15 years of legal finance: Industry firsts and cases that transformed the industry
In the 15 years since Burford's founding in October 2009, the legal finance industry has grown considerably and there has been an ongoing evolution in the ways in which it is used by both businesses and law firms. We don’t expect this to change: Nearly half of CFOs (45%) surveyed predict legal finance will become a common practice in their businesses over the next 15 years, and our conversations with clients suggest a desire to continue exploring novel legal finance solutions.
Over the last 15 years we have contributed to some of the key innovations in legal finance. Below are some of the cases and industry firsts that serve as the key milestones in our business and the industry we helped shape.
2009-2010
Burford announces first investment success in single-case fees and expenses case
Burford’s first successful resolution was a $7 million investment in a company that was grappling with financial strain from a downturn in the real estate market and faced the risk of losing its legal representation. Burford’s non-recourse capital, provided soon after its launch in the autumn of 2009, ensured the case could continue, ultimately resulting in a $110 million jury award in the breach of contract dispute. Not only was it Burford’s first investment success, but it was the first public US litigation where the plaintiff openly used legal finance.
Since 2010, businesses have continued to partner with Burford to fund law firm fees and litigation-related expenses for commercial litigation and arbitration claims. By covering these substantial costs, Burford’s financing has transformed the legal landscape, enabling companies to manage the financial burden and risk associated with ongoing disputes, turning claims from burdensome expenses into assets with upside potential.
2010
Burford makes its first legal finance portfolio investment—a first for the industry
In 2010, Burford invested $15.6 million in a portfolio of four fraud and asset recovery matters. This was the first instance of the funding of multiple commercial matters in a single capital facility, and Burford’s portfolio finance solution has since become common.
Burford's portfolio investment solution—combining multiple claims into a single capital facility—enabled the client to spread risk and lower overall costs even with mixed case outcomes. Burford provided significant capital that could support ongoing litigation, cover related legal expenses or be used to pursue broader business strategies. In this case, the client was able to focus on bringing asset recovery actions and reclaiming legal assets without the burden of upfront costs.
Businesses have since adopted portfolio solutions to finance significant portions of their litigation departments as well as to address broader business opportunities and needs. Law firms have adopted portfolio financing to pursue new business opportunities, offer alternative fee arrangements and invest in growth. Portfolio finance has marked a significant shift in the legal industry, allowing businesses to better manage their affirmative recovery efforts and firms to take on more complex, high-value cases while managing risk and financial exposure.
2014
Clear precedent for legal finance work product protection
A landmark legal finance case not funded by Burford is Miller UK Ltd. v. Caterpillar, Inc., which established a clear precedent for the protection of litigation funding agreements and communications as work product. In this case, the court addressed whether communications and documents shared between a plaintiff and a third-party litigation funder were protected from discovery under the work product doctrine. The ruling reinforced the confidentiality of materials prepared in anticipation of litigation, even when shared with funders, so long as the primary purpose remains focused on legal strategy. This case underscored the importance of preserving the protection of work product in the context of litigation finance, ensuring that plaintiffs can engage funders without compromising the confidentiality of their legal strategies.
Courts have routinely cited Miller in supporting the protection of legal finance arrangements from discovery.
2014
Burford invests in monetization finance
In 2014, Burford made its first investment in a whistleblower’s claim against a larger public entity, seeking recovery of losses due to fraudulent reimbursements. Burford’s financing accelerated or “monetized” expected future entitlements from the claims, providing the claimant with immediate cash. Eventually, the litigation concluded with a settlement.
Monetization has since become a fast-growing financing product, especially for businesses, as it provides immediate capital through the advancement of a portion of the expected entitlement from pending claims, judgments and awards. Companies capable of covering their legal expenses nonetheless choose to monetize their claims: Rather than waiting years for legal recoveries, it allows them to mitigate risk, improve liquidity and strategically reinvest in their operations. It has become especially valuable to businesses opting out of class actions, as it secures part of the anticipated recovery, preserves working capital and benefits stakeholders before the final settlement.
Monetization is a cornerstone of Burford’s services, attracting Fortune 500 clients who routinely turn to Burford for significant monetizations of millions of dollars in captive value.
2015
Financing the defense through counterclaims
A common assumption is that legal finance is used solely by plaintiffs. The case of Gillette Company v. ShaveLogic, Inc. challenges these misconceptions: Litigation finance was provided to the defendant, not the plaintiff.
ShaveLogic was sued by Gillette, which accused it of trade secret theft and unfair competition; ShaveLogic counterclaimed that Gillette was interfering with its business and engaged in unfair trade practices. Constrained by financial limitations, ShaveLogic turned to legal finance through Burford, which provided funding on a nonrecourse basis to support ShaveLogic's defense and counterclaims.
Ultimately, it was the unfunded party, not the one using financing, whose claims were dismissed on summary judgment as without merit. While instances of funding of defendants is certainly rare, Gillette v. ShaveLogic showed how access to capital can also benefit defendants, and is further evidence of how legal finance continues to defy easy assumptions about what it is or who it’s for.
2016
The first secondary market transaction
In its 2016 interim report, Burford explained that it had made a secondary market transaction:
“We do think that some secondary market activity is likely to develop as more capital becomes aware of litigation finance and we intend to be in the vanguard of establishing such a market….Thus, in the current period, we closed one secondary market transaction, in which we sold a portion of our investment to a third party investor at a gain and at a price that suggested the value of the majority of the investment that we retained was worth more than its carrying value...”
In subsequent reports and releases, Burford discussed secondary market transactions relating to its possible future proceeds in its investment related to the Petersen claims.
The emergence of secondary market activity in legal finance, led by Burford, marks a key development in the maturation of the market, demonstrating increased understanding of the industry and a step forward in its broad acceptance across businesses, law firms, investors and financial institutions.
2017
Legal finance recognized in the Cayman Islands outside of the insolvency context
In the Cayman Islands, where maintenance and champerty had long been viewed as criminal offenses, the Grand Court in A Company v A Funder handed down a landmark decision broadening the use of legal finance even when the company is solvent. The prominence of the Caymans in international business litigation makes the decision especially significant.
In A Company v A Funder, Segal J recognized the benefits of allowing plaintiffs with genuine claims to pursue litigation on terms that offer a better risk-reward ratio than if they were pursuing the cost of litigation themselves. He expressed,
“Cayman has an important, world-class court system and litigation culture and there is no reason why responsible, properly regulated commercial litigation funding undertaken in accordance with the principles I have set out should not have a place in this jurisdiction.”
The ruling aligns with a broader global trend as more and more jurisdictions recognize legal finance. In the same year, Singapore and Hong Kong also enacted reforms to permit third-party funding in arbitration, demonstrating how legal finance is becoming a valuable tool for lawyers in leading commercial jurisdictions around the world.
2019
Award assignment
Cessna Finance Corporation found itself holding two unenforced arbitration awards worth over $100 million. Despite their significant value, the awards remained unpaid, as the judgment debtors were well-connected Emiratis with the majority of their assets in the UAE who refused to pay.
Facing the task of pursuing complex and costly enforcement across multiple jurisdictions, Burford provided a hybrid “money now, money later” assignment deal that offered CFC immediate capital, while transferring the time, cost and risk of the enforcement process to Burford.
Burford’s innovative approach to award assignment involved purchasing the unenforced judgments outright, providing CFC with immediate capital and a retained back-end interest. A $50 million settlement on one award and partial recovery on the other allowed CFC to focus on core business activities while benefiting from the potential for additional recovery.
By assigning their legal claims and awards, companies like CFC can unlock trapped value, reduce financial uncertainty and outsource the burdensome enforcement process to a specialized team.
2019
Supporting law firm growth
PCB Litigation, a Band 1 London-based boutique focused on civil fraud and asset recovery that routinely competes with larger full-service firms, needed an innovative financing solution to expand its risk sharing capacity and help fuel its growth.
In a market first, Burford completed a transaction with PCB not only to finance a portfolio of matters going forward, but also to take a passive equity stake in the firm. To enable the equity stake, PCB converted into an approved ABS. Passive equity investment is a useful tool for law firms, supporting growth and risk management while allowing control to remain with the firm. Unlike traditional fee financing tied to case outcomes, equity financing offers immediate capital for broader firm development, rather than just funding litigation.
The arrangement provides both a cash and risk management solution enabling the firm’s continued growth to reach its next stage of development. The flexibility also enabled the firm to target new markets with its service offering and incorporate innovative fee structures which were better suited to clients’ challenges. In addition, the firm continues to partner with Burford’s Chambers-ranked asset recovery team to collaborate on solving client problems. This exemplifies how Burford can even support firm growth and strategic expansion through addressing both financial and operational challenges.
2023
Landmark judgement in YPF ruling
In September 2023, a decision found Argentina liable to pay damages of approximately $16 billion to two former shareholders of YPF following Judge Preska in the Southern District of New York’s ruling that the company had been unlawfully renationalized. This is perhaps the largest ever issued by the court.
Burford CEO Christopher Bogart called the decision “a major milestone for Burford”, while Chief Investment Officer Jon Molot noted Burford’s unique ability to see through a matter than Burford began funding in 2015.
2023
New standard for SEC reporting and transparency
In 2023, with input from the US Securities and Exchange Commission (SEC), Burford built a valuation approach for legal finance assets that aligns with global accounting standards. This framework, building on Burford’s established practices, integrates case-driven valuation with duration and the time value of money. In the methodology, valuation changes at each valuation period, given the passage of time.
The development reflects the maturation of legal finance, providing investors and users of legal finance with the transparency they expect from established asset classes. Burford’s standard builds on our commitment to transparency and is poised to become the industry standard whether reporting under US GAAP or IFRS.
In addition to these milestone matters and investments, Burford continues to lead industry innovation in other ways. In 2018, we launched The Equity Project, an award-winning initiative to address the diversity gap in the leadership of commercial litigation and arbitration; to date, Burford has committed almost $170 million to fund matters led by female and racially diverse lawyers. In 2024, we announced a goal to commit at least an additional $150 million.
In 2024, as AI has grown as a major topic of interest in the business of law as in other sectors, Burford continues to amass the industry’s leading proprietary data set concerning commercial litigation and arbitration outcomes—a data set that enables Burford and our clients to break new ground in modeling commercial dispute outcomes.
Burford looks forward to ongoing innovation in legal finance and the business of law in our next 15 years.
