Legal Finance 101

Reported use of legal finance—also called litigation finance or litigation funding—has doubled in recent years, as companies and law firms increasingly recognize the benefits of gaining better control over legal budgets and risk without ceding control of litigation decision-making or settlement.

Nonetheless, many potential users of legal finance want to know more about legal finance solutions, how they work and the factors they should consider.

Defining legal finance

Legal finance is commonly used to remove the costs associated with commercial litigation or arbitration (lawyers’ fees, case expenses, etc.), or to accelerate the value of pending claims, judgments, awards or fees (often called monetization), with a third-party funder assuming downside risk of loss in exchange for a portion of the ultimate recovery.

Financing typically takes one of several forms:

  • Fees & expenses finance: Funds the costs and expenses of a single litigation or arbitration
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  • Monetization: Acceleration of the value of a pending commercial claim or an uncollected judgment or award
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  • Portfolio finance: Capital facility to fund multiple litigation or arbitration matters in a single funding vehicle that may include a mix of defense- and plaintiff-side matters
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Who uses legal finance?

Corporations
Companies from startups to the Fortune 500 and FTSE350 use legal finance to:

  • Remove the cost and risk of pursuing litigation and arbitration from P&Ls
  • Enhance liquidity without adding debt
  • Reduce risk
  • Add certainty to legal budgets

See how Burford works with companies

Law firms
The world’s leading law firms use legal finance to:

  • Offer clients competitive terms
  • Manage risk to the firm
  • Generate new business
  • Accelerate pending fees or client deliverables

See how Burford works with law firms

What legal finance can do for companies & law firms

Manage budgets & costs

An AmLaw 50 law firm bridged the gap between its hourly fees and a client’s budget—and won a $110 million award.

Enhance liquidity

A Fortune 100 company generated immediate working capital by accelerating $75 million of a pending claim.

Reduce legal risk

A company used portfolio finance to avoid early settlement and work with its counsel of choice.

How the funding process works

The journey to legal finance is more straightforward than it may seem to those new to the practice. We work hard to make that journey clear, even as we recognize that securing non-recourse financing for multi-million-dollar, high-stakes commercial litigation and arbitration requires expertise and effort.

Learn more about securing finance from Burford