The latest issue of the Burford Quarterly goes to press some six months after Covid-19 achieved pandemic status and our world shifted to a new reality of contactless working and collaborating. That new reality quickly became normal: Burford’s team moved to remote operations without missing a beat, and the in-house and law firm lawyers with whom we work adjusted to practicing law from their homes, often with their kids running around or doing their schooling online. Most courts have by now shifted into remote operation, although some slowed down significantly, and settlement activity has returned in earnest.
It has been reported that legal finance has become newly relevant in the Covid-19 era. Common sense certainly suggests that it has an important role to play in providing capital for meritorious matters to proceed or to be advanced as cash for business operations when companies of all kinds must work even harder to protect and enhance their liquidity. And a significant uptick in litigation activity is likely, whether that means the more than 4,000 Covid-related lawsuits already filed in the US, or disputes arising from deals gone bad in the economic downturn that has followed Covid.
Not surprisingly, as legal finance captures more headlines, we have seen an increase in calls from in-house and law firm lawyers seeking to understand how and when to use it—and we have also seen the marketplace for legal finance become more active and more competitive as funders new and old seek to capitalize on that increased demand. As the largest and best capitalized legal finance provider in the world, we welcome that competition—but we also caution the lawyers we work with to carefully diligence legal finance providers. And we urge them to ensure that they’re engaging the fully evolved industry that legal finance has now become.
I would argue that there are at least three developments of which lawyers should be aware as they consider their options:
Legal finance solutions—not transactions
When businesspeople deal with investment bankers and other sophisticated financial partners, they expect to be asked first about the problem they need to solve, and then to get in response unique thinking about how a capital solution might work. Lawyers and finance professionals should have the same expectation of legal finance. Not all legal finance providers operate at this level of sophistication—they simply lack the expertise, scale and experience to do so—but the legal finance solution set of 2020 has expanded significantly from what was on offer when Burford was founded in 2009, in the wake of the last global recession. Lawyers should not only confirm that a legal finance provider has significant and relevant expertise and experience in crafting single case funding deals, portfolio-based capital facilities to fund multiple matters and monetizations in which cash is advanced against a pending claim or judgment, but they should also challenge the funder to offer creative thinking, deal structures and pricing models to address their specific challenges. At Burford, while we’re significantly less likely than others in the industry to issue press releases announcing new deals, we’re very proud of our ability to craft novel solutions for our in-house and law firm clients, and to do so at a scale beyond what our peers can match. We’re also proud of the top industry rankings we have earned given our reputation as legal finance’s trusted leader and foremost expert.
ILFA—A new global association for the legal finance industry
After working together for well over a year, Burford and five other leading legal finance providers have banded together as founding members of the International Legal Finance Association, launched in September 2020 as the world’s first and only global trade association for the commercial legal finance industry. ILFA aims to protect the interests of the businesses it serves by, among other things, providing standards and best practices for its use. ILFA members commit to following its principles of conduct, which emphasize transparency and professionalism at standards that businesses would expect of other financial institutions with which they regularly work. In-house and law firm lawyers and finance professionals should welcome ILFA as a resource that will help them be better users of legal finance.
Partners to meet today’s needs—especially for corporations
With continued pressures on businesses to husband their cash and the inevitable rise in commercial disputes in years to come, it’s not surprising that we are seeing a continued increase in interest specifically from in-house legal and finance teams that have not previously considered legal finance. For these clients, what differentiates Burford is not merely our scale and experience in the industry, but even more so the transparency with which we operate as a publicly traded company, with audited financial statements and our own permanent capital: As the largest legal finance provider, Burford offers unparalleled expertise and trust, at an unmatched scale. These factors should matter greatly to any user of legal finance, but they’re essential for in-house legal and finance teams that require a higher level of certainty around compliance issues as well as confidence that the capital they want will be available at scale for the long term. (Note: As of publication, Burford is publicly listed on London’s AIM marketplace and is pursuing a dual listing in the US.)
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Issue 4/2020 of the Burford Quarterly features new thinking on a variety of topics, including how Burford, as the leader of an evolving industry, can be a valuable partner to in-house and law firm lawyers today.