Of the 55 lawyers on Burford’s global team as of publication, 18 are former in-house lawyers, including Burford’s CEO, Christopher Bogart, who co-founded Burford in 2009 inspired in no small part by his experience as the former General Counsel of Time Warner Inc.
In June of 2019, Burford Senior Managing Director and former in-house lawyer Aviva Will gathered members of the team who recently joined Burford from in-house legal teams for a roundtable discussion of lessons learned on both sides of the in-house/legal finance divide.
Craig Batchelor, Former Vice President, Barclays
Christopher Catalano, Former Assistant General Counsel, JPMorgan Chase
Moderator: Aviva Will, Former Assistant General Counsel, Time Warner
I have theorized that one of the reasons so many in-house lawyers are still learning about legal finance is that their natural instinct is to think about their roles as defenders of the company, rather than as proactive litigants. At the same time, I have encountered an increasing number of in-house lawyers who are working with recovery targets and who therefore think quite differently about affirmative litigation and financing that litigation. What has your experience been in this regard?
Craig Batchelor: Most in-house litigators think of themselves as defenders of the company. Many are reluctant to bring affirmative claims, because litigation is expensive, and they do not want to incur significant costs that might not be recovered. This is particularly true because many of their preferred law firms will not take these types of matters on contingency. Legal finance obviously changes that calculus because it is non-recourse financing. The company can retain upside in a litigation while reducing its downside exposure, all while using counsel that it knows and trusts.
Burford’s 2018 research identified in-house lawyers’ top two challenges as “managing legal risk and uncertainty” and “increased pressure on legal budgets, staffing and spending.” Is that consistent with your experience?
Craig Batchelor: In-house lawyers feel comfortable managing legal risk because they have been trained to do it. But many do not have the same level of experience or familiarity with managing legal budgets and staffs. Legal finance is an invaluable tool because it helps them manage the financial component of their jobs and frees them up to focus on legal issues.
Christopher Catalano: This is entirely consistent with my experience. The problem is that there’s a tension between managing risk and uncertainty and keeping budgets down. A bargain-basement firm may do a terrible job and cost you more money in the end than paying a higher-end firm—of course high-end firms try to take full advantage of this concern to justify their fees. Corporate clients, though, are becoming savvier consumers of legal services, and law firms have realized that they need to meet the needs of their clients within the constraints even of reduced legal budgets.
With the ongoing trend towards globalization, there has been a rise in the number of multi-jurisdictional cases being brought. What challenges do in-house lawyers face in this context?
Craig Batchelor: Multi-jurisdictional cases bring many challenges, but one trend that I have noticed in the last few years is the rise of class action type litigations outside of the US. Although US-based in-house lawyers traditionally have faced these kinds of litigations only in the US, that is quickly changing. I expect that we will see more and more class action type litigation being brought in multiple non-US jurisdictions.
In-house lawyers are often eager to innovate and to be as commercially-minded as their peers in other corporate functions—and yet the law is of course notoriously bound by tradition, precedent and other barriers to change. From your perspective, what are the most important ways in which legal departments must innovate? How can their law firm and other partners support this innovation?
Christopher Catalano: The global financial crisis frightened the tradition right out of the profession. Firms laid off huge numbers of lawyers and were falling over themselves to appear to be cost conscious to their clients by agreeing to AFAs. For their part, corporate law departments started putting matters out to bid, automated and offshored document review, and generally increased financial discipline. Legal departments with some affirmative claims can, of course, use litigation finance to turn themselves into profit rather than cost centers, but that depends on their willingness to see affirmative claims as assets whose value they should try to maximize. In a way this shouldn’t be a big leap, since they see defensive claims as liabilities.
Craig Batchelor: It is true that in-house legal departments are focused on innovation, and most of that focus is on finding ways to reduce outside counsel costs, as many law firms can attest. This is why legal finance is a win-win for in-house legal departments and law firms. In-house counsel can reduce their costs and pursue affirmative claims that they might otherwise neglect. And law firms that are familiar with litigation finance can offer it as an innovative solution to their clients’ problems and benefit from the additional work. Given this dynamic, I expect that we will see more and more in-house legal departments using legal finance in creative ways.
Read more of "Former in-house lawyers weigh in on legal finance":
Part I • Part II
To read the article in full, download the Summer 2019 Burford Quarterly.
