Use of legal finance is growing and becoming more sophisticated, and In-house expect it to flourish further.
The number one factor in choosing a litigation finance provider is “expertise/track record” and the least likely to be cited is “cost of capital,” while in-house lawyers say use of legal finance would grow still more in event of a downturn, according to results published in the 2019 Legal Finance Report: A Survey of In-House and Law Firm Lawyers.
Awareness and use of legal finance continue to grow, according to the survey research published Burford Capital, a global finance and investment management firm focused on law. Based on online survey data from 509 in-house and law firm lawyers in the US, UK, Canada and Australia, as well as in-depth phone interviews conducted with 32 leading lawyers across seven countries, the report reveals that legal finance is continuing to grow in use and sophistication, with lawyers predicting still more use in the event of a recession. Christopher Bogart, Burford’s ceo, commented “What stands out about the findings is that lawyers not only expect their companies and firms to use legal finance but also are becoming more discerning in how they do so - whether that means funded recovery programs or high-value monetizations for in-house lawyers, or a proactive use of finance as a new business and client retention tool for law firms.” Mr Bogart continued, “This reflects the tremendous evolution of the category Burford led in our first decade, and we are of course gratified that the research also shows how much experience and track record matter to lawyers in their choice of legal finance provider.” The research reports 69.2 percent of lawyers are “very familiar” with legal finance, up from 50.3 percent in 2018, while 73.9 percent of lawyers see legal finance as growing and increasingly important. Also, 80.0 percent of lawyers agree that legal finance is an essential law firm new business tool.
Lawyers, the report says, are becoming more sophisticated in their use of legal finance. The number one factor cited by lawyers in choosing a legal finance provider is expertise and track record (45.6 percent), and the least is cost of capital (33.3 percent). Three out of four lawyers (74.8 percent) cite as a very important/important benefit that legal finance allows their businesses to invest in growth and “use capital efficiently”. The report also finds that companies leave millions in claim value on the table, with 72 percent of in-house lawyers saying their companies have failed to pursue meritorious legal claims for fear of adversely impacting the bottom line. In interviews, half of in-house lawyers note that their companies have recovery programs. The report also notes that 68.6 percent of lawyers agree “most lawyers support litigation finance; its opponents are a vocal minority who exploit unjustified fears about its use,” and use is predicted to increase should the economy worsen, with 69.5 percent of lawyers pushing for legal finance in the event of a recession and in-house lawyers even more likely to advocate for the tool. The full 2019 Legal Finance Report: A Survey of In-House and Law Firm Lawyers is available here.