James MacKinnon is a Vice President with responsibility for assessing and underwriting legal risk. As part of Burford’s investment team, he focuses on matters in Asia, the UK and Europe.
Burford’s investment team has a dedicated case management function. Can you explain how this function benefits clients?
After Burford commits or deploys capital, its case management function keeps in regular contact with the client to monitor the progress of the underlying matter. Burford does not control cases, but we may offer advice, usually at the behest of clients, throughout the lifecycle of each case to which we commit capital. Clients routinely ask for our views on case strategy, pleadings, budget management and submissions, and they see tremendous benefit from having a “second set of eyes”.
The pandemic has made this case management function even more valuable to clients, as companies are more focused than ever on maximizing value and minimizing costs. Due to our experience we are uniquely placed to assist clients with budget and expense management and can optimize recovery by assisting with successful enforcement strategies. Since the crisis began, Burford has worked tirelessly to ensure that our partners have increased access to our team. Lawyers appreciate both our expertise and our responsiveness.
Over the summer, you contributed a chapter on the use of legal finance in M&A arbitrations. What key takeaway would you offer to claimants and M&A practitioners?
For companies and law firms interested in legal finance solutions in the M&A context, it’s important to remember that there is no one-size-fits-all arrangement, and that our capital can be used to address a wide range of legal risk arising from M&A transactions. Our clients value our ability to bear the cost and legal risk of commencing arbitrations from M&A transactions, as well our ability to monetize claims and awards to create operating capital for other parts of the business.
Singapore is beginning to close in on Hong Kong's international arbitration case load. What do you think is driving the trend?
Singapore has invested a lot in arbitration facilities and commercial courts, in addition to promoting itself as an arbitral hub, and that strategy is paying off. Singapore is now the external dispute resolution center of choice for companies in India and in the wider Southeast Asian market (including Indonesia, Thailand, Vietnam and Malaysia). Still, Hong Kong, with its excellent arbitral facilities, remains the seat of choice when mainland Chinese state-owned enterprises are involved (I may be somewhat biased, though, as I used to work at HKIAC). There is also an enormous amount of trade that flows through Hong Kong, giving it a built-in advantage beyond its larger capital markets. Both cities have deep benches of talented lawyers and arbitrators and active arbitration communities. In the long term, I think whichever city first allows lawyers to act on risk—in line with the position in the US, UK and Australia—will be a key factor in giving that city an advantage, as clients value the alignment of interests and cost reduction that sharing risk entails.
What impact do you think the Covid-19 crisis will have on commercial arbitration now and in the years ahead?
We at Burford have been surprised and impressed by the way law firms have seamlessly transitioned to working at home. In the commercial arbitration context, lawyers have adapted quickly, coordinating filings remotely and holding virtual hearings and conferences. The more significant impact will be on the burgeoning costs and duration of international commercial arbitration. All corporations and investors are heavily focused on managing cash flow and are looking to their lawyers to provide innovative and efficient ways to manage the significant cost and duration of international arbitration. Increasing the use of technology to hold virtual hearings or cut down on paper only goes so far to address these aims. Instead I believe companies and firms will increasingly use legal finance, either by a client using our finance to offload cost or a law firm using our capital to be able to offer risk-based fee structures. Clients will also look for expert assistance in managing budgets, spend and legal risk—hence the reason for Burford’s case management function, which is there to provide this service certainty around spend.
In a down economy, what advice would you give to companies that want to realize the value of meritorious arbitration claims or pending awards?
I cannot emphasize enough that finance providers do not just offer capital for legal fees and expenses: They also offer products that enable companies to monetize existing legal assets, whether claims, judgments or awards. New research suggests that 70% of companies and law firms are going to lean on finance solutions to offset recession impacts in the years ahead. Given that more than two thirds of in-house lawyers report having unenforced judgments valued at $20 million or more, it seems likely that monetizations will become a critical tool for companies and their counsel.