1. finance

Summary of Findings:
Third Annual Litigation Finance Survey (2014)
Sponsored by Burford Capital LLC
NOVEMBER 2014
Introduction
Introduction & Survey Highlights
In September and October 2014, Briefcase Analytics, a leading business intelligence firm,
conducted research on the role of litigation finance, sponsored by Burford Capital LLC.
Burford is the world’s largest provider of investment capital and risk solutions for
commercial litigation.
As a general practice, litigation finance involves a third-party financier’s non-recourse
investment in a pending legal case, exchanged for a share of the ultimate proceeds of the
case. Burford finances commercial cases with strong underlying legal and factual claims,
and works both directly with clients and with the outside firms that represent them in
complex commercial litigation matters.
According to Christopher Bogart, CEO of Burford, “The survey reinforces that litigation
finance is needed, relevant, and growing. There’s not only increased awareness, but also
a greater urgency around the clear business challenges it addresses for outside lawyers,
general counsel, and chief financial officers.”
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Introduction
Introduction & Survey Highlights
Briefcase surveyed three distinct but related audiences, and collected over 480
responses, which collectively provide a statistically valid and representative sample of the
opinions of the audiences surveyed. Those three audiences are:
Outside Lawyers: Litigation partners at private law firms based in the United States
(marked in blue in the graphs of this report).
In-House Counsel: Senior legal executives (i.e., Top Legal Officer and Deputy,
Associate or Assistant General Counsel) of large and mid-sized companies (marked
in red in the graphs of this report).
Financial Executives: Senior finance executives (i.e., Top Financial Officer, VP
Finance, or other senior financial officers) of large and mid-sized companies
(marked in green in the graphs of this report).
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Introduction
Introduction & Survey Highlights
Highlights of the survey include the following key data points:
•
Litigation finance is considered a “useful tool” by 72% of outside lawyers, 69% of general
counsel, and 78% of CFOs. (See p. 11 for outside lawyers; and p. 12 for general counsel and CFOs)
•
The number of in-house counsel and finance executives saying they’ve made use of
litigation finance for their own cases has more than doubled since the 2013 survey, while
rising more than 36% from outside counsel. (See p. 9 for in-house counsel and finance executives;
and p. 8 for outside counsel).
•
80% of general counsel say their number one business challenge is increased pressure on
legal budgets, staffing, and spending – an almost 10% increase over 2013. (See p. 6)
•
77% of CFOs agree that budget and staffing are their top concern – a 50% increase over
2013. (See p. 6)
•
Outside lawyers’ top challenges are demand for discounted fees (74%) and increased
need for business development (71%). (See p. 6)
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Introduction & Survey Highlights
•
The number of general counsel and CFOs who say they’ve used litigation finance has more than
doubled since last year, and jumped by 36% among outside litigators. (See p. 9 for general counsel
and CFOs; and p. 8 for outside litigators)
•
A significantly higher number of CFOs say they have an active case that could benefit from
litigation financing. (See p. 13)
•
A sizeable percentage of each audience (41% of outside lawyers, 32% of in-house
counsel, and 40% of chief financial officers) say litigation finance should be part of the
conversation at the start of each case. (See p. 14)
•
Almost half of all outside lawyers and in-house counsel expect demand for litigation finance
to grow – and 62% of chief financial officers agree. (See p. 15)
These 2014 survey highlights are marked with a yellow star in the pages that follow.
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Introduction & Survey Highlights
2014 survey results are reported here by audience in four major categories as detailed
below. If you have further questions about the survey or would like to learn more about
corporate litigation financing, Section 5 includes contact information for both Burford and
Briefcase.
1
General Business Challenges
2
Awareness of Litigation Financing Options
3
Perceptions of Litigation Financing
4
Demand for Litigation Financing
5
Contact Information for Burford and Briefcase
5
1. General Business Challenges
Companies and outside law firms both face major business challenges.
Outside Lawyers
Demand for discounted fees
74%
77%
Increased need for business development
71%
68%
Increased competition
65%
63%
In-House Counsel
Increased cost-cutting and cost-consciousness generally
77%
75%
Increased pressure on legal budgets, staffing and spending
73%
Need for discounted legal fees
46%
80%
52%
Financial Executives
Increased cost-cutting and cost-consciousness generally
80%
81%
Increased pressure on legal budgets, staffing and spending
77%
51%
Need for discounted legal fees
26%
= Survey Highlight for 2014
6
32%
2014
2014
2014
2013
2013
2013
1. General Business Challenges
60% of In-House Counsel have shifted work away from big law firms and
towards litigation boutiques in the past 12 months.
60% have
shifted work to
boutiques
40% have NOT
shifted work to
boutiques
54%
2014 Burford Survey
46%
2013 Burford Survey
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2. Awareness of Litigation Finance Options
96% of Outside Lawyers are aware of the option of litigation finance.
11%
Done it
7%
22%
Know someone who
has
26%
49%
Know the idea
46%
14%
Limited understanding
First I’ve heard of it
12%
4%
9%
2014
2013
= Survey Highlight for 2014
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2. Awareness of Litigation Finance Options
In-House Counsel
Financial Executives
86% of In-House Counsel are aware of
litigation finance.
75% of Financial Executives are aware of litigation
finance.
5%
Done it
8%
Done it
2%
3%
8%
Know someone who
has
11%
Know someone who
has
5%
46%
Know the idea
29%
Know the idea
44%
27%
Limited understanding
First I’ve heard of it
34%
27%
Limited understanding
34%
14%
First I’ve heard of it
16%
= Survey Highlight for 2014
3%
34%
25%
25%
2014
2014
2013
2013
9
3. Perceptions of Litigation Finance
All 3 audiences strongly favor risk-sharing between lawyers and their clients.
65%
65%
64%
61%
53%
40%
2014
2013
2014
2013
10
2014
2013
3. Perceptions of Litigation Finance
Outside Lawyers recognize multiple specific benefits of litigation finance.
Disagree
It will lead to good cases being brought
(that might not otherwise be brought).
41%
It should be viewed as just another form
of corporate finance (e.g., aircraft
leasing).
59%
46%
It levels the litigation “playing field”
between parties with unequal financial
resources.
54%
30%
It is a useful tool that allows noncontingency firms to do cases they
otherwise could not.
28%
= Survey Highlight for 2014
11
Agree
70%
72%
3. Perceptions of Litigation Finance
In-House Counsel and Financial Executives also perceive specific benefits of
litigation finance. But Financial Executives are much more favorable than InHouse Counsel.
Disagree
It will lead to good cases being brought
(that might not otherwise be brought).
GCs
It should be viewed as just another form
of corporate finance (e.g., aircraft
leasing).
GCs
It levels the litigation “playing field”
between parties with unequal financial
resources.
GCs
It is a useful tool that allows noncontingency firms to do cases they
otherwise could not.
GCs
64%
Agree
36%
42%
CFOs
58%
51%
49%
31%
CFOs
69%
42%
58%
18%
CFOs
31%
22%
CFOs
= Survey Highlight for 2014
12
82%
69%
78%
4. Demand for Litigation Finance
23% of Outside Lawyers currently have an active case that could benefit from
litigation finance. Financial Executives are starting to see the possibilities too.
23%
20%
11%
7%
5%
2014
2013
Outside Lawyers
0%
2014
2013
In-House Counsel
= Survey Highlight for 2014
13
2014
2013
Financial Executives
4. Demand for Litigation Finance
A sizeable percentage of each audience says law firms should explain
litigation finance as a payment option at the start of each case.
41%
40%
32%
2014
2014
2014
Outside Lawyers
In-House Counsel
Financial
Executives
= Survey Highlight for 2014
14
4. Demand for Litigation Finance
All audiences expect demand for litigation finance to increase or hold steady
in the next 18 months. Very few expect a decrease.
2014
Outside Lawyers
In-House
Counsel
Financial
Executives
48%
59%
2013
2014
2013
2014
2013
48%
5%
34%
45%
7%
52%
43%
3%
52%
62%
57%
34%
29%
Increase
= Survey Highlight for 2014
15
4%
No Change
3%
14%
Decrease
5. Contact for More Information
Liz Bigham
Chief Marketing Officer
+1 212 235 6820 (office)
[email protected]
Burford Capital LLC
New York . London
www.burfordcapital.com
Richard J. Cellini, Esq.
Chief Executive Officer
Briefcase Analytics, Inc.
Cambridge, Massachusetts
www.briefcasedata.com
+1 617 871 6119 (office)
+1 617 955 3776 (mobile)
[email protected]
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