Webcast: Unlocking value from corporate patent portfolios

In a recent webcast, “Unlocking Value from Corporate Patent Portfolios: Legal Finance and AI-Powered Patent Workflows in Practice," Burford Managing Director Katharine Wolanyk and Patlytics CEO and Co-Founder Paul Lee sat down to discuss how businesses can adopt a more proactive, data-driven approach to IP strategy and patent monetization.

You can watch the webcast below.

 

---

Katharine Wolanyk: 

Hello everyone, and thank you for joining us today for a discussion on using AI and legal finance to unlock value in corporate patent portfolios. My name is Katharine Wolanyk, and I am a Managing Director and lead Burford's global intellectual property team. As with all of Burford's patent team, I have extensive technical as well as legal experience. I've been a systems engineer in the aerospace industry. I practiced law with Latham & Watkins. I've been in-house in a number of technology companies over the years, and then I've been in the world of legal finance for 12 years. So really a full perspective of how companies and law firms are working together to unlock value in legal assets. I'm excited to be joined today by Paul Lee, the CEO of the leading AI-powered IP platform, Patlytics. And he's joining us today from the middle of the night in Asia.

So Paul, thank you for staying up late to be with us. Go ahead and introduce yourself.

Paul Lee:

Absolutely. I'm delighted to be here, Katharine, and thank you for the invite. Excited to be showcasing some of the creative ways to unlock value in patent portfolios. I am the CEO and co-founder of Patlytics, a leading AI platform. We work with hundreds of corporates, leading Am Law 100 firms and the government to make sure that we can create exceptional value to the IP ecosystem. Patlytics was created just around three years ago.

My background is I've been a venture capitalist for around 10 years, previously a partner at Tribe Capital, a $2 billion fund when I was first introduced to the world of IP and found it really interesting. Before that, I spent some time at AVC. I'm Canadian and studied engineering and economics at the University of Waterloo.

Katharine Wolanyk:

Terrific. We'll start by introducing both Burford and Patlytics. As many of you know, Burford is the world's largest provider of legal finance. We've got 17-plus years of experience, and the business has moved much more into the corporate market in recent years. So that's really coming together nicely with what we're going to talk about today. Burford is publicly traded on the New York and London stock exchanges, and that public status is valuable from a transparency standpoint. Potential users of our capital can see our sources of capital, our track record, and the breadth of ways that we are working with our counterparties to put capital to work in the legal context. And it's also permanent capital. So that's a way for us to, particularly with patent strategies, to really best address the long duration that some of these strategies take to play out.

Burford's deal flow comes from both law firms and increasingly from clients directly from around the globe. We do a wide range of commercial legal finance, certainly in the patent space, but also arbitration and corporate matters, and increasingly across the globe. We have a dedicated patent team of nine people who, as I said earlier, all have technical and legal backgrounds, and I think that makes us the largest on the investment side of the IP market. And while Burford sees many, many hundreds of really terrific legal finance opportunities each year, our patent team alone sees hundreds of them, very high quality, increasingly coming directly from corporate patent owners who are looking for ways to put capital to work. And this has really been a significant growth area for us over really the last five-plus years. As the slide here says, over half of our commitments through the end of last year came directly to us from corporates.

So that's really kind of an evolution in the legal finance world. And we've got a portfolio that's $5.7 billion as of the mid-year here and spread across the globe. So a very, very significant part of the finance world and one that we are getting the opportunity to work with really, really interesting and forward-looking corporations, operating companies, as well as universities and smaller entities. But again, so much of our growth is coming from the corporate market in the last few years. So that's Burford and my team. And Paul, I'd like to talk a little bit about Patlytics.

Paul Lee:

Thanks, Katharine. So just to augment some of the details on Patlytics is we work with both sides of the table, plaintiff side and definitely the defense side. The value has been to decrease frictional, laborious inefficiencies in getting some of the outcomes and some of the more interesting work done. The genesis of Patlytics has come from a desire to have a system in place where you can do the whole IP flywheel work. And by IP flywheel, I mean talking about invention disclosure harvesting to prosecution, drafting office action work, to portfolio strategy, portfolio maintenance type of work to, I guess relevant here to really understanding portfolio for potentially licensing, litigation readiness, et cetera. The whole life cycle is what we cover. And we've quickly come out the gate now total funding of $65 million from Silicon Valley VCs, the largest funded patent AI platform.

We have four offices around the globe headquartered in New York, San Francisco, London, and now Tokyo.

And I guess some of the coolest things that I've been able to witness and see is really corporates doing more with less using AI, being able to do more higher-level work and law firms winning pitches and law firms being able to do a lot more sophisticated work as well. And it's been a delight to help power some of those workflows. When we started the company, we wanted to start with some of the best of the best. So not only do we have dozens of patent attorneys on the team, but also we were advised from former director of the USPTO to leading chairs of IP litigation practices and chief IP counsels of great companies. It helped drive the roadmap to what the product is now and going forward.

Katharine Wolanyk:

Thanks. And it's definitely, I feel like particularly if you're out at the conferences in our market and such, Patlytics seems like it's everywhere these days. So it's really amazing how quickly AI has come to be such an integral part of our patent market. So as I noted earlier, the majority of Burford's legal finance business overall and definitely that for our patent business is coming these days directly from operating companies. And they're looking for ways to leverage legal finance to achieve their corporate goals. And in the patent space, that increasingly involves patent monetization. So over the last five to seven years, we've seen really heightened deal flow from companies across the globe asking, “How does this work?” And so we began to wonder whether we were just fortunate by being big and well known in our space, whether we were seeing the lion's share of the deal flow, which we were happy obviously to see.

So we conducted some outside legal market research last year. It's mentioned here on the left-hand side of the slide, and we went out to both senior law firm patent litigators as well as in-house IP practitioners, again, across the globe, deliberately choosing to try to get a global perspective and asked them how they were looking at their patent portfolios as assets, what they were doing.

And really the results were very surprising to us: 71% of the in-house lawyers in that survey have already divested assets or are actively exploring divestiture options. Within the monetization spectrum, that tends to be where the corporate market is going. And so that to us really showed that yes, we were seeing a lot of opportunities to invest, but what we think is, and if you read IAM or any of the IP publications, you can see this is kind of a steady drumbeat in recent years of companies transacting significant assets through divestitures and between corporates.

So increasingly patent portfolios are becoming strategic assets. There are a number of reasons driving that. Some of it is certainly global competition. In other cases, economic challenges have made companies look to their patent portfolios as strategic assets. And so again, seeing increased transaction activity. And that is also being seen by a lot of law firms and the whole ecosystem of patent practitioners, licensing counsel, litigation counsel, analytics firms, damages experts, all of the market is seeing this uptick in activity.

And then coinciding with this real step up in activity that we've been seeing, we've obviously seen the Unified Patent Court come online in the last few years, and that has transformed a litigation market that was heavily US-centric for many, many years now to increasingly companies who many times their businesses are global and so their portfolios are global. They're looking to the UPC as an attractive alternative.

And then the activity that we are seeing, and not just in terms of our deal flow, but also in things that are publicly reported, is really spanning across a wide range of technologies, certainly in the life sciences and pharmaceutical space, where businesses are in many ways built around intellectual property, but increasingly across a wide range of established technologies. Semiconductors obviously are very big, consumer electronics, very big, but increasingly into newer technologies. And this is why we're here today, it's a daunting task for many corporations. They might have built up a patent portfolio over years through their organic development. They may have acquired some of those assets due to M&A, but these portfolios have become very large and it is a challenge to really do a thorough analysis and determine what is valuable within that portfolio and how best to then extract that value.

And so AI has really turned out to be a welcome development in allowing companies to analyze, determine what assets might be core or non-core to their businesses, which ones might be optimal for a monetization strategy or divestiture strategy. And also with the pace of technology, being able to do so quickly and cost effectively is a very important thing. So again, AI really playing a significant role in driving this activity. And as I mentioned, Burford's business is global. Our patent business is definitely global. And this is just a sense, these are companies who have announced transactions in recent years, and you can see it really does span the globe and the United States or North America, I should say more accurately, is obviously a very large player and companies are transacting patents for a variety of reasons, but it's also increasingly being driven out of Asia as well as Europe.

And this is just at the beginning of a list. These are meaningful transactions. There are many more on a monthly basis. IAM publishes a very good report that we watch carefully that shows even more bite-sized, if you will, transactions. And again, this is right now turning to be an early-adopter kind of phase. I mean, there's some companies that are sophisticated and have gone quickly into this, but we are seeing some companies dip their toe a little bit and doing so with smaller transactions and then figuring out is it something that's a fit for their business? And then if so, we are seeing many of them are moving on to a regular cadence where they're doing a quarterly or annual review of their patent portfolio, trying to assess what could be the next transaction for them, and then working with perhaps their chosen partners and their advisors to construct the right strategy.

It has been largely focused toward divestiture, but we do and finance also a fair number of transactions where the company is retaining the assets and monetizing directly. So it's a wide range. The other thing that I think is interesting is years ago in the legal finance world, it was very much litigation finance. And that is true, particularly for the bigger transactions, litigation probably will be a part of the strategy, but what I think is interesting and actually heartening is that we are seeing more and we are financing more strategies that are either partially licensing driven or entirely licensing driven. So that kind of gives us a sense that the openness of the market to licensing versus litigation solely to address value in these portfolios is kind of happening on a real-time basis. So again, just sampling of the companies, but you can see these are very well recognized names and this is going on also for smaller operating companies and universities to a lesser extent as well.

Paul Lee:

Some of these use cases that Katharine has mentioned has been key workflows for AI and definitely Patlytics. For example, the M&A divestiture litigation, yes, but definitely for partial or full licensing campaigns. We see a trend among corporates these days to figure out which pockets are interesting and that can be done and performed really, really well by determining hit rates across the portfolio, which we'll get into a little later. And I think the pattern that I see across the globe is that there is a level of transactional inefficiency that's coming down already and it's going to continue to come down with the right use of AI. For example, our marquee product in the market, which was our infringement detection software, really kind of kickstarted what else can we do with their portfolio? And some of one of the biggest misconceptions around infringement is that a lot of folks, corporates and law firms, think that's only from a plaintiff-side perspective, but it's also a very defensive mechanism for pruning purposes and also for the ability to have a blue-team/red-team analysis.

It's been very, very handy, which we can show you what that looks like a little later. The ability to do claim construction, look at the different heat maps of your portfolio, SEP analysis and validity, FTO classification, and then also the prosecution workflows from drafting provisional to non-provisional, working with said law firms or even in-house teams, having now the muscle to do some of these a little better, and then creating some efficiencies on office action responses have been some of the benefits from an end-to-end system perspective.

For I think the time being, we'll hyper-focus on some of the monetization and some of the value unlock that you can get from portfolio analysis, but we can share emails and contact info after if there's more curiosity in some of the other workflows as well afterwards. And just very briefly, our system has patent records. We have different jurisdictions across the globe, EP, US, Korea, Japan, and other jurisdictions. There's also examiner data and I'd say U.S. case law on platform. And we are partnered with a lot of different legal ecosystem players through eDiscovery, such as Relativity to different databases, chemical databases, to legal databases. And it's a great place to do very hyper IP-specific work.

So this is relevant and interesting is I think on average we hear out of a portfolio, the hit rate's around 2%. There's some sophisticated practitioners and also in-house counsel, some law firms who try to have a higher quality by pushing it to 10% through the use of AI and through the use of some of the workflows and the triaging that we'll show you. This has been a huge benefit and also allows some of these outcomes and use cases that Katharine was mentioning, which has been for greater partial or full licensing campaigns, but also to be a little more creative with your portfolio as well. I think the conversion from two to 10% up to 10% is interesting, especially when you don't have to add additional resources and when you can do sophisticated type of work, including claim construction manipulation to different triaging per the different dimensions that you could triage on.

And I'd say that's been a main driver for a lot of pruning exercises.

Katharine Wolanyk:

And Paul, you raise a terrific point here and it's one that we have definitely seen, and I'm sure others who are on the webinar today have seen in their own practices is that companies built patent portfolios over the years for various reasons. We often hear folks mention that they prosecute patents for more defensive reasons, and also perhaps again, they've acquired portfolios as part of their business acquisitions where they didn't necessarily have a whole lot of control over the patents and why they were prosecuted.

And as we have seen more companies coming to the market and looking at their patent portfolios with new eyes, and are these affirmatively licensable or maybe litigation grade, if you will, the focus has changed in terms of how they're prosecuting their patents are thinking, I think, about their portfolios in a very different way. And we had some portfolio analysis exercises going back a few years now where the companies had a lot of patents, but perhaps not ones that really were good fits for investment.

And they've heard that and they've gone back and they've worked with their counsel and their internal teams and really changed their focus in how they're prosecuting and really trying to think of the patents as truly as assets as opposed to something where they've got a large count of intellectual property in their portfolio, but more so ones that they can potentially use in a cross licensing campaign or entering a new market, all the different types of reasons that companies do prosecute their patents.

Paul Lee:

Absolutely. We've seen prosecution become more targeted at times, and we've seen more proactive type of work during the prosecution phases, playing two steps, three steps ahead. And it's been really interesting, especially when you can think of it from an invention level as well. So it's getting earlier into the IP life cycle for some of the moves you can make a little later. For the law firms in the room, it's been a tried and tested, battle tested now value driver to use some of the workflows to win pitches. Basically to go through samples of portfolio, to determine early level claim charts, to be able to understand and show outcomes really fast out of the gate during the pitch.

Pitch environments, it's been a game changer for firms, and we're super proud to be giving an extra competitive edge over there for live and maybe litigation ready type of licensing/active litigations and the cost allocations that's associated to that. Now you can be a little more acute or be quicker on some of this work earlier on. It's been also really interesting to have client by client, matter by matter usage tracking. And lastly, we've delivered the product to work on immediate needs. We have over 200-plus IP skills that practitioners and funders to the law firms, litigation finance, to be able to use quick type of flows to get the results done much faster than before. And it's been helpful on active diligence matters as well.

Katharine Wolanyk:

I think that's right. And when we published our research last year and that 71% of in-house IP practitioners having some level of activity going on with their portfolios and patent monetization, I think was really surprising to a lot of law firms, particularly big law, that this is your client base, huge operating companies with global businesses and big patent portfolios, but perhaps they've never been on the affirmative side of patent monetization before. And so the law firms are, I think, realizing that this is a way to serve your clients, to help them with a challenge and to, again, show value because this is something that's important to many in-house corporate teams that they're able to show their C-suite that they're doing something really proactive with their intellectual property. And so for the law firms, from our perspective, the law firms are a crucial part of the equation.

It's one thing to have narrowed a very large portfolio to a more actionable set of assets, but still there's the human-eyes-on aspect, and we'll talk about the demo here coming, that is so important. And so for law firms who have been serving their clients, they know their businesses, they know their business priorities to now be able to use an AI-powered platform such as Patlytics to really get to that focused pitch to their clients and sometimes raise the question clients who aren't yet far along and they're thinking on this, this is a way for law firms to really show some significant value to those clients.

Paul Lee: 

So I think for the next 10 minutes, it might a good idea to go over what Katharine likes to say, the money flow, the money workflows on some of these Patlytics modules that could be quite interesting. So let me share the screen here. So this is a landing page of the Patlytics platform. You're able to quickly do some work as soon as you land. And depending on if you're a law firm or an in-house prosecution firm versus litigation firm, you're able to have skills done from a complaint was filed, received an office action, how do we prepare claim construction, demand letter, client needs an update, raise issue, et cetera, et cetera. From the in-house perspective, being able to run maintenance, what is the competition doing? It's a common skill. How should we approach the prosecution of this family?

Someone's using our brand or content on the trademark side, post-grant proceedings. Each of these skill you can click on and it gets to work really, really fast. We're very, I think, proud of these skills being helpful and we've categorized them for different in-house teams and different law firms and that's been a success. But for the point of this, what would be helpful for us to see is what you can do immediately as soon as you get in. You're able to go into the patent vault, which allows you to import, discover, upload your own portfolio or other assignees, other competitors or other M&A, whatever portfolio that you think is interesting and you want to do work on, you're able to put it and add it to the vault. You're able to ask questions on these. For example, some of these patents here, let's say you want to classify some of them, you want to figure out what other stuff you'd like to do with them.

For example, if you want to do heat maps of infringement and validity, you're able to do that. It's been a really helpful library of collecting different assets out there from granted patents to pending to anyone's in the ideation stage. And the ability to do quick work on it, there's been a lot of value for that.

So this is just an example of some of the work that it's doing on some of the classification side. But given that it's not the point of the workflow right now, we'll just exit out of that and go into something that's relevant where we pick out an asset or a portfolio of asset in let's say the cybersecurity space. You can add files, you can import files if you have NetDogs, if you have Relativity, if you have iManage, other SharePoint, we allow integrations. So you're able to see and have work done under one list. And it's been pretty powerful to have some of this MyDrive work. But going back to the cyber portfolio, we've uploaded a list of some of these assets.

And what's very common to figure out the value and the monetization and the potential pruning exercises is being able to do red-team and blue-team, being able to run infringement heat maps at scale, and then also simultaneously see validity heat maps and also compare them against other prior art for you to see both sides able and see some interesting analysis, interesting kind of outcomes. You can just do that by going into the IP module and creating heat maps here. And we've actually ran some of this already, which is based on the cyber portfolio that we looked at. And what you can see is that after running this heat map, which takes about 10 to 15 minutes, for assets that you're interested in, it does a really good job identifying products out in the market and kind of ranking on hits versus non-hit.

And it auto classifies as well, if that's interesting. Or you can make it unclassified however you'd like. But the value is that for this patent here across these different products out in the market, the first row, the many different columns, you can get a green/yellow/red reading and you're able to click on each box, determine the endpoints, see the analysis, claim-by-claim, element-by-element. You can look at, it discovers where some of these matters and information is pulling from direct. So it's non-hallucination. Everything is like reg technology based on the pull here.

And that's key, being able to pull exactly from the different materials. And then you can look at claim-by-claim and really see what's a direct hit versus a non-direct hit more of a suggested. And at the end of the day, if some of these work is interesting, then you could go to the claim chart index and view the claim chart itself. So this is a portfolio triage. So you'd have your portfolio that you were looking at, go through the heat map, kind of rank top to bottom on interesting patents based on the hits that you get across the market. And then if you want to be hyper specific on some of these patents that's at the bottom of the funnel, you're able to get to the charts. And the charts get really interesting because you can get summaries on these charts, but all in all, you're able to get claim-by-claim type of experience where you can see what is a hit versus non-hit and where it's coming from and really do substantive work, the type of work that you would care about.

And you're able to view prosecution history on the platform as well.

So going back to the main purpose of this is that from a triage level, by going through the heat map, you're really able to see kind of red, yellow, green in terms of your portfolio. And that's on the infringement side. And now I want to share with you on the invalidity side, which is kind of the blue team type of work where for the same set of your assets, you can run these assets across different prior art out there and you can view the portfolio from high to low, low to high, however you want to rank it.

And you can see that there's some prior art that's actually quite interesting. And similarly, you're able to click onto each if you'd like and see the patent families and the claim specs, all of that type of stuff. Or you can chart it immediately across different assets that you want to take a look at. The reason why this is so money is because now you're kind of analyzing both from two different levels. So it can be two or three steps ahead on some of the kind of argumentation or some of the balances that you might want to check over. And it's been extremely helpful for quicker licensing discussions and quicker monetization type of discussions as well.

Katharine Wolanyk:

Well, and it's interesting in the evolution of our inbound financing inquiries, we went from years ago we would get, perhaps a company would bring us a short list of assets that they had pre-selected themselves, either internal analysis or with the use of outside advisors. And many times those would be assets that were very late in life, perhaps were peripheral in value to them and also to potential investment. And so many times, this is true of legal finance generally, we would have to pass on the investment. It wasn't really a good fit. And then fast-forward a few more years and companies were realizing that they probably had investible assets, they just didn't know where they were in the portfolio. So what we were seeing increasingly was an entire patent list being given to us, hundreds to thousands of patents and the company saying, "You tell us what would be interesting to Capital?" Recognizing that they're very large investments and so that we have to put the valuable assets at least into the conversation.

And so that's been in more recent years, we would see the entirety of the patent list or perhaps law firms would see the entirety of the patent list or other advisors and such. And that was as AI was just really starting to come into its capabilities and such still ended up being a very challenging process and one that involved a lot of manual work the more recent. And this suggests to me that a lot of companies are using AI platforms like Patlytics, maybe specifically Patlytics, but also maybe some internally developed as we're now getting back to a world where work has been done and we are seeing opportunities brought to us where they vetted their infringement reads and then the validity analysis. And there's yet the third piece, which is the damages analysis that has to come along. So it's very clear to us that companies are both interested in doing something with their patent portfolios and now they're empowered to really get to a much more manageable subset of assets, ones that they're able to talk about internally, are we comfortable putting these assets into the market and such, but it's a much more focused conversation.

And so clearly people are using sophisticated platforms such as Paul just demonstrated to be able to get to an investment conversation or a licensing conversation with counsel or whoever the members of the team. So it's really been a rapid development in the market.

Paul Lee:

Absolutely. It's been getting to outcomes fast as quickly as possible. And for every set of assets that you want to take a look at, you have an agent on the side, which you can just click on or you can write whatever you want to write on. But these three are quite common. Summarize the heat map or show me the most relevant, highest to lowest and compare key differences. And the value of doing this, especially in M&A, especially in some of these use cases that we mentioned on this call have been super helpful. And what used to take weeks and maybe a lot of resources and up to a month or a couple months, now you can get things done with clicks of buttons.

Katharine Wolanyk:

So we had a couple questions come in that I think might be a good moment to address. The first one is how much of Burford's patent deal flow is still inbound from law firms and patent owners as opposed to ones that we are originating ourselves and is AI changing that mix? And so again, I said I've been in legal finance for almost 12 years now and deal flow used to come directly from law firms. They would have to have done all the hard work in putting together a package of materials particularly where litigation was the focus. And that has changed in the last five-plus years. The deal flow has flipped and now it's coming directly from corporates operating companies who are trying to figure out how does this all work? What steps do they need to take? Now AI is letting them really do some pre-thinking on their own right.

But we're also out having conversations with the market. I speak regularly on the value of legal finance. And so many times because we are out educating the market about what's possible and even just raising the question, we are now seeing I think just more and more inbound corporate deal flow and law firms, as I mentioned a minute ago, law firms are realizing this is their client set and they have the ability to really work hand in hand with those companies. So it's become a real interesting time. And I think AI has really empowered a lot of that. So the second question was, Paul, I think this is best directed to you. When your system flags a patent is infringed and worth asserting, how does it know whether the holder will actually act? And across the patents you have charted what fraction of the holders have ever asserted, sold, or pledged a patent before and what fraction did anything in the following two years?

Paul Lee:

When the system flags a patent as potentially infringed and worth asserting, we don't know if the holder's actually going to act or not, but the litigation data that is soon to be coming onto our platform through a bunch of different databases that we're stitching up, you'll have a much clearer view of some of the patterns and also some of the decisions that's been made in the past. And from that, you're able to see, let's say, when you drill deeper into some of these holders, you're able to see the history of assertions, sales, and pledges and what those were. And that's really litigation data. And some places have much better litigation data versus other places. And this is why the type of work that we do is a lot of the stitching up and stitching up across different jurisdictions as well.

I guess lastly, how do we know whether a chart is a lead rather than a dead end? Look, if you have a very direct all green chart, that's a strong chart and you can do something with it. It's really, really interesting. And I think it's been just such a delight to work with corporates and law firms all across the globe, seeing green across everything or across some specific asset. And we've been hearing that a lot of stuff has been done with those identified assets. So getting those quicker, being able to have more options on those, and then later determining financing on those through partnering with Burford has been, I think, a very critical element for some of these patent holders.

Katharine Wolanyk:

Well, I know there's still more questions, but I wanted to touch on this last slide here for a minute if we could. So this is like, okay, you've got the insight, you've done really good work here. And obviously Paul's shown us a way that you can identify a number of assets potentially actionable. And then it becomes what's the strategy that's right for your company and for these particular assets? And where you have the luxury of a portfolio with a lot of green on it and not a ton of invalidity issues, a lot of times that might be a licensing strategy just because that tends to be how people like to present their license strategy where it's more focused or the value is higher, that might be more of a litigation-driven strategy. The things that make portfolios investible, and as I said, the damages piece is also essential, is you can have the greatest infringement reads and they can be incredibly strong from a validity standpoint, but if it's too early in the commercialization for that technology, it might not be investible.

Those are still valuable patents. You might have to wait a little bit or perhaps again, pursue a licensing conversation. Just the cost and the risk and the duration of litigation tends to drive toward more high volume technologies. Another question that we often get, a company has gone through, they've done their analysis, they've worked with Patlytics, or maybe they've got their own tool, there's a variety of ways they get to these results, but then they have to think about what's the right strategy for their company. And we often are in the course of talking through options with companies, try to point up to them if there are actual encumbrances, there's been licensing or other transactions that serve as encumbrances on the assets, or there are very highly sensitive business relationships, highly valuable business relationships that just need to be protected from any type of monetization strategy.

Those are things that we try to tease out early in the conversation. It may mean the transaction is harder to invest or it may be completely navigable. So that's something, but it's important because we're often talking to IP counsel or the in-house legal counsel. It's important that they're going to be able to pitch this successfully to their C-suite. And so we need to give them a route to protect those relationships. And as I said here, often companies who are newer to this will start with non-core assets, and then it's very common once they've gotten that first deal will expand. And at this point, while we finance a wide range of transactions, and in many cases it's the most beneficial from the company's perspective to retain the assets and maintain control and all of that comes with staying in the driver's seat, there's also risk to that.

And not all companies have the in-house expertise, nor do they want to focus their in-house lawyers on that type of thing. So for them to divest, essentially outsource the monetization strategy that is proving to be at the moment where the market is choosing to go. Maybe that changes over time, maybe that's always going to be the case, but where a company chooses to divest assets and move them away from the operating business, then it's a matter of us working with the company and counsel to build the structure. But litigation counsel, whether there's litigation front and center or maybe at some point in the strategy, they're a key piece of the team. And so having, again, these deep relationships with your clients makes their monetization strategy more investible. We often say to companies, there's more to a buyer than someone who might bid the highest price.

A lot of transactions fall apart in diligence, a lot of transactions fall apart where the bidder isn't able to pull the capital together. So choosing a partner that has that capital and can close on transactions. And particularly with Burford, many times these are private transactions. Companies don't always want to go to market and have a widely known sale of certain other assets. So they prefer a transaction that's private nature. Ultimately, those assets will be assigned and that will show up on a report, but at least the transaction at that point is closed. And again, the main thing from takeaways is you may have used a lot of analytics to get to a more digestible investment opportunity, but then we really do think, and I think one of the questions goes to this, this is maybe forever or at least for the foreseeable future, the human-eyes-on is such a critical element.

We are using AI. Patlytics obviously is a terrific example that a lot of big law is using and a lot of funders and companies, but in the end we do need to double check, triple check, and make sure that the human piece is brought to bear in our investment decision.

So those are getting to an investment grade strategy is part of the challenge as well. So let's see here. I'm looking back to the questions here. Paul, if there's any that are jumping out at you that you want to tackle.

Paul LeeL

I think the next question is, has Burford realized an increased rate of cases they fund based on work products through Patlytics' proof of infringement? If so, what is the increases compared to work products produced manually or with other AI tools? I think to Katharine's answer, their judgment from a human level is you can't replace that. And I think at the end of the day, we could do a lot of the analysis and a lot of the laborious work and be even a double confirmation for some of the hypothesis or some of the stuff you want to identify. But we definitely do not replace judgment across corporates, law firms and the government. So I think, I don't know, Katharine, I'm sure you've seen a lot of different work products that's come across your desk. Has that led to an increased rate of cases?

Katharine Wolanyk:

I don't know about an increased rate. We still run less than 10% of the opportunities we look at end up being ultimately closed investments, but we are definitely seeing more AI-generated work product as part of the case materials, the diligence materials that come to us. But depending on the strategy, we still do require not at a minimum vetting, but often adjusting of those charts and all the other analysis that comes along. So at this point, it's more of a tool than an ultimate outcome driver, but it is incredibly helpful because it just was hours and hours and weeks and months of very expensive hourly analysis before this. And now we're getting to a point where we can really start the conversation at a very efficient focus point. I think that brings us right to exactly the end of our time. So thank you everyone. Hopefully this was eye-opening as Paul offered, Patlytics has got all kinds of functionality that we just barely touched on because we wanted to keep the focus on monetization analysis, but this is becoming a key function in all practicing lawyers' toolboxes these days.