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Follow-on claims and litigation finance: Burford’s view

October 23, 2019
Craig Arnott

The eye-popping €2.93 billion in fines imposed by the European Commission on a group of truck makers in July for price-fixing and other anti-competitive behaviors is fueling potential follow-on claims brought by truck purchasers. Some are suggesting that these claims may be worth many billions of euros in damages.

Potential claims are not, however, money in the bank, and press releases do not make for a legal claim. The EC’s yet-to-be-published judgment establishes liability for the cartel conduct identified in its decision—but private claimants must establish they have suffered damages from that conduct in a follow-on claim. Such follow-on claims require hefty fees for lawyers and economists and other experts—expenses that will hit claimants’ profit and loss statements month after month, and possibly for years. In jurisdictions such as Germany, where lawyers are not permitted to work on contingency, the resulting monthly legal bills can be difficult to stomach even for clients with multi-million-euro claims.

Litigation finance has a significant role to play—and Burford is actively playing such a role in these trucks matters as well as other cartel claims.

For example, Burford has closed innovative deals with corporate claimants as well as a €30 million agreement with leading global claimants firm Hausfeld to finance competition claims in Germany. Through our agreement with Hausfeld, as well as Hausfeld’s work with claims aggregator Financial Right, active book-building has been in place since before the July 2016 EU antitrust announcement. Litigation finance shifts the cost of paying legal fees and expenses from the claimant to Burford, and enables a client to unlock the asset value of a pending claim without risk or negative impact on corporate financial statements.

In the trucks matters, Burford has several ways of working with claimants and can adjust models to meet differing needs. Burford provides financing to companies harmed in the trucks matter. Burford can also provide financing through arrangements with a law firm that will act on behalf of companies. Lastly, clients can assign their claims to an aggregator which has an agreement in place with a law firm and funding from Burford enabling them to collect and prosecute trucks claims.

Notwithstanding turbulence across the EU this year, the long-term trend in competition litigation is clear: more competition actions, and more complex competition actions, are being brought and defended. Regulators, courts and lawyers engaged in competition litigation are becoming increasingly sophisticated. Litigation finance is a more important tool than ever to empower the pursuit of redress where there is anticompetitive behavior—and Burford is proud to be the market leader in the space, working with leading law firms in doing so.