Burford Capital Limited (“Burford”), the leading global finance and professional services firm focused on law, today announces that it has agreed to provide $45 million in litigation financing for a FTSE 20 company.
The financing arrangement encompasses a portfolio of pending litigation matters and addresses the need that companies of all sizes have for financial alternatives to paying by the hour for legal services.
Previously, the company paid for the significant legal fees and expenses associated with litigation out of its own revenues, thus reducing operating profits. With the Burford arrangement, it has transformed how it manages litigation expense. The structure of the arrangement provides multiple corporate benefits:
- The client can use Burford’s capital either to relieve legal expense budget pressure or for corporate purposes unrelated to the litigation matters
- Capital is provided on a non-recourse basis, entitling the client to book it as income as received, without waiting for the result of the underlying litigation matters
- Burford will receive a portion of the proceeds from the litigation matters in the portfolio on a cross-collateralised basis
- This protects Burford against the risk of any single matter losing – and enables it to offer attractive pricing that does not need to overcome the risk of single case loss
As with most Burford transactions, the client in this instance wishes to preserve the confidentiality of its litigation-related activities and not have its identity publicly released.
Christopher Bogart, CEO of Burford, commented: “This transaction is another example of the continuing transformation of litigation finance into corporate finance for law, and our focus on constructing innovative solutions for businesses of all sizes, including the world’s largest companies.”
Bogart predicts continued growth: “More and more, in-house counsel see the value of innovating how they finance litigation, and deals like this show how easy and straightforward we can make it for them. Equally, financial executives are increasingly aware of the accounting and finance benefits of this approach, including the value of being able to move risk from corporate balance sheets, and the tremendous benefit of being able to recognise income from a claim when it’s advantageous to the business instead of when it’s convenient to the courts. Put these together, and we see continued appetite for this kind of transaction.”