Burford Capital & Litigation Case Origination
Former Investment Manager at Augusta Ventures
inpractise.com/articles/burford-capital-and-litigation-case-origination
Former Investment Manager at Augusta Ventures
The executive has 10 years experience in litigation funding, with 4 years at Augusta and now in business development at a law firm helping lawyers fund cases.
Interview Transcript
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What does the client care about?
The client cares about the best pricing. They want the lowest funder success fees and a quick turnaround. They care about which funders come back to them quickly, but also who will be best at creating income they take home at the end of the day. Those are the early stages but as the process goes on, the funder meets with the client to check that the client will go along with reasonable settlement offers if they arise. They check the client doesn't have a personal vendetta against the defendant which might draw out the litigation process. When a client comes to a funder without a law firm, the funder will take the claim to market to get several quotes on legal spend from law firms who they value and respect, then take that to the client, and I have been part of those processes before. The client will consider which law firms to use in a sense of cost but also expertise, in the sense of which law firm will represent them in the best way.
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Burford reported their median commitment was £2 million to £4 million 10 years ago and now it's £20 million, and they've also said returns are increasing. Are you suggesting that is simply a function of a higher dollar amount at risk, and due to the non-recourse and binary nature of the assets, investors are demanding higher returns?
The higher return is also due to the value of cases. A £20 million case no longer involves straightforward contractual litigation. An investment duty claim or construction case has a higher risk towards the end and you could lose £20 million and not reap any rewards. Previously, you were only losing £2 million to £4 million but you had another 10 cases in the pipe which could be lucrative if they win. With £20 million cases, you invest in less claims and diversify your investments in a smaller pod of more expensive cases, but they are high-risk high-reward. You could potentially win £80 million at the end of it. As a result, the market prices in a higher return on investment, and your pricing gets higher as you put more money into these cases.
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