Liz Bigham: Start off Evan, if you would, by telling us what fees and expenses financing is.
Evan Meyerson: Fees and expense financing is when Burford provides capital as the name implies, to fund the fees and expenses of a legal claim. We can either do that with the client directly or vis-a-vis law firm representing that client. The problem we're trying to solve is a pretty simple one. Complex commercial disputes can be very expensive, and using our capital instead of a clients or mitigating the risk for a law firm seeking to work fully on contingency can be very attractive to our counterparties.
LB: You touched on this a bit, but could you expand on what are the benefits of using fees and expenses, financing if you are a claimant or if you're a law firm?
EM: As a law firm, the benefits are pretty straightforward. It allows a law firm to market its services to clients either for free or almost for free while not having to take on the entirety of the risk, including both the economic risk and the duration risk of a given litigation or a group of litigations. In the background, Burford can help mitigate some of that risk for the law firm by providing a portion of the fees and expenses. It's putting out risk as to the client, but taking a little bit off the table vis-a-vis Burford in the background. And of course, as to both clients and law firms, our funding is non-recourse. It's not debt, and the value of that, both to law firms and clients is you owe us a return only if you win. If you lose, you keep our money, and that's the risk we've taken and you've transferred over to us.
If you are a claimant, a corporation or a client, one major value is you can take the risk and cost of the litigation budget off of your books and transfer it over to ours, and that can be of immense value for legal departments with limited resources and corporations generally who would rather use their capital and resources to grow their businesses and focus on what you do every day rather than prosecute claims you may have, while not having to give up those meritorious claims and still be able to see some upside from them. That's really the main advantage.
LB: Of course, Burford provides capital when we provide fees and expenses financing, but there are other ways that we can add value to our counterparties. Talk about that if you would.
EM: Burford is the largest pure play investor in legal assets globally. We have the most experienced investment team around. My colleagues and I all come from major law firms globally, and Burford prides itself on doing all of its diligence in-house. How is this helpful to our counterparties? It means that from the very start, we're going to provide an independent analysis of the strength of your claim, the value of your claim, the strategy around it, and we do that not only for our benefit, but for yours. At the end of the day, we're looking to partner with either the claimant or the law firm, and it's very much in our mutual interest, yours and ours, to make sure that you have the best possible strategy and most available insight into pursuing this claim.
We not only bring to bear our experience and our scale globally, but also what is the largest proprietary dataset in our industry. Burford has, from the experience we've had over the last 14 years, built a data set of all of the engagements that we've funded, and even those that we haven't, incorporating third party data around litigation and arbitration generally into a machine, that effectively allows us to think through the probabilistic returns of our investments and give insight to our counterparties as our partners into how to think about when and how a case might resolve and how to think about pricing that resolution of your claims.
Since the vast majority of investments we make and the vast majority of litigation that's meritorious settles before trial anyway, not only are we bringing the experience of our investment team and proprietary dataset to benefit our counterparties in every deal we do, we also have one very important distinguishing feature, especially in our industry, which is a permanent capital base. Burford is the largest by leaps and bounds public entity that invests in legal assets globally, and it means that a bulk of capital in every investment we make is coming from our own balance sheet. And the reason that's important is it allows our counterparties to rest assured that no matter how long your dispute lasts and they can last a while, you can rely on Burford to be your partner for the duration of that dispute. You're not going to go have to find a new partner in the middle of it because we've run out of money. It's just not a risk when working with Burford and its permanent capital base.
It's important to note that at the end of the day, all of these resources are yours for the taking, and we very much encourage our counterparties to use us in every way they can, but ultimately, decision-making in your litigation is between you and your counsel. That distinction is very important to us in every investment we make, with a few notable exceptions here and there that we're obviously transparent about from the start. But generally speaking, the bet that we're making is that you've hired good counsel to take this litigation to a successful resolution. We've assessed that from start to finish, and we're putting money to work behind you and your team and relying on you and your counsel to make good decisions using us wherever you can.
This video was recorded in June 2023.
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