset recovery specialists spanning more than 60 jurisdictions, which has given us direct exposure to many of the tools and strategies discussed in the book. This international perspective was an important influence on the project and helps explain why cross-border asset recovery became one of its central themes.

We were privileged to receive contributions from two individuals whom we greatly admire. The foreword was written by Daniel Goldberg, one of Brazil’s leading legal and financial thinkers, while the presentation was written by Garry Miller, President of the International Fraud Group and one of the foremost authorities in international asset recovery worldwide. Together, their contributions reflect the book’s central premise: that law and finance are becoming increasingly interconnected in today’s global disputes market.

4. The Mariana disaster litigation is deeply connected to Brazil but has also involved international dispute resolution and claim monetization structures. What does that case reveal about the future of mass claims involving Brazilian victims, defendants and assets?

Mariana is one of the most important examples of how Brazilian mass claims may increasingly interact with global dispute resolution. It involves Brazilian victims, Brazilian facts and Brazilian social consequences, but it has also generated litigation and strategic initiatives outside Brazil.

This reveals a major trend. Large-scale harm connected to Brazil may no longer be addressed only through domestic litigation. Claimants, investors, funders and lawyers are increasingly looking at the full map: where defendants are located, where assets are held, which jurisdictions offer procedural tools, and how claims can be organized, funded and monetized.

In other words, different jurisdictions are becoming a viable path for investors to fund Brazilian-related claims.

Mariana may ultimately become a reference point for future cross-border mass claims involving Brazilian stakeholders. It demonstrates that disputes can simultaneously involve domestic courts, foreign proceedings, institutional claim-management structures and sophisticated funding arrangements.

5. You also cover Dieselgate litigation in Brazil. How does that story illustrate the potential for collective claims to develop into investable legal assets in a market that is still building its litigation finance infrastructure?

Dieselgate shows that collective claims can have significant economic potential, especially when they involve a large number of affected consumers, sophisticated defendants and a well-defined factual and legal theory.

The comparison between Brazil and other jurisdictions is particularly interesting. In several countries, Dieselgate generated substantial recoveries and became one of the most significant examples of mass consumer litigation in recent years. In Brazil, however, the litigation has not yet produced outcomes comparable to those achieved abroad, which also proves that alternative jurisdictions for litigation arising from facts that took place in Brazil could be more beneficial for claimants and investors.

This contrast highlights an important lesson for investors and claimants. In cross-border disputes, it is often necessary to evaluate all available avenues for recovery rather than focusing exclusively on a single jurisdiction. Different legal systems may offer different procedural mechanisms, evidentiary tools, enforcement frameworks and settlement dynamics. One of the broader themes explored in the book is precisely how understanding these international alternatives can significantly affect the value and recoverability of a legal claim.

6. The UK Post Office scandal is very different from a traditional commercial dispute. Why did you include it, and what does it show about the intersection of funded litigation, economic value and social impact?

We included the UK Post Office scandal because it shows that litigation finance is not only a tool for commercial disputes. It can also play a role in correcting serious institutional failures. In that case, many individuals lacked the resources to fight a powerful institution. Funding helped transform fragmented grievances into a coordinated legal challenge, which was also covered in the series Mr Bates vs The Post Office.

This is important for Brazil. There is often a misconception that litigation finance is only about financial return. Of course, investors need a return, but funded litigation may also produce broader social impact when it enables access to justice, balances power asymmetries and brings hidden wrongdoing to light.

The Post Office case demonstrates that economic value and social value are not necessarily opposed. In some cases, the financial viability of a claim is precisely what allows a broader injustice to be addressed.

7. Across these examples, what separates a legal dispute that is merely interesting from one that can become a viable special situations or litigation finance investment?

A viable legal asset requires more than an interesting story or even a strong legal argument. It needs a combination of legal merit, quantum, enforceability, timing and economic rationality.

First, the claim must have a credible legal foundation. Second, the potential recovery must justify the cost, duration and risk of the dispute. Third, there must be a realistic enforcement path. Fourth, the parties involved must be aligned through a structure that properly allocates risk and return. Finally, the case must be understandable to capital providers, with a clear thesis and disciplined downside analysis.

In special situations, complexity can create opportunity, but complexity alone is not enough. The best opportunities are those where legal uncertainty can be analyzed, priced and managed.

8. Brazil has one of the world’s largest judicial systems, a growing restructuring market and increasing investor interest in uncorrelated assets. What needs to happen next for litigation finance and special situations investing to become a more institutional asset class in Brazil?

Brazil has many of the ingredients for a strong legal assets market: a large volume of litigation, significant insolvency and restructuring activity, sophisticated law firms, experienced judges and a growing investor base looking for uncorrelated opportunities.

By way of example, according to the National Council of Justice (CNJ), in 2025 alone, 105,429 collective actions were filed in Brazil. In the same year, over 120,000 collective cases were decided, and in early 2026 there were over 215,000 pending collective actions in the Brazilian Judiciary.

In terms of arbitrations, Brazil has consistently been among the top five seats of ICC Arbitrations and in 2024 Brazil returned to being the most represented nationality in the region and the second most represented nationality worldwide, as reported by the latest ICC Dispute Resolution Statistics.

As for restructurings, Brazil registered a historical record of 5,680 companies that filed for judicial recovery in 2025.

As the market evolves, continued education will play an important role. Companies, creditors, lawyers, judges and investors are becoming increasingly familiar with litigation finance and special situations structures, while market participants continue to develop best practices in areas such as governance, underwriting and risk assessment.

What is particularly encouraging is that we are already seeing a growing number of successful transactions, monetization structures and recovery strategies across different segments of the market. As these precedents continue to accumulate, litigation finance and special situations investing are likely to become an increasingly recognized component of Brazil's broader credit, restructuring and alternative investment landscape.

In our view, Brazil is no longer asking whether this asset class will develop, but rather how large it can become. The combination of legal complexity, economic scale and growing investor sophistication creates a unique environment for the continued expansion of legal assets and special situations investing in the years ahead.