The growth of legal finance in the United States over the past decade has surprised skeptics and even those who always believed in its power to change the legal industry. Among the elite firms to lead the way is Burford Capital, which has been lucky to have Emily Slater on board for nearly all of its 12-year history. Slater joined in 2010, a year after its founding, from Debevoise & Plimpton, where she was a litigator focused on complex financial cases and investigations. Now as Managing Director, Slater says that Burford has continued to enhance its position in the marketplace with an impressive array of new investments that increasingly serves large corporate clients in addition to smaller companies and law firms that have already adopted legal finance as a tool.
Lawdragon: Can you describe for our readers the types of services you provide within the legal industry and to whom?
Emily Slater: Burford Capital is the leading finance firm focused on law. An underpublicized yet high-growth asset class, legal finance is changing the way companies and law firms enhance liquidity and manage the risk associated with commercial litigation and arbitration risk.
At its core, our business is built on Burford’s expertise in valuing legal assets—typically affirmative recovery commercial litigation—and our capacity to provide capital to clients who have those assets. Most often, we provide capital over the life of a legal asset in exchange for a portion of a successful outcome. We make investments, not loans, and they are almost always non-recourse.
Burford’s portfolio includes more than 1,000 commercial matters. We work with law firms and corporate legal and finance departments to evaluate and invest in their legal assets. As of 2020, 94 AmLaw 100 and 90 Global 100 firms have brought us opportunities to fund their firms or their clients.
And despite 18-plus months of global disruption, we continued to win clients, of which 57% were corporate clients ranging from Fortune 500 companies to startups – indicating a growing awareness and use of legal finance among C-suite executives and in-house lawyers. It’s a trend we expect to continue as CFOs and other corporate executives seek out opportunities to bring more commercial thinking and corporate finance tools to the legal function, reduce uncertainty and maximize the value of their assets.
LD: How has the legal finance profession changed since the early part of your career?
ES: Chris Bogart and Jon Molot launched Burford Capital in 2009 with a modest $130 million IPO on the London Stock Exchange. A year later, I joined the underwriting team under now co-COO Aviva Will. At that time, Burford had two rooms in NYC with spotty internet. I always believed Burford would be successful; at that time, however, I had no idea that ten years later we would have a team of over 135 people, offices around the world and a $4.5 billion portfolio.
While not “new,” legal finance as an industry is certainly still in its early stages. When Burford launched in 2009, small companies were our primary clients; single-case financing arrangements to finance legal fees and expenses were the extent of what was available to clients. But as client needs changed, our business adapted. Ten years later, we’ve come a long way from offering only single-case fees-and-expenses arrangements to a broad group of solutions for risk and liquidity needs of large companies and law firms, including multi-million-dollar up-front monetizations of case value, multi-case portfolio investments, asset-recovery services and After the Event (ATE) insurance – and we’re continuing to develop, adapt to and anticipate our clients’ needs.
That’s one reason why I’ve been with the firm for a decade – as Burford has grown, my role has likewise evolved and today I work with multi-functional teams across Burford’s business. I started in 2010 as a vice president underwriting single-case legal finance transactions and helped build Burford’s investment and underwriting processes from the ground up. I helped launch Burford’s business development function, worked on Burford’s complex strategies business and now focus on large investments and new investment ideas as the head of Burford’s new business incubator.
Understanding that there is untapped growth potential in the market and that the market doesn’t grow organically, the Incubator is dedicated to identifying capital and risk management needs in the legal market. Central to this project is working with large corporate clients to develop commercial funding solutions that address their particular business priorities, which can vary significantly from client to client.
Companies are beginning to recognize the previously hidden value of their legal assets and how legal finance can help them reach strategic business goals. But it is still early adopters that are using legal finance and we continue to work to educate clients about the benefits of legal finance and learn from them about what their needs are.
LD: To the extent your business involves innovation in the legal industry, what is it you are trying to achieve that will help your clients or their business?
ES: As of 2020, companies accounted for over half of our commitments, but our research has found that there remains significant untapped potential in this market. Most financial officers understand that their companies have valuable legal assets yet they are not yet fully leveraging the tools available to unlock the value of them.
At Burford, we assess the value of commercial legal assets, determine the economics of potential investments and structure deal terms to optimize results for our clients. In doing so, we enable companies to pursue meritorious litigation and arbitration while limiting the associated cost and risk. In our growing work directly with large companies, we help CFOs and GCs understand the value of litigation and arbitration and shift the perception of legal departments from “cost centers” to a revenue generating arm of the business.
For instance, in a recent survey [conducted by Burford] 75% of large company financial officers reported unenforced judgments worth $20 million to $100 million in 2020; 39% say that they do not conduct modeling of litigation because litigation variables don’t lend themselves to quantitative analysis; and 56% don’t think that they are able to control timing of cash flows from litigation. Legal finance can be a solution to provide predictability and certainty to contingent recoveries, cash flows and expenses.
Burford has the industry leading underwriting process to help assess and model litigation risk and outcomes, drawing on our own proprietary and public data from thousands of cases. And the fact that finance professionals still view these as unsolvable problems demonstrates that there is a lot of room for growth for legal finance to assist them.