The legal finance playbook: From basics to benefit

Over the past 15 years, use of legal finance has grown significantly: In a 2024 survey, 73% of legal and financial professionals reported that they either had used or would consider using legal finance.  

Yet despite its increasing use, many still have questions about how it works. 

At its core, legal finance is the provision of financing to a litigant or a law firm where the value of a pending litigation or arbitration claim or award is used to unlock funding. That funding can be used to pay for the matter to proceed or to accelerate some of its expected cash value. Capital is typically provided on a non-recourse in exchange for a return tied to case outcomes, meaning that if the case is successful, the funder earns its investment back and a return, but if it loses, nothing is owed to the funder. Legal claims can thus be transformed from costly liabilities into valuable assets. 

In a recent webcast, Burford’s Evan Meyerson provided a comprehensive introduction to legal finance, outlining benefits, process and structures. Below is a summary of key points. 

Criteria 

To qualify for legal finance, providers evaluate several criteria based on the type of litigation or arbitration and the associated risk. 

Since legal finance providers only recoup their investments if funded matters are successful, a strong case with solid legal merits is the essential starting point for funding. Burford’s clients typically need at least $5 million from us, with a quantum of enforceable damages that suits our funding model (at least $50 million for a $5 million investment). If a case is promising but doesn’t meet the minimum threshold for funding fees and expenses in isolation, an alternative solution (such as bundling the claim with others in a capital facility) may be available. 

Another key factor is the presence of experienced legal counsel with proven litigation strategy.  

Process 

Once we determine that a case meets basic funding criteria, it enters the diligence stage. Here, our in-house legal team conducts a thorough risk assessment, evaluating factors such as the case’s merits, potential damages and likelihood of collection. Assessment and valuation is enhanced by Burford’s proprietary database of case outcomes, the largest in the industry, as well as third-party data. 

The term sheet will reflect pricing that aligns with the expected outcome of the case and the best interests of all parties involved, and an appropriate return structure that aligns with client needs. 

Following diligence, the case moves through a formal investment committee review, after which Burford and the client complete final deal documents. 

Legal finance agreements explicitly state that control of the matters remains with the client, and that Burford will not interfere with litigation strategy or settlement.  

Case management 

After the deal is executed and the investment is made, clients provide regular updates to Burford’s team. Clients often benefit from Burford’s ongoing input during this case management stage. At minimum, our team tracks court filings and deadlines and ensures that legal spending stays aligned with the case’s stage and budget, so that clients have the resources they need to see the case through to a successful outcome. 

To learn more about legal finance and how Burford helps meet client needs, you can watch a replay of the webcast here.