The short answer is no. Legal finance providers are passive investors and do not control the legal assets in which they invest, except in extraordinary circumstances agreed to in advance by the client.
Various professional and bar associations, such as the International Legal Finance Association (ILFA) and the Association of Litigation Funders of England and Wales (ALF), provide guidance and codes of conduct that emphasize the non-interference of legal finance providers in lawyers' duties to their clients. These associations state that funders should not seek to influence the funded party’s lawyers to give up control or conduct of the dispute to the funder.
US courts have affirmed that parties may enter into agreements with commercial litigation funders that do not amount to a delegation of control. For instance, in Charge Injection Technologies, Inc. v. E.I DuPont de Nemours & Co., (Del. Super. Ct. Mar. 9, 2016) the court found that a client may contract with its legal finance provider to restrict his or her ability to discharge counsel without a legal finance provider’s consent. But the US courts have rejected the notion that these agreements render legal finance providers real parties in interest to a lawsuit. While legal finance providers benefit from successful case resolutions, they do not hold the substantive right sought to be enforced, as the claimant retains ownership of the claim and prosecutes it themselves.
There is no uncertainty about control in Burford’s litigation funding contracts, also known as capital provision agreements, which explicitly provide that litigation and arbitration decision-making remains with clients. Because our role is that of a passive capital provider making investments on a non-recourse basis, our upfront diligence process is exhaustive, and we endeavor to structure legal finance agreements so that the economic incentives of all parties are aligned. The vast majority of commercial legal finance providers will behave similarly, but those considering financing should, of course, seek confirmation and counsel as they engage with a legal finance provider.
After the execution of a legal finance agreement, Burford receives updates from counsel on the progress of the case. Although the legal finance provider’s role is that of a passive investor, funded counterparties may benefit from the value beyond capital that Burford can provide given our deep experience and expertise in commercial disputes. While it is ultimately up to the client to listen to or ignore this perspective, many clients actively seek out our views as a “sense check”. They may, for example, request that finance providers comment on draft briefs, join moot courts to help lawyers prepare for motions or appeals, assess and advise on the financial impact of proposed settlements, and assist in expense management. At all times, though, the claimant remains in control of litigation decisions.
Ultimately, companies that enter into carefully negotiated, multimillion-dollar transactions with Burford can do so knowing that their legal finance contract will not alter their control of litigation and settlement.