Fast-growing profits at a listed litigation funder were no flash in the pan, the company confirmed this week as it reported more positive figures.
Burford Capital reported to the London stock exchange that operating profit increased 23% in calendar year 2018 to around £248m. The New York-headquartered investor also reported that income increased at the same rate to £318m.
Burford said consistently high demand for its capital reflected in new investment commitments of almost £1bn in 2018, showing that 2017’s similar commitment level - which more than tripled the prior year’s performance - was not a one-off event.
Chief executive Christopher Bogart said: ‘The big question this year was whether 2017’s explosive growth [when profit more than doubled] was a one-time anomaly. These results show that it was not.
‘Burford has committed $2.6bn [£2bn] to new investments in just the last two years, more than twice its lifetime cumulative commitment level prior to that time. That is extraordinary and suggests a sea change has occurred in the legal finance marketplace.’
The team has now grown to 110, with 55 lawyers, as it approaches its 10th anniversary. It operates from principal offices in New York, London, Chicago, Washington, Singapore and Sydney.
In its report to shareholders, Burford says it would ‘take effort’ today to find a lawyer in a major law firm unaware of the rise of legal finance, with its own polling showing 96% of respondents saying they were familiar with the industry.
The number of lawyers who said their firms or companies have used litigation finance has grown since Burford first conducted its research – from under 10% of respondents in 2012 to 32% of lawyers in 2018.
But despite increasing its written business in the last two years, the company said shareholders should not be complacent and expect persistent and unbroken growth.
‘If anything, the risk of volatility is greater now than it ever has been,’ added the report, which also warned law firms of the risk of entering into legal finance themselves: ‘Law firms would be imprudent to take on their own risk as they tend to invest in only a few cases at a time on risk as opposed to our hundreds of cases. Small entrants face a real challenge obtaining sufficient capital to enable sufficient diversification, the lack of which creates substantial business risk… This is not a business for dabblers.’