Legal finance for transportation
Businesses operating in the movement of goods and people are party to some of the most complex contracts and transactions—which can result in expensive and risky international disputes. Given this, it is a top priority for legal and finance leaders in the sector to manage and minimize legal department costs, and over half have already used legal finance to do so.
Insights from recent research into transportation
Burford recently conducted research into economic impacts on different industries and their litigation portfolios. For senior in-house lawyers and finance leaders at companies in the transportation sector, the key takeaways were:
• One of the top priorities for finance and legal leaders at transportation and supply chain companies is managing and minimizing legal costs.
• Finance and legal leaders at transportation and supply chain companies are among the most likely to say they will use fees and expenses financing in the coming years. Finance and legal leaders at transportation and supply chain companies are more likely than the industry average to say allowing meritorious matters to proceed is the biggest benefit of legal finance.
• 55% of finance and legal leaders at transportation and supply chain companies say they have used legal finance—41% more than the industry average.
How legal finance is used in the transportation sector
At its core, legal finance enables businesses in the transportation sector to maximize their recoveries in commercial disputes and to ensure they can fully leverage their legal assets.
There are numerous ways transportation businesses can leverage legal finance to generate value from their litigation and arbitration assets—without impacting control of their disputes.
• Fund claims and recoveries: Burford takes on the financial burden of paying lawyers to pursue meritorious high-value claims, allowing businesses to pursue meritorious cases without incurring upfront costs.
• Eliminate downside risk: Legal finance provided by Burford is non-recourse, meaning that the investment and return are contingent on a successful outcome. This allows businesses to lock in guaranteed minimum returns and shift legal risk off their books.
• Manage cash flow: Burford can accelerate expected entitlements from pending claims and awards, providing companies with the flexibility to time cash flows according to their desired schedules, enhancing liquidity and working capital.
• Identify opportunities: Leveraging proprietary data and industry-leading insights, Burford can assist legal teams in setting priorities for their commercial litigation and arbitration portfolios. This helps businesses identify the most valuable claims and allocate resources effectively.
• Manage exposure: Burford can provide a hedge for litigation risk in the company’s portfolio. This allows businesses to mitigate the potential financial impact of litigation and protect their interests.
• Enforce judgments: Through funded enforcement and asset recovery, Burford can help businesses transform unenforced judgments and non-performing loans into cash
Worked example
A global shipping company was seeking recoveries in multiple litigation and arbitration matters. The defendant was litigious and had considerable resources—presenting the company with a protracted legal battle and likely enforcement challenges to any eventual settlement or award. As legal bills mounted, the company recognized that it would be unable to adequately pursue its claim over the long haul—but it did not want to be forced to accept a premature settlement offer.
A legal finance capital facility unlocked $10 million across a portfolio of ongoing and future commercial litigations and arbitrations in Europe and the US. The company used the capital to pay ongoing legal fees and avoid incurring additional expenses during its protracted claim. The client preserved significant upside in an eventual settlement, without added cost or risk to the company.
Given the non-recourse nature of the financing, the client would repay the investment plus a return if and only if a successful judgment or award was enforced against the defendant, or from the proceeds of the sale of the investee company—and the company would keep any excess funds recovered after paying the legal finance return. If the matters were unsuccessful, the company would owe nothing and would have paid nothing out of pocket to pursue its cases.
The company avoided being forced into early settlements—and, able to work with its counsel of choice, had already won two awards against the defendant within a year of securing finance.
