A litigation funding giant is expecting ‘tens of millions’ of dollars of extra income based on its 'bulge' of cases before the Jackson civil litigation reforms came into effect.
Burford Capital reveals in its annual results for 2014 that it wrote almost £136m of potential coverage in the three months before the Legal Aid, Sentencing and Punishment of Offenders Act came into force in April 2013.
That was the date when recoverability of success fees and ATE insurance was abolished, forcing Burford to amass a ‘substantial book of business’ before the reforms were applied.
The Burford report described its investment book as a ‘pre-Jackson bulge’ of which many cases were expected to ‘fizzle out’.
‘Happily, that has turned out not to be the case,’ said the report. ‘Instead, the 2013 cohort is performing consistently with out historical experience. It is certainly reasonable to expect that, over the next few years, this book may represent tens of millions of dollars in additional income.’
Overall, Burford announced a 43% increase in worldwide operating profit for 2014, to £41m.
Since incorporating in 2009, the funder said 32 investments have generated £134m in recoveries, with a 60% net return on invested capital.
The company acquired UK firm FirstAssist in 2013 and announced the acquisition of London-based asset tracing business Focus Intelligence Ltd in January this year.
The financial report said Burford, which is listed on the London Stock Exchange, is ‘bucking the trend’ with a new product in the UK designed expressly for cases valued below £500,000.
But chief executive Christopher Bogart (pictured) told the Gazette that the UK is still not embracing the potential for litigation funding in the same way as other countries.
‘Overall only 37% of our portfolio is single cases,’ he said. ‘A significant majority has become multiple case portfolio and something more complex. In the UK the business is predominantly single cases.
‘The UK legal market is lagging in appreciating that litigation finance is more than just paying for a single case – that is not what clients want in other jurisdictions.’