Evan Meyerson is a Vice President with responsibility for assessing and structuring investments in high-value commercial litigation matters. Prior to joining Burford, he was a litigator at Paul, Weiss focusing on complex civil litigation, after beginning his career as an analyst at Bain Capital evaluating venture capital investment opportunities.
What opportunity did you see in the legal finance industry that influenced your move from BigLaw to Burford?
Simply put, meritorious commercial legal claims are commercial assets. The legal industry is one historically resistant to change, and I saw that law firms and clients alike were undervaluing and underutilizing these assets. Burford has been leading the charge in transforming how firms and corporate clients work together to value and monetize legal assets. Every deal I work on feels like a steppingstone towards optimizing the business of law. Joining Burford’s investment team gave me the opportunity to work at the forefront of a relatively new asset class experiencing supercharged growth, and I just couldn’t pass that up.
From your experience in BigLaw, is there a growing shift away from traditional hourly fees to flexible, contingency fee arrangements and, if so, what is the advantage in that?
There is no question that hourly fees remain a primary driver of BigLaw revenue, but there is also a growing emphasis on alternative fee arrangements. This is due, in part, to encouragement from clients and also the increased availability of legal finance. Alternative fee arrangements, such as contingency fees, more closely align the interests of law firms and their clients: The law firm is rewarded for achieving a successful outcome while the client can dramatically reduce its upfront costs.
Legal finance, for its part, can relieve the pressure clients are increasingly placing on law firms to reduce their hourly rates. Instead of waiting years to be paid for their efforts, firms can smooth out their revenue stream by working directly with a legal finance provider, reorienting legal engagements around successful outputs and not just hours billed.
What is the most important thing clients and firms seeking financing need to know about Burford’s due diligence process?
Burford’s diligence process is unique among its peers in at least two critical ways. First, we conduct our diligence in house. Burford's underwriting team is made up of litigators who worked at the best law firms in the world. This means that our counterparties receive an unvarnished analysis of their cases from a team with decades of top-tier litigation experience and the largest proprietary data set on financed case outcomes in the industry. You will hear from us directly when walking through the merits of a case, not from a third-party law firm to which a funder has farmed out diligence responsibilities.
Second, Burford offers its counterparties terms that we stand behind. There is an unfortunate tendency among other funders to rush out a term sheet to secure exclusivity on a deal before conducting meaningful diligence. Those funders then frequently seek to re-trade terms. Burford prides itself on conducting an efficient diligence process, responsive to the timing needs of our counterparties, that concludes in a term sheet not subject to a bait-and-switch.
What advantage does portfolio financing provide over financing a single, one-off case?
It’s important to note that Burford actively finances single case opportunities, including some of our largest investments in the last couple of years. However, there are certain advantages to using portfolio financing, namely reducing the cost of capital and establishing a repeatable process for future investments. Portfolio financing packages multiple cases under a single agreement. These cases are typically cross-collateralized with one another, meaning that if a case in the portfolio is a loss, Burford and the counterparty can recover their investment from the next winner. Burford’s return on its investment comes from results across the entire portfolio, reducing the binary risk of investing in a single case.
With a reduced risk of loss, the cost of capital can also be reduced. Moreover, a portfolio arrangement can reduce administrative burdens for the counterparty looking to finance future legal assets. A portfolio serves as a repeatable framework that eliminates the need to negotiate a new set of deal documents each time a new case is added to the mix. It becomes a matter of signing a one-page addendum to our existing deal, simplifying the process for both Burford and the counterparty.
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