BURFORD QUARTERLY

Legal finance and affirmative recovery insurance working together

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Among the many changes we have seen in the legal finance market in 2021 is the growth of a new financeadjacent product: Litigation insurance policies on affirmative recoveries. The providers in this market are the same large insurance companies that for years have offered defense-side litigation products to insure litigation spend and liabilities.

These carriers have now entered the affirmative recovery market with two primary products. The first of these are policies to protect the first tier (often 10-20% of total value) of a law firm or corporate affirmative recovery portfolio, and the second are “judgment preservation” policies that insure some portion of a judgment on appeal or pending collection. These policies operate much like traditional insurance, where the policyholder pays a premium at the outset of the policy, but they also usually include a backend participation for the insurer if and when the claim proceeds are received.

Affirmative recovery insurance policies can be a complementary product to traditional legal finance that, in some instances, allow companies to maximize the present cash value of a claim and reduce overall cost of capital. Below we discuss three ways that affirmative recovery insurance and legal finance can work together to meet a company’s business needs.

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About the author

Kelly Daley is a Director and the head of the US commercial underwriting group at Burford, where she oversees the Chambers-ranked team that assesses US commercial litigation matters for financing. Prior to joining Burford, she was a senior litigator at Orrick Herrington, where her practice focused on the litigation needs of media and technology companies.

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Kelly Daley

Kelly Daley

Director