Jonathan Owen is a Vice President with responsibility for originating new business with US law firms and companies.
You have over a decade of experience in the legal finance industry; how have you seen it evolve?
I was introduced to the legal finance industry in 2011, and what was once a nascent market has now proliferated into a global, successful industry. I have seen finance providers become more innovative with deal terms, structure and litigation insurance as investments in practice areas like patent litigation explode. While these changes have had a profound effect, the most noticeable change has been the overall shift in perception of the industry and the caliber of the law firms and corporates that now utilize it.
If the earlier perception of litigation finance was that it was only used by law firms or corporates in financial distress, that couldn’t be further from the truth now. We have seen many AmLaw 200 law firms as well as Fortune 100 companies become heavily engaged in financing arrangements upon realization that they can leverage the inherent value of otherwise inaccessible pending litigation—value that ultimately translates to the creation of additional liquidity.
What is most exciting about developing Burford’s business on the West Coast?
Being based in the San Francisco Bay Area, I am most excited about the opportunity we have to work with some of the most interesting technology companies and capable IP law firms in the world. Given that Burford has such a strong patent underwriting team led by Katharine Wolanyk, along with a real appetite for risk, we are incredibly well positioned to help these clients and their counsel evaluate, strategize and protect their technology through the enforcement of their IP rights.
Katharine and her team rigorously evaluate complex cases, and their expertise makes Burford a powerful resource for clients and counsel irrespective of whether we provide financing for their claims. It can be incredibly valuable to have a third set of eyes for our clients, especially those whose business depends on a favorable resolution.
Focusing specifically on class action claims, how can in-house lawyers leverage legal finance to maximize recoveries?
Many corporations have valuable affirmative claims that they may be unaware of, claims that we can help identify and pursue. In the class action space, while in-house lawyers may be aware of cases under which their company would qualify as a class member, Burford is able to determine whether a plaintiff may have a far more valuable claim if they were to opt out of the class and pursue a direct claim against the defendants.
In-house lawyers may initially be averse to this path because it can be costly to litigate an individual opt-out claim rather than remaining as a member of a broader “class” or group of corporate plaintiffs. Burford, through its network, can not only connect these plaintiffs with elite counsel who can represent them, but can also bear the cost of the litigation on a non-recourse basis.
In many cases, Burford can also offer these clients the option to monetize or accelerate a portion of their expected recovery, again on a non-recourse basis. This is incredibly attractive for in-house GCs and CFOs as it allows them to create liquidity and revenue from an otherwise inaccessible asset.
What do you see as the most valuable benefit of legal finance for the law firms you work with?
The biggest advantage of our non-recourse financing is our ability to promote law firm growth, increased revenue and overall profitability. One of the most common questions I get asked by elite law firm lawyers is, “Why would I take non-recourse money against my cases at a higher cost than I would pay for a bank line of credit, especially when we don’t lose?” I love being asked this question!
Unlike a line of credit, which is debt, Burford’s financing is only collateralized by future contingency fees; therefore, if law firms use our financing to pursue cases otherwise deemed “too risky” and they lose, Burford would absorb that loss. On the flip side, though the premium for using our capital may be more expensive than a bank’s, the law firm earns a large contingency fee if the case is successful—an opportunity that it may have missed in the first place if it wasn’t in a position to take on more risk. What we have witnessed is that major law firms are increasingly recognizing the power of this model; they can use financing to scale their contingency practice rapidly without taking on significant additional risk, ultimately earning a multiple on the amount they borrow from us.
What is something corporate legal teams don’t know about legal finance, but should?
I think many in-house legal departments are unaware of legal finance, and those who have heard of Burford generally assume that we are a source of traditional financing, resulting in traditional debt. Even companies that understand the business can have significant misconceptions about how we are aligned with the interests of our clients. An example of this is the idea that Burford has control over the direction of the litigation, tactical decision making and even how and when the case is resolved. This couldn’t be further from the truth.
In fact, our financing documents explicitly state that we do not have control in the litigation; to do so would not only be an ethical issue but also create major conflicts in the financing relationship with our client and the attorneys involved. Burford is there to provide financial backing and to share in the risk associated with the case. While we have a deep bench of incredibly intelligent ex-Big Law attorneys on our team, we take on the role of a passive investor. Furthermore, our financing is not categorized as traditional debt for the purpose of our clients’ accounting. Financing is only secured by a future contingent receivable that may or may not materialize, depending on the outcome of litigation.
5… qualities of a great soccer (AKA football) player (since you are a former pro player)?
There are so many qualities, many of which translate to the corporate world. Here are five in no order:
- Passion: A prerequisite for any sport, I wholeheartedly believe that you will never be great at something unless you truly love it.
- Confidence: There will be highs and lows at the top of any game, but the best players have an immovable belief in their ability to get through rough patches.
- Communication: The all-time great players are able to communicate with their teammates effectively in order to get the best out of each other.
- Vision: The greatest players I have ever played with have been able to anticipate their next move ahead of others and were constantly aware of those around them.
- Style: Superficial as it seems, the best players always have a unique style or “it” factor and manage to capture the imagination of the fans for more than just their athletic talent.