At its inaugural annual conference on October 24 in New York, the International Legal Finance Association (ILFA) gathered a group of leaders in legal finance to discuss the state of the industry.
“It's rare to find a partner in a law firm or an in-house lawyer who does not know of the existence of legal finance and the opportunity to use capital. We've passed the rubicon on ubiquity and on knowledge. The challenge for the next decade is to turn that ubiquity of knowledge into ubiquity of use. When I talk to groups of CFOs, I tell them I want them to do something very simple in their business. They don't go and buy a new photocopier today without doing a little financial analysis: Should I buy it? Should I rent it? Should I lease it? And I want them to do exactly that when it comes to litigation.”
- Christopher Bogart, Chief Executive Officer, Burford Capital
Bogart’s comment illustrates how the legal finance industry has progressed over the last decade. In the early days of the industry, conversations about “third-party litigation funding” treated it as a niche tool, but it is increasingly viewed as corporate finance for law. As one GC of a multinational logistics company put it: “Fifteen years ago, if someone asked about funding litigation it sounded radical, but now it is mainstream.”
Now, the conversations about the industry revolve around the different and creative ways in which legal finance can be used by both law firms and companies. As Bogart says above, legal finance should now be an essential consideration for all companies as they look at their litigation portfolios and decide whether to pursue an affirmative recovery strategy.
The next development in legal finance will be the continued normalization of commercial legal finance as a routine business tool. Corporates are increasingly moving in that direction. At Burford, for example, as recently as 2018, corporates accounted for only 20% of commitments, but as of December 31, 2021, corporates accounted for more than half (56%) of commitments. Use of legal finance is likely to continue to grow in the coming months and years.
About the panel
The panel was moderated by Gina Passarella, Editor in Chief, American Lawyer Media, the panel included Christopher Bogart, Chief Executive Officer, Burford Capital; David Gallagher, Co-Head of Litigation Investing, The D.E. Shaw Group; Neil Purslow, Chief Investment Officer, Therium and Andrew Saker, Chief Executive Officer, Omni Bridgeway.