How does legal finance work for arbitration disputes?

Liz Bigham: Jeffery to start us off, use of legal finance is growing both to fund investor state arbitration and commercial arbitration. Can you talk about why this is happening in your view?

Jeffery Commission: There's really two reasons why the use of legal finance is growing in international arbitration, one old and one new.

The new reason is because legal finance—arbitration finance, as I like to call it—is really in the mainstream now. It's reflected in the arbitral rules, including those of ICSID, which is responsible for administering over 70% of investor state disputes. It's equally represented in the rules of the ICC with the introduction of rule 11(7). So, it's in the mainstream, in the arbitral rules. It's in the mainstream, in the minds of companies. Companies are now making announcements upon securing funding and upon the results of funded arbitrations. Law firms themselves are reporting funded arbitrations and increasing numbers. In the last global arbitration survey, firms reported 208 funded arbitrations. That's up from 150 in 2018. And finally, you are seeing the fact of funding in the decisions of tribunals and ad hoc committees.

Now, as for the old reason why, the use of legal finance is increasing, it's really just time and costs. These arbitrations are taking longer and costing more. The average investor state arbitration is now up to 55 months, over four years in duration, and the average investor spend is well over $7 million.

LB:  What are some of the ways that businesses that have arbitration claims can work with Burford and use our legal finance solutions?

JC: I would identify three potential solutions that Burford routinely provides for claimants in international arbitrations. The first is funding for individual cases. This involves provision of the funding for the fees and expenses. That covers counsel fees, tribunal costs, as well as experts for funding an international commercial arbitration or an international investor state arbitration on a single case basis.

The second is portfolio funding. Increasingly, we are providing funding for corporates directly that covers a portfolio of disputes. It could be a mixture of litigations or arbitrations, it could be commercial arbitrations and investor state disputes or what have you.

Finally, there's been a significant uptick in the number of award monetizations at the end of an ICC arbitration, for instance. Claimants increasingly are seeking to monetize that award, which is essentially a legal asset. We're seeing the same in ICSID and UNCITRAL arbitrations in the investor state context as well.

LB: So as claimants consider their potential options, why should they choose to work with Burford to finance their arbitration matters?

JC: I think some of the reasons why parties should select Burford are the reasons why I selected Burford. Quite frankly, it is the most sophisticated and experienced player in the legal finance space. It is by far the largest. It is the most well-capitalized, and Burford has funded more international arbitrations than any of its competitors.

And because it does have a team of folks that have worked as counsel in international arbitrations, all of the underwriting, all the due diligence is done internally, so it's not outsourced like most of our competitors. You really do get the added value from a team that can assist in various strategic questions as an arbitration proceeds.

Finally, we are transparent. We will be frank with you about our views on the case and we'll do so expeditiously and if we are committed and interested in moving forward, we will do our best to meet your expectations, meet the client's expectations, and do so in a rapid fashion.

This video was recorded in July 2023.

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