Enthusiasm for third-party funding continues to grow, says survey

Bogart: Significant opportunity for further growth

There is strong growth in the consideration and use of litigation finance in the UK, new research has found, with 63% of respondents saying their organisation’s use of it has increased in the last two years.

Three-quarters of UK lawyers said litigation finance was now a “key marketing tool”.

The research by leading third-party funder Burford Capital involved an online survey of 495 lawyers in the US, UK and Australia; 196 of them were from the UK, both lawyers at law firms and in-house.

It showed how awareness of funding has now grown, with 65% of UK lawyers saying they were very familiar with litigation finance.

The research also highlighted the growth of portfolio funding; 53% of UK respondents said they had used single case funding and 41% portfolio funding.

It did indicate a disconnect between the types of matters for which private practice and in-house lawyers would seek litigation finance: for private practice, fraud, contract, tax and bankruptcy litigation were the most popular of 14 categories of dispute put forward; for in-house lawyers, it was commercial class actions, commercial B2B disputes, cybersecurity and financial of legal receivables.

“Not surprisingly”, the research said, growth in the use of finance was significantly higher among law firm versus in-house lawyers, although 40% of UK in-house respondents said their companies were “very likely” to use litigation finance in the next two years.

Hedging risk was a significant factor behind in-house interest in litigation finance – with 81% of UK in-house lawyers identifying costs management as an urgent issue for them, 72% said their company had chosen to forgo claims due to the impact of the associated legal costs on the bottom line.

UK respondents were most likely to agree that litigation finance could also help turn in-house legal departments into profit centres (79%).

Of those whose organisation had not used litigation finance, 28% said they were very likely, and 58% somewhat likely, to use it in the next two years

Christopher Bogart, Burford’s CEO, said of the research: “The research confirms that, even with the continued and dramatic growth of litigation finance in the last few years, there remains significant opportunity for further growth, most obviously among corporate legal teams that are still only partly aware of the utility of litigation finance, and who haven’t yet fully grasped its benefits to their business.”

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