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Asset recovery: Essentials for in-house lawyers

May 6, 2020
Daniel Hall & Michael Redman

It’s clear that the economy has entered a downturn, and that means that no company can afford to leave money on the table. Given this reality, it’s important for in-house lawyers to stop leaving millions in unenforced judgments uncollected.

The problem is significant: In 2019, two-thirds (65%) of in-house lawyers reported that their companies have unenforced judgments or uncollected awards valued at $20 million or more.

Below we explore the essentials of asset recovery and how in-house lawyers can recover money otherwise left on the table.

The problem

After a protracted legal battle, companies are often unwilling or unable to pursue the equally expensive and lengthy process of chasing awards or judgments. Companies pursuing awards are often at a disadvantage compared to the debtor—because the odds and the financial balance are stacked against the creditor, and the creditor is subject to rules that the other party is not. These include paying court fees, paying lawyers to plead the case and, of course, assuming the burden of proof. Thus it’s understandable that companies may conclude that it’s easier to abandon hard-fought awards and judgments rather than throwing “good money after bad” to pursue a recalcitrant debtor, but it often means forgoing assets worth tens of millions of dollars—an increasingly unacceptable financial outcome.

For this reason, the demand for asset tracing and judgment enforcement services is likely to grow in the months and years to come.

How asset recovery works

At a high level, asset recovery helps clients overcome the factual and legal hurdles that stand in the way of recovering favorable legal judgments or awards in the event that the debtor is unwilling to pay.

Burford’s asset recovery team delivers actionable intelligence to help move forward legal cases or help to recover legal assets— effectively transforming judgment debt from “legal paper” to cash. Depending on the client’s needs and the nature of the case, Burford can offer one of two services: Contingent asset recovery or fee for service (consultancy).

Contingent solution: A company seeking assistance to enforce an award will partner with Burford on a fully funded basis, which eliminates the downside risk of pursuing assets that may be unrecoverable. Typically, when companies come to Burford’s asset recovery team, the case has concluded, a judgment has been awarded, and now specialized assistance is needed to recover the award or enforce the judgment.

  • Working on a purely contingent basis—something no one else in the market offers—Burford provides investigative input and case management. This work is almost always multi-jurisdictional as it’s extremely rare to have judgment and enforcement in the same jurisdiction and can include a portfolio of cases.

Fee for service (consultancy) solution: A company seeking assistance to assess potential recoveries that does not require financing will engage with Burford’s consultancy services. The consultancy team can be thought of as a highly specialized research team. We engage in a range of matters from pre-action to complex investigations to arbitration. Burford’s team can evaluate the cost benefit of a potential opponent, identify a cause of action, execute complex cross-border investigations, find new witnesses and fact-check testimony.

  • The fee for service offering allows Burford to get involved at any stage regardless of whether a judgment or award has been established. We work with a range of clients whose needs vary in size and timing. As such, those two factors contribute to how Burford charges. Depending on the size of the case, Burford offers a fixed cost or a monthly retainer. Irrespective of size or timing, there is no minimum for clients to meet.

How GCs can use asset recovery services

  • Gather intelligence to inform engagement strategy and effect settlement
  • Trace assets of individuals, commercial entities or sovereign states
  • Prove legal and beneficial ownership, risk of dissipation and bars to enforcement
  • Investigate fraud or white-collar crime
  • Retrieve primary evidence, documentary or digital, and interview witnesses of fact
  • Distinguish strategically important assets
  • Select local counsel and advisors in novel and challenging jurisdictions

How to choose the best partner

When evaluating asset recovery services, it’s essential for GCs to choose a team that can effectively trace assets but also use that information to realize the full potential of a legal judgment. Even better is a partner that can provide a variety of financing models for that offering, as Burford can, in providing asset recovery on a fee-for-service or contingent basis, as well as purchasing judgments outright.

Burford’s team combines human intelligence with data-driven analysis (including our own proprietary databases) to gather valuable intelligence on judgment debtors. Our lawyer-led team then deploys a multi-jurisdictional strategy based on that intelligence.

Burford is the only major legal finance provider with its own in-house global corporate intelligence and asset recovery business, giving our clients the benefit of our combined capital and investment expertise and top-level global judgment enforcement.