Because commercial legal finance is still a nascent industry where solutions for clients are rapidly evolving as more companies and law firms learn about how legal finance can be beneficial for capital and risk management and growth, developing business in this space requires some new approaches and also relies on time-honored relationship development values and techniques. The role of business development in legal finance is very much about both educating clients and listening to and understanding both their litigation portfolio and their financials.
While awareness of legal finance has grown, most companies and even many law firms may require a better understanding of how legal finance can be used to address different risks and drive growth, the sophistication with which transactions can be structured and the cost of non-recourse capital. Research released in 2022 demonstrated that while almost half (44%) of in-house lawyers are very aware of traditional fees and expenses litigation finance, only a quarter are aware of monetization, which allows companies to advance a portion of the expected recovery from a pending claim on a non-recourse basis. Additionally, only a third are well-versed in portfolio financing, which reduces risk and the cost of litigation finance across multiple claims. These discrepancies highlight significant growth potential and continuing need to educate the market about the range of solutions legal finance can provide.
Identifying potential clients
Part of effective business development for Burford is strategically identifying potential corporate and law firm clients engaged in high-stakes affirmative and defensive litigation who we think can benefit from commercial legal finance such as disputes involving large project development, manufacturing, large retailers and healthcare. By leveraging data analytics in addition to engaging directly with potential clients, we can pinpoint businesses and industries with a high likelihood of benefitting legal finance solutions by evaluating litigation history, case merit and financial position.
Explaining complex concepts and setting and meeting expectations
In client relationships, my personal approach prioritizes time-tested values such as communication, transparency and accessibility. Effective business development in legal finance necessitates that clients receive clear and straightforward information, avoiding buzzwords and industry jargon. Legal finance concepts are often novel and are not necessarily intuitive, so explaining how it works as simply as possible is imperative.
Given what can be a relatively long process from the conceptual stage to closing a significant transaction, it is important to explain each step in clear, direct language, anticipate issues that may come up in the diligence, term negotiation and transaction process, set client expectations and then meet or surpass them or clearly explain when an unanticipated risk or issue is identified. This approach helps build trust and facilitates transactions with fewer surprises.
Meeting client problems with innovative solutions
Burford is the leader in innovating solutions in the legal finance space – this is one way that we maintain our leadership position in the legal finance industry. Clients often don’t have a firm sense of the legal finance options, so it is crucial to understand their businesses and specific risk exposures and friction points. We often do a lot of listening before we propose a solution for a client – and sometimes the best solution for the client requires innovation by Burford to meet the client’s needs.
For instance, in 2023, a Fortune 500 company and existing Burford client sought to address a significant financial need by leveraging some of its high-value litigation assets. The CFO worked with the legal department and Burford to craft a $325 million non-recourse legal finance monetization transaction that accelerated the expected value of a portfolio of affirmative litigation recoveries before the company’s year-end. Burford provided over $225 million in financing at closing with an additional $100 million option which the company was free to deploy anywhere in its business. Because Burford’s return was contingent upon successful resolutions from a defined group of cases, the arrangement provided capital without current payment requirements, helped the company significantly mitigate the risk of loss and collection risk of the litigations and enhanced its cash position and financial flexibility.
In a legal finance, the most important aspect of business development is meeting clients where they are, understanding their unique needs and challenges and proposing legal finance solutions that meet those needs.
Emily Slater is a Managing Director and a senior member of Burford Capital’s US commercial underwriting group responsible for identifying, assessing, structuring and managing high-value investments in the commercial litigation marketplace.
