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Burford's CFO Jordan Licht explains the economics of legal finance

May 2, 2023
Jordan Licht

What CFOs need to know about legal finance


CFOs need to care about legal finance. Throughout my career as a consultant, investment banker and Chief Operating Officer, I've had the opportunity to work with and advise many CFOs on how they think about and manage risk. That risk can show up as liquidity risk, credit risk, interest rate risk or operational risk, and CFOs are constantly looking for alternative and innovative ways to bring value to their business.

We're in a climate where inflation is at a 40-year high and the cost of debt is rising, and it's essential to explore every available avenue for adding value. Pending litigation and arbitration claims represent an area of opportunity for generating liquidity and managing cash flow. But these litigation assets also remain largely invisible to many CFOs.

In its simplest form, legal finance removes the cost and risk of paying lawyers’ fees from a company's P&L, creating an effective way for a company to pursue ongoing high value litigation or arbitration matters. Burford Capital works with companies that have plenty of access to capital or limited resources. Both are extremely happy to share upside with Burford in exchange for shifting all their downside risk of loss to us.

Legal finance can also provide a liquidity event when Burford accelerates a portion of a company's pending claim, or uncollected judgment or award. By monetizing a pending matter in this way, companies avoid duration risk that comes with most commercial claims. You get access to capital now rather than waiting years for a matter to resolve. Working with a legal finance provider like Burford enables a company to focus its resources where they matter—on core initiatives—while diversifying and minimizing risk.

Burford's capital differs from other capital sources because it's not debt. It's not a loan. We're paid back and earn a return only if and when the claim resolves successfully. We get paid when our clients get paid and if they don't, we don't. Because of the non-recourse nature of the capital, legal finance doesn't require the pledge or sale of operating assets. It doesn't impact a company's debt capacity nor represent a reduction in credit. From a company's perspective, we're increasing liquidity and legal finance actually improves its credit profile.

CFOs need to be thoughtful about any corporate finance partner they work with, so they should be just as thoughtful about which legal finance partner they choose. And Burford is the obvious choice for three main reasons. We're the largest provider and routinely work with Fortune 500 and FTSE350 companies on significant deals, putting significant dollars in capital to work. Second, our expertise: CFO's benefit from Burford's experience as the leading capital provider since 2009 in legal finance with 55 attorneys on staff and 13 years of data monitoring case results across the globe. We have the experience to support what our clients need. And third, our stature, Burford is the only legal finance provider to be publicly listed on both the New York and London Stock exchanges.

We run our business with the professionalism and transparency that CFOs expect of their financial partners. As pressures for businesses increase, it’s time for CFOs to think about how legal finance can help them unlock millions of dollars in trapped assets they may otherwise leave on the table. Burford stands ready to help you and your litigation finance needs.

This video was recorded in December 2022.

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any ordinary shares or other securities of Burford. This video may not be copied, distributed, published or reproduced, in whole or in part.