Litigation funding takes the next step

It has been announced this week that the listed litigation funder, Burford Capital, has taken a 32% stake in a law firm in return for providing funding for a portfolio of the firm's matters.  

This marks a new approach within the litigation funding market in the UK and no doubt some will have concerns over the need to prioritise the clients' best interests.  It has, however, been confirmed that the deal is not exclusive for either party and that Burford will be taking a passive role.

Chris Bogart, Burford chief executive, has commented that “In many other industries, it would be entirely common for a financing provider to take warrants or equity as part of a financing transaction".  

The firm in question, PCB Litigation, has been converted to an alternative business structure with the Solicitors Regulation Authority in order to enable the equity sale and has stated that it hopes the approach will fuel the firm's future growth. 

It remains to be seen whether this will spark similar deals between funders and law firms.  Burford itself has not ruled out further investment of this sort and indicated that it is in regular discussions with a number of firms around funding and capital structures.