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20 October 2016

Litigation funders plan to invest in ABS law firms

Litigation funders Burford Capital and Woodsford Litigation Funding say they plan to invest in UK-based law firms that are allowed to have non-lawyer owners.

By Victoria Basham


Jonathan Molot, Burford’s chief investment officer, told Law.com  that the company is ‘open’ to investing in such firms, which are known as ‘alternative business structures’ (ABS). The news follows Burford’s announcement this month that it had formed its own law firm under the UK ABS law. Mr Molot said the firm is limited a single lawyer, former Akin Gump Strauss Hauer & Feld counsel Tom Evans, who will track down funds from litigants who try to avoid judgments that Burford’s investments have helped to win.


He also clarified that Burford does not intend to hire lawyers to conduct its own case work and said that creating a full-fledged ABS law firm ‘would never be our plan.’ The funder is wary of upsetting its relationship with the large law firms it pays to handle legal work by being seen to compete with them for that work.  


Steven Friel of Woodsford Capital said his firm is actively considering whether to make a move into the ABS space, as owning a law firm could eliminate the risk of being held liable for the defendant’s costs in losing cases they fund. It would also enable the funder to exert more direct control over the course of litigation, something champerty rules still disallow for funders. Mr Friel said his firm is still weighing whether to make its own move into the ABS space, but is confident that he will invest in an external ABS firm. 

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