Third-party litigation funder Burford Capital has reported a 25% hike in profits and says lawyers are finally coming round to the benefits of external finance.
The US-based dispute financier announced to the London Stock Exchange profit for the calendar year 2013 was £25.5m, compared with £20.5m in 2012. Turnover grew from £32.3m to £36.5m.
In its financial report, the company said 2013 saw ‘continued acceptance and adoption of litigation finance’, with law firms viewing it as a useful tool and a ‘dramatic uptick’ in corporate chief financial officers favouring external finance.
Since inception in 2009, the company says 25 investments have generated £88m, producing a 52% net return on invested income.
The investment portfolio currently contains 35 separate investments with total commitments of £159m.
The company said its involvement in the legal market is ‘much more than the simple funding of legal fees’.
Its report added: ‘Our capital can be used for many different purposes, ranging from paying litigation costs to providing risk transfer solutions for law firms and their clients to providing operating capital for businesses with material litigation assets.’
Speaking to the Gazette, chief executive Christopher Bogart (pictured) said the majority of investments were still in the US, but there is ‘a significant amount of interest’ among UK firms.
‘An increasing number of lawyers are going from being interested in the proposition of litigation funding to making use of it,' he said.
‘The key for 2014 is for the UK to move from consideration to utilisation. There is no question that clients want multiple financial options for their litigation – the idea simply of paying hourly rates until the cows come home is largely unfavoured.’
The company warned that the UK insurance market is still unstable following the fallout of the Jackson reforms in April 2013.
Burford said it saw a ‘record-breaking surge’ in new insurance business in the first quarter of 2013, followed by reforms implemented ‘in such a way as to create confusion and uncertainty in the UK legal market’.
The report added: ‘As a result, and unsurprisingly, the litigation volumes we saw following 1 April fell sharply, as did the demand for our UK offerings.
‘After the summer, we had expected the market to stabilise and to be able to assess the future. However, while demand did pick up, we do not think we have yet reached any sort of stability in the UK litigation market but we expect 2014 to permit that kind of market assessment.’