Litigation funder Burford Capital has agreed to provide over £30m in litigation financing for a FTSE 20 company, in the first publicly announced deal of its kind.
Burford said the deal addressed the need of “companies of all sizes” to avoid paying lawyers by the hour.
A spokesman said the $45m financing arrangement with the company, which has not been named, “encompasses a portfolio of pending litigation matters”.
He went on: “Previously, the company paid for the significant legal fees and expenses associated with litigation out of its own revenues, thus reducing operating profits. With the Burford arrangement, it has transformed how it manages litigation expense.”
The spokesman said the deal provided multiple corporate benefits, including the ability to use Burford’s capital “either to relieve legal expense budget pressure or for corporate purposes unrelated to the litigation matters”.
He said Burford would receive a portion of the profits from litigation on a “cross-collateralised basis”, meaning that it was protected against the risk of any single matter losing.
The spokesman added that Burford was providing capital on a “non-recourse” basis, in a way that enabled the client to treat it as income received, without waiting for the result of the underlying litigation matters.
Christopher Bogart, CEO of Burford, commented: “This transaction is another example of the continuing transformation of litigation finance into corporate finance for law, and our focus on constructing innovative solutions for businesses of all sizes, including the world’s largest companies.
“More and more, in-house counsel see the value of innovating how they finance litigation, and deals like this show how easy and straightforward we can make it for them.
“Equally, financial executives are increasingly aware of the accounting and finance benefits of this approach, including the value of being able to move risk from corporate balance sheets, and the tremendous benefit of being able to recognise income from a claim when it’s advantageous to the business instead of when it’s convenient to the courts. Put these together, and we see continued appetite for this kind of transaction.”