What are affirmative recovery programs and how do they work?
- Affirmative recoveries
What is an affirmative recovery program?
Affirmative recovery programs are formal efforts by a legal department to strategically seek redress when the business is harmed, including through meritorious plaintiff-side litigation, and to maximize the amounts they can recover. As many companies seek cost savings and opportunities to add to the bottom line, affirmative recovery programs can empower legal departments to generate liquidity for the company and shift from cost centers to value drivers.
Extensive one-on-one interviews with senior legal leaders including general counsels and heads of litigation show that affirmative recovery programs are increasingly common, but opportunity remains to leverage them further.
Companies have untapped value in affirmative litigation
Two thirds of GCs say their businesses have an affirmative recovery program, yet only a few legal leaders say their company’s program is robust. This suggests additional upside potential for companies seeking to maximize their recoveries and transform the legal department from a cost center to a profit center. As one group GC of a privately held construction company put it: “The outcomes [of our affirmative recovery program] have exceeded our expectations, and our management is very confident in what we do. We are cutting edge in our approach and analysis. The challenge for us is to continue to improve.”
Seventy-four percent of senior in-house lawyers say they expect to see an increase in the volume of disputes their businesses face. As a result, many also say that they expect to pursue affirmative claims more frequently but have concerns about the costs of doing so. As one senior corporate counsel of an industrial company explained: “Patent litigation [will increase] as we may proactively look to pursue enforcement actions that generate revenue. That said, no one wants to pay a lawyer for the two years it would take to bring a case to fruition and secure a recovery.”
Therefore, it is no surprise that some in-house lawyers highlight the availability of legal finance as an important factor in enabling them to pursue meritorious litigation claims regardless of the business’s appetite to pay lawyers out of pocket.
Improve recovery programs with legal finance
The potential to add cost and risk to the business is a common barrier to the pursuit of meritorious claims and to the establishment of effective affirmative recovery programs. Even when a company is likely to recoup significant recoveries, there are valid concerns about the risk of outright loss as well as duration risk, as delays are a major factor in commercial disputes.
Legal finance can be a valuable tool for any company embarking on an affirmative recovery program. When a company works with a legal finance provider, the funder pays the upfront legal fees and expenses on a non-recourse basis (meaning repayment is contingent upon a successful recovery in the matters funded, shifting downside risk of loss and duration risk to the funder). Legal finance providers can also accelerate an expected entitlement from a pending claim, meaning that a company can also use funding to increase near-term liquidity and control the timing of cash flows associated with recoveries. Accelerating or “monetizing” an expected litigation or arbitration outcome based on the company’s preferred timing, not the timing of the litigation or arbitration, is a fast-growing area of legal finance.
In this manner, a financed affirmative recovery program can serve as both a P&L solution and a balance sheet solution. Shifting upfront costs to a third party and eliminating the risk of loss enables legal departments to contribute to the bottom line without adding to expenses. Accelerating expected entitlements from litigation creates immediate liquidity in advance of a litigation recovery. As a further benefit of this corporate finance for the litigation department, legal finance partners of Burford’s scale have third-party data and expertise that can help companies prioritize the matters that are most likely to yield the most positive results as quickly as possible.
A version of this article was published on Burford’s website on November 22, 2021, and was updated with new research data on September 16, 2025.
