Litigation funding key to ongoing business growth

By Grace Ormsby|06 November 2018

A future trend for in-house lawyers is the proactive use of litigation finance as corporate finance for law, according to a new report.

Burford Capital’s ‘2018 Litigation Finance Survey’ says a persistent challenge for in-house legal teams is the relationship between legal risk and budgetary pressure, with 68 per cent of in-house respondents indicating that they have “chosen to forgo a claim due to impact on bottom line.”

In a one-year period, the report indicated a 105 per cent increase in the perceived need of in-house respondents for innovation from outside counsel.

The biggest increase in level of concern for in-house respondents was the difficulty in enforcing judgments, which saw a 140 per cent jump.

The report also saw a jump in companies perceiving benefits to legal finance since 2017, with an 118 per cent increase in the perception of “the ability to finance the pursuit of unpaid judgment debts” making it the most significant benefit of litigation funding for companies.

A 46 per cent increase was also noted in “the ability to be more competitive in the marketplace”, making it the second most important perceived benefit of legal finance.

Other benefits of legal finance which were noted by in-house professionals included the bringing or sustaining of proceedings regardless of a company’s cash proceedings, to improve control over timing and an ability to monetise legal assets, as well as pursuing claims that can bring value to an organisation.

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Of particular relevance to the Australian litigation funding market was the indication that more than four-fifths of Australian in-house respondents agreed that their company had “chosen to forgo claims due to the impact of associated legal expenses on the bottom line.”

A similar number agreed “cost management is an urgent issue for legal departments and law firms and requires innovative solutions.”

Just under 80 per cent saw litigation as expensive, agreeing that “even large companies benefit from moving costs off balance sheets.”

With many business challenges relating to ongoing economic pressures, the report said “the relevance of litigation finance to addressing these challenges is clearly key to its ongoing growth.”

 

Litigation funding key to ongoing business growth
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