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  • Christopher Bogart

The UK Court of Appeal today released its decision in the Excalibur matter.

What is truly notable about the Court's decision has nothing to do with Excalibur and its facts. Instead, it is the complete acceptance of litigation finance as an integral part of a modern justice system. The very first line of the Court's decision asserted, simply: “Third-party funding is a feature of modern litigation”. And the Court did not stop there. It went on to say: “Litigation funding is an accepted and judicially sanctioned activity perceived to be in the public interest.”

While doubtless the press will make much of the salacious facts of the case, Excalibur itself is not especially interesting because those facts are sui generis:  a huge claim championed by a very bullish Magic Circle law firm; a refusal (or so the rumor has it) to finance the claim by every "professional" litigation funder that diligenced it; the emergence instead of a cabal of speculative funders, cornerstoned by a Greek shipping magnate, who collectively invested an eye-popping $51 million; a crushing loss at trial; and a further costs order against the funders' cabal.

Indeed, those facts simply affirm the central tenets of Burford's business model and its approach to litigation finance: diversified portfolio investing backed by solid diligence and without concentration risk—and the knowledge that being offered a high return can't transform a bad risk into a good one. We take on cases we think are going to win. To non-litigators, having a 20% chance of winning means that one in five cases should win (and so charging 7x money should be profitable) – but to litigators, a 20% likelihood of success probably means five of five losses, time and again.

It is an intriguing paradox that the decision in this salacious matter is the latest validation that litigation finance is, in fact, rather boring.  It is mainstream, like insurance. It isn't new, novel, esoteric or controversial. It's just a normal part of the justice system—and an “essential” one, to boot.

To be sure, there will always be Excaliburs and other excesses. There will be bad behavior and some lawyers will sometimes act less than admirably. That is just life. But at its core, litigation finance has grown into a permanent and accepted part of civil justice. That, much more than its unique circumstances, is what the Excalibur decision is all about.