For clients whose businesses have suffered as a result of anti-competitive behavior, deciding to pursue a competition claim[i] requires a significant commitment of resource. In the US, claimants are required to prove harm in civil matters even after government prosecution—and that means that expensive expert witnesses must be engaged every time a claim is pursued, putting pressure on clients even when their firms are willing to work on a contingent basis. In the EU, alternative fee arrangements are not a developed part of law firm offerings, so clients must seek other means to help with the financing of costly litigation.
As a practical matter, this means that clients or their firms must be ready to absorb significant costs just to get to the stage where a claim can be filed. But because claimants have necessarily endured financial hardships as a result of anti-competitive behavior, they may be especially challenged to pay high hourly rates and out-of-pocket expenses. And firms are not always able to take on the degree of risk required.
The upshot: Competition claims are ideal candidates for legal financing.
How competition financing works
In its most common form, legal finance pays the fees and costs associated with a competition claim, in exchange for a portion of the ultimate award or settlement.
- Typically, a litigant or law firm seeking financing contacts Burford in connection with commercial legal claims or related legal fee receivables.
- Financing can be provided at any stage of the proceeding–for pending claims, claims on appeal or legal receivables awaiting payment.
- Burford uses the value of those legal assets and receivables to craft capital solutions based on financing a single case, a portfolio of cases, or another structure that is customized to meet the client’s or law firm’s needs.
- Our capital may be used to pay fees and expenses associated with a case or for entirely different business purposes. Expense-heavy competition claims are prime candidates for portfolio-based financing of fees, expenses only or a mix of both.
- Terms and structures vary. Burford will provide capital of $1 million or more, including investments of more than $100 million, usually on a non-recourse basis (meaning our return is tied to the successful outcome of underlying cases).
- This diligence and investment process usually takes 30 to 60 days, but we can move much faster if needed. In some cases, we have provided capital in under a week.
Choosing the right partner
It’s vitally important to choose the right partner when financing competition matters: Claims have a long timeframe and clients and law firms must have confidence that their finance partner has the capacity to commit for the long-term—ensuring they have the resources they need to see matters through to conclusion.
In addition to providing capital that can be used to support competition claims that are almost always expert-intensive and extraordinarily expensive, the right finance provider can offer far more than traditional single-case financing, and instead can partner directly with clients and law firms to support their business needs. As one example, a global law firm with a particular expertise in competition litigation had experienced growing client demand for its services in Germany, where the firm did not have a dedicated office. Burford provided €30 million in financing backed by the firm’s future portfolio of German-based competition cases. With backing from Burford, the firm was able to open a new office in Berlin and provide its clients with broader access to the types of innovative funding arrangements that are often essential for clients pursuing costly and high-stakes litigation.
A strategic partner like Burford has an experienced team that can offer insights and add value beyond capital. Although Burford acts as a passive investor and does not control litigation related decision making, its team boasts former heads of competition litigation from leading companies and law firms—and we draw on that experience in working with our clients.
There is no question that competition remains a growing area of need and opportunity that is still largely underserved by the litigation finance industry. As clients and law firms embrace the litigation finance tools available to them, more businesses can be made whole.
[i] Although “antitrust” and “competition” are American and European terms for the same thing, for consistency’s sake we use the latter here.