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Adding value beyond capital: Post-investment

October 12, 2019
Christopher Catalano

Cost-based comparison-shopping may be an understandable mainstay of consumer decision-making, but what’s relevant for buying a toaster doesn’t apply when it comes to financing commercial disputes. For in-house and law firm lawyers it’s an at best limited and at worst potentially harmful way to select a legal finance partner.

So if lawyers ask us why they should take Burford’s capital rather than someone else’s—reasoning that money is money, and so why not get the cheapest money available?—we note that given the scale and diverse sources of our available capital, Burford will always be competitive on cost. But we also note that after a decade in business and having reviewed many thousands of requests for funding for commercial disputes, it’s clear that the challenges our clients face are rarely (if ever) just about the money. And it’s also clear that they routinely choose Burford because of the value we offer beyond the capital we provide.

To unpack what that can look like, we review below the ways in which Burford can add value for companies, law firms and lawyers from the earliest stages of the review process through to when Burford makes an investment, which we oversee in our respective roles managing Burford’s US investment pipeline and its US litigation investment portfolio.

Adding value post-investment

As we said at the outset, law firms and clients that focus solely on the cost of capital during the case review process risk missing out—but those that actually commit to working with a legal finance partner on this basis risk something much more damaging post-investment. Many “litigation funders” offering aggressive pricing terms do not have permanent capital—and in the worst-case scenario, for cases with long lifespans that can mean those funders may not be able to provide money when or as quickly as it is needed, and may even cease to exist when it comes time to fund the capital they originally committed. Conversely, Burford has our own permanent capital, and we are ready to go the distance with our clients.

But law firms and companies that work with us get more than capital: They get a long-term partner in alignment with them who is focused on maximizing the value of the claim, which is the goal of bringing the case in the first place. We fundamentally take the view that a claim is an asset to be monetized. As John noted above, we bring that view to bear in the first instance when diligencing a potential investment. But we also bring this asset-monetization view to bear after we’ve made the investment—and this adds real value to the law firms and companies that work with us.

Thus, while Burford is a passive capital provider, we regularly confer with our counterparties about both the prospects of the litigation and the set of likely investment outcomes, which can be a moving target. We position ourselves as an additional team member—an extra set of eyes and ears. We do our own substantive analysis so that we have the most complete possible picture of where the case is headed and when and on what terms it may be resolved. This enables us to consult with the law firms and companies we work with on both strategic and run-of-the-mill issues on the most informed possible basis.

To be clear, we do not foist ourselves upon our clients. Some may wish simply to provide the fairly minimal information required by our agreements. Other clients, however, actively seek out and benefit from our assistance. The choice to solicit our input remains with them.

Post-investment, we can add value in a number of different ways:

  • Commenting on draft briefs
    Burford regularly comments on draft briefs. While the law firms and companies we work with are under no obligation to accept Burford’s suggestions, they often agree that this process helps strengthen the final product.
  • Joining moot courts
    Burford can join the panel on moot courts to help lawyers prepare for motions or appeals.
  • Assessing proposed settlements
    The decision to settle remains the client’s regardless of financing, but should there be an opportunity to settle a case, Burford can analyze the financial impact of the proposed settlement to help the client determine whether or not settlement is the right decision.
  • Assisting in expense management
    Although Burford and its counterparties agree upon sufficient capital commitments during the underwriting process, budget management is not something that comes naturally to many lawyers. Therefore, Burford can and often does consult with the law firms and companies we work with on how best to bring the case to a successful conclusion using the capital that has been allocated.

 Much more than money

As a multi-billion-dollar business, Burford has the capital and historical track record to provide capital for even the largest, most complex litigation and arbitration matters. But Burford is much more than its money. Burford acts as a true partner to law firms and companies at every stage of the diligence and investment process, and it shows. It’s no coincidence that 75 percent of those who initially get financing from us come back later to work with us again. We’re confident that this demonstrates that lawyers see the value we can add beyond the capital we provide.

Read more of "Adding value beyond capital": 

Part I • Part II

To read the article in full, download the Spring 2019 Burford Quarterly.