2018 Litigation Finance Survey
New research shows rapid growth of litigation finance
Since 2012, Burford Capital has invested in research to better understand the litigation finance market. Up-to-date insights help us be nimble and responsive partners and provide solutions tailored to our clients’ needs.
The 2018 Litigation Finance Survey provides a deeper look at lawyers’ first-hand impressions, drawing on independent research conducted online with 495 lawyers in the US, UK and Australia, as well as one-on-one telephone interviews conducted by an independent consultant with 38 corporate general counsel and law firm partners in ten countries.
Highlights follow. Download the full report at right.
Litigation finance defined
Litigation finance (also called litigation funding, legal finance, or third-party funding) generally refers to a process by which a litigant or law firm uses the asset value of commercial litigation or arbitration to secure capital from a third party, either to finance the litigation or for other business purposes. Financing consists of a variety of models and approaches, and most transactions occur on a non-recourse basis—meaning that the finance provider loses its investment if the underlying claim or case is lost.
Clients and law firms are under pressure
According to the research, clients’ top three business challenges are:
- Managing legal risk and uncertainty
- Increased pressure on legal budgets, staffing and spending
- Need for innovation from outside counsel
Law firms see litigation finance as a new business tool: Law firms’ top three business challenges are:
- Pressure to be more competitive in bringing in new business
- Need to provide clients new financing and pricing options
- Need for innovation to remain competitive
Litigation finance solves business challenges
77% of respondents agree that litigation finance is a growing and increasingly important area in the business of law—and the research shows that clients and firms are using it to solve business challenges.
Top 3 ways clients and lawyers use litigation finance:
- Pursue claims that will bring value to the business
- Bring or sustain proceedings regardless of cash position
- Invest in growth and use capital efficiently
Research shows dramatic growth of litigation finance
32% of interviewees and an even larger percentage of survey respondents said their firms or companies had used litigation finance—a 237% increase since 2012.
Snapshot: Litigation finance in the US
- More than half (53%) of US lawyers say are very aware of litigation finance
- Seven in ten (72%) US lawyers who haven’t yet used litigation finance expect to do so within two years
- US respondents reported the biggest increase in the use of litigation finance since 2017
Snapshot: Litigation finance in the UK
- Two-thirds (65%) of UK lawyers say they are very aware of litigation finance
- Over six in ten (63%) UK respondents who haven’t yet used litigation finance expect to do so within two years
- UK respondents are most likely to agree that litigation finance can help turn in-house legal departments into profit centers
Snapshot: Litigation finance in Australia
- Over eight in ten (85%) of Australian lawyers say they are aware of litigation finance
- Over half (55%) of Australian lawyers who haven’t yet used litigation finance expect to do so within two years
- Australian respondents are most likely to agree that litigation finance is a growing and increasingly important area in the business of law