Burford CEO Christopher Bogart: 'In many other industries, it would be entirely common for a financing provider to take warrants or equity as part of a financing transaction'
London-based dispute resolution firm PCB Litigation has agreed to give Burford Capital a minority stake in its business in exchange for access to capital to fund a portfolio of litigation cases.
The agreement will give Burford a 32% equity holding in seven-partner PCB, which has changed its ownership structure to become an alternative business structure (ABS) in order to secure regulatory approval for the deal.
The deal is believed to be a market first, paving the way for similar funding deals between law firms and litigation funders.
PCB managing partner Anthony Riem said: “Burford develops innovative funding solutions for those in litigation or arbitration, which marries well with the legal services we offer clients, particularly in fraud and asset recovery, insolvency and dispute resolution. Together with the capital that Burford can deploy in cases, we expect this to fuel the firm’s continued growth.”
Market watchers are expecting to see a pick-up in litigation in the coming months as companies that put disputes on hold amid the coronavirus pandemic seek to reboot them, in part driven by the growing availability of litigation finance.
Riem added: “Access to justice is of more importance now than ever given the additional financial challenges that parties may face in bringing claims. With our established track record in formulating and implementing creative legal solutions for clients to win cases and recover assets, and Burford’s long standing history of successfully funding meritorious claims, we will together offer products to clients that enable them to monetise their claims or share in the risk of recovery.”
Christopher Bogart, CEO of Burford, added: “This structure continues Burford’s history of innovation and takes the legal industry a step closer to conventional financial structures. In many other industries, it would be entirely common for a financing provider to take warrants or equity as part of a financing transaction, and Burford and PCB have figured out how to adapt such a structure to the particular needs of the legal industry. We believe that this is another first in the market.”
PCB, which founded in 1979, has built up a strong following in emerging markets, particularly with Russian clients using litigation funding. It recently acted for the wife in the case of Akhmedova v. Akhmedov, in which Mrs Justice Knowles provided guidance and approval on the use of such funding in England and Wales.
Its founder, Stephen Phillippsohn, left the firm in November last year, to become head of international fraud litigation at Asserson, which serves the UK international legal market from headquarters in Tel Aviv.
In April, Burford brushed off a 15% fall in income in 2019 with the claim it had a ‘spectacular year’ in terms of growing its business and generating free cash.
The following month, it conceded defeat in an unprecedented battle with the London Stock Exchange (LSE) after the High Court rejected its application for the LSE to hand over confidential trading information as part of dispute with hedge fund Muddy Waters.