Burford ramps up portfolio finance activity with first UK firm deal

Harvey: more flexible and more competitive

Burford Capital has agreed a “multi-million pound” portfolio financing agreement with Shepherd & Wedderburn, which it said is the first of its kind to be offered by a top 100 UK law firm and major funder.

The deal provides flexible capital that Shepherd & Wedderburn can use “to expand its ability to offer alternative fee arrangements to clients and grow the firm’s reach in commercial litigation and arbitration”.

The portfolio combines current and future commercial litigation matters. Capital is provided on a non-recourse basis. Burford will receive a portion of the proceeds from any litigation matters in the portfolio that succeed on a cross-collateralised basis.

Burford said that because the risk was diversified, it could offer “more attractive pricing” than on a single-case basis. It already has similar arrangements with US firms, including some operating in the UK as well.

Guy Harvey, head of commercial and international disputes at Shepherd & Wedderburn, said: “This portfolio arrangement enhances our capacity to take on new matters on an alternative fee arrangement basis without adding risk to the firm. For clients, that makes us a more flexible and more competitive partner.”

Craig Arnott, managing director of Burford in London, added: “The UK legal market is changing and becoming increasingly competitive. Portfolio finance is an essential tool to help UK law firms be nimble and innovative to attract clients.”

Burford has been steadily moving away from financing single cases. Last year, it provided £71m in capital to a “major global law firm” in its largest transaction ever, “arrayed against a wide variety of legal assets”.

Its recent half-year report said that only 9% of new investment commitments made in 2017 were to single cases, compared to 25% to portfolios. The rest went on recourse finance – investments in connection with legal claims where Burford has recourse to an underlying asset beyond the legal claim – and legal risk management, such as providing an indemnity for adverse costs.

Meanwhile, fellow funder Vannin Capital has opened an office in New York – its second in the US after Washington DC and eighth globally – after hiring commercial litigators from Arnold & Porter Kaye Scholer, Freshfields Bruckhaus Deringer and Dentons as investment directors

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