Introduction to
Monetization
A guide on using legal finance to advance the
value of pending litigation and arbitration matters
CONTENTS
Comparing funding options: Fees & expenses vs. monetization 2
Claim monetization: A guide to unlocking legal asset value 6
Timing is everything: Exploring the benefits of award and judgment
monetization 10
Legal finance valuation 14
Case study: Generating working capital through monetization 16
Contact Burford 18
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ordinary shares or other securities of Burford.
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information, please visit burfordcapital.com.
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registered trademarks of Burford Capital
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Since opening its business in 2009, Burford Capital
has been committed to educating legal and finance
professionals about using third-party capital
to transform how they think about, pay for and
manage legal cost and risk.
Empowering our counterparties to better
understand legal finance helps us add value beyond
the capital we commit—one of the reasons clients
often cite for choosing Burford.
In that spirit, we have collected some of our
introductory materials on monetization in the
pages that follow. We encourage you to visit
Burford’s blog and Quarterly publication online
for further articles—or better yet, please call us to
discuss how we can help.
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Fees & expenses
vs. monetization
COMPARING FUNDING OPTIONS:
“ Nine out of ten CFOs say that greater control over
timing and the ability to monetize legal assets on
their company’s schedule is an important benefit
of legal finance.”
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COMPARING FUNDING OPTIONS: FEES & EXPENSES VS. MONETIZATION
When speaking to potential clients, a common
question we often get asked is: How does
monetization differ from traditional litigation
finance? The answer is that the two products
cover different problems.
FEES & EXPENSES M O N E T I Z AT I O N
Funding of fees and expenses Acceleration of a pending
DEFINITION associated with the pursuit commercial claim or an
of a commercial claim uncollected judgment or award
LEGAL FEES
Paid by the funder N/A
AND EXPENSES
TIMING OF CASH FROM Paid as incurred over 100% at deal close, plus potential
BURFORD TO CLIENT the course of the litigation share of future proceeds
Non-recourse; investment back Non-recourse; investment back
TYPICAL
plus a multiple or percentage of plus a multiple or percentage of
TERMS the ultimate award or settlement the ultimate award or settlement
Accelerate payment of a
potentially successful claim or
Offload cost of pursuing dispute
KEY an uncollected judgment or
to a third party; eliminate upfront
BENEFITS award; lock in portion of claim
costs and downside risk
value, judgment amount or award
amount, regardless of outcome
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Legal finance solves
“money out” and
“money in” problems
Fees & expenses financing solves
“money out” problems
Legal finance shifts the cost and risk of pursuing litigation or
arbitration from the company (or its firm) to Burford—enabling
the pursuit of meritorious claims while minimizing money put out
the door and a corollary hit to profits.
Monetization financing solves
“money in” problems
Legal finance accelerates a portion of a pending claim or an
uncollected judgment or award, bringing money into the business
and allowing companies to unlock the value of pending claims
and uncollected judgments and awards without waiting for legal
processes to resolve.
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4
LEGAL FINANCE SOLVES “MONEY OUT” AND “MONEY IN” PROBLEMS
“Unlike fees and expenses financing, in
which money flows from the finance
provider to pay lawyers as costs are
incrementally incurred, capital provided
through a monetization is provided in a
lump sum upon investment.”
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5
Claim monetization
A GUIDE TO UNLOCKING LEGAL ASSET VALUE
K E L LY D A L E Y
(312) 778-6182 | kdaley@burfordcapital.com
Kelly Daley is a Managing Director and the head of the US commercial underwriting group with
responsibility for supervising the team that assesses and prices investment opportunities in US
commercial litigation. Prior to joining Burford, Kelly was a senior litigator at Orrick Herrington.
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CLAIM MONETIZATION
Here’s a paradox: Even as more lawyers
become more aware of legal finance as
a tool to offload cost and risk, too many
of them remain unfamiliar with one of
its most potent uses, the monetization
of pending claims.
L ack of awareness of claim monetization is all the more surprising given that
it alleviates one of the biggest frustrations faced by companies involved in major
commercial disputes: Their inability to control the timing and certainty of cash flows
back to the business when they pursue recoveries through litigation. This has relevance
in the broader C-suite. According to the 2019 Managing Legal Risk Report, nine out of
ten (91.9%) CFOs say that greater control over timing and the ability to monetize legal
assets on their company’s schedule is an important benefit of legal finance.
Why then are so many lawyers unaware of claim monetization? Perhaps because
so much discussion of legal finance focuses on its most common use, in which a
third party pays lawyers’ fees and expenses so that claims may proceed. In-house
lawyers who only see legal finance as a tool to pay their lawyers may then mistakenly
conclude that unless they can’t or don’t want to pay their lawyers out of pocket,
legal finance isn’t for them. Far from it: Legal finance enables companies to unlock
the asset value of pending claims—including companies that can afford to and do
pay their lawyers out of pocket. In doing so, monetization gives companies (and
their firms) the ability to control the timing and certainty of cash flows back to the
business by accelerating a portion of a pending claim.
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CLAIM MONETIZATION
DEFINING MONETIZATION WORKED EXAMPLE
As its name implies, monetization is simply MaxValue Inc. had for four years been
the conversion of a portion of a pending pursuing an antitrust claim against a group
claim into cash, with a legal finance provider of suppliers that had engaged in price-fixing
essentially advancing capital that would that resulted in $1 billion in overcharges
otherwise be captive until the resolution to its business. MaxValue Inc. had a strong
and payment of the claim in question. claim and, with ample resources to engage
a top litigator at a leading firm, had
Pending claims often represent vast latent elected to pursue its claim on an opt out
value to the organization. Unfortunately, basis. However, even as the claim passed
they carry a tremendous amount of motion to dismiss, MaxValue Inc. faced
uncertainty as to both outcome and an indeterminate delay to being made
timing—and because they are highly whole through the litigation. Meanwhile,
illiquid, traditional capital sources the company CFO, facing a quarterly
historically have been unable to assign reporting deadline, wished to access some
asset value to them. Because legal finance of the cash from the asset. The GC secured
providers have experience and expertise in a $100 million monetization on a non-
assessing the value of legal assets, however, recourse basis in exchange for a portion
they can help companies unlock value of the ultimate recovery in the event of a
through monetization. successful outcome. Happily for the CFO,
the monetization injected $100 million of
Monetization accelerates an organization’s immediate cash income into the business;
access to capital. Capital is provided upfront, happily for the GC, the cash was used to
without the company needing to wait for fund a combination of defense matters and
outstanding claims to resolve—offering a recovery program that would bring further
immediate liquidity that may be used for value to the business.
virtually any business purpose. Unlike fees
and expenses financing, in which money MATTERS SUITED TO
flows from the finance provider to pay MONETIZATION
lawyers as costs are incrementally incurred,
Claims suited for monetization tend to be
capital provided through a monetization is
large-scale matters with significant damages,
provided in a lump sum upon investment
and must meet standard criteria for legal
and can be redirected to fund defensive
finance, which for Burford include:
positions in the legal department—or
to build warehouses, hire staff, shore up • Strong merits
corporate balance sheets or any other
• Type of matter (complex commercial
corporate purpose. And because the capital
litigation, including antitrust, securities,
typically is provided on a non-recourse
fraud, contract, patent and intellectual
basis, the company is obligated to repay the
property, trade secret and other business
investment only following the successful
tort matters, as well as international
resolution of the matter.
arbitration)
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CLAIM MONETIZATION
• Experienced litigation counsel with Finding the right legal finance partner
successful track records and a strategic
Companies seeking to monetize claims
approach
should take care in identifying a reliable
• Jurisdiction (matters filed or expected to legal finance partner with a good reputation
be filed in domestic courts in a common and quality capital sources—respectively
law jurisdiction or in an internationally the top two most important factors cited by
recognized arbitration center) lawyers in choosing a funder, according to
• Damages supported by solid evidence the 2020 Legal Finance Report.
of loss and large enough to support our
By definition, monetization will require a
Claim monetization
investment and returns with the client
keeping most of the proceeds if the case
goes well
special quality of finance provider. Many well-
capitalized finance firms lack the expertise
or the willingness to provide a lump sum
A G U I D E T O Uinvestment
NLOCKIN forGaLlegal
E G Aclaim
L A Sbecause
SET VA LUE
they lack
BENEFITS OF MONETIZATION the expertise to value that claim; conversely,
For companies with high-value claims, there few specialist legal funders have the capital to
are several obvious benefits to monetization: monetize significant claims.
• Mitigating risk: Companies can reduce It is important for companies to work with
their exposure to the risk of loss, a a finance provider with sufficient valuation
reduction of damages or a reversal set expertise and talent, and with sufficient
aside of a judgment. resources to provide the requisite capital—and
• Controlling timing: Companies gain when timing is of the essence, working with a
access to capital based on their preferred provider that has access to its own permanent
timeline—cash they can then invest in capital (as Burford does) helps ensure the
the business without delay. process moves swiftly and smoothly.
• Unlocking better pricing: Should
companies have multiple claims suitable
for monetization, financing can be
offered through a portfolio-based facility
that provides more competitive pricing.
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Timing is everything
EXPLORING THE BENEFITS OF AWARD AND
J U D G M E N T M O N E T I Z AT I O N
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Aviva Will
212 235 6820
awill@burfordcapital.com
As Co-Chief Operating Officer with
overall responsibility for Burford’s
global marketing, origination and
underwriting activities, Aviva Will
has reviewed many hundreds
of billions of dollars’ worth of
commercial matters. Previously,
she was senior litigation manager
and Assistant General Counsel
at Time Warner, Inc. and a senior
litigator at Cravath, Swaine &
Moore LLP.
Craig Arnott
+44 (0)20 3530 2010
carnott@burfordcapital.com
Craig Arnott is Burford’s Deputy
Chief Investment Officer with
responsibility across our entire
investment portfolio as well as
responsibility for growing and
developing Burford’s Australian
market. He was previously a
barrister at Sixth Floor Selborne
and Wentworth Chambers in
Sydney, and Head of Competition/
Antitrust at Fried Frank Harris
Shriver & Jacobson in London.
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TIMING IS EVERYTHING
With companies working to shore up earnings prior
to reporting deadlines, we at Burford find ourselves
answering a common question from corporates with
outstanding commercial litigation judgments and
international arbitrations awards: Can legal finance
expedite our recovery?
The short answer is yes—through a financial tool
known as monetization.
THE TIMING PROBLEM OF AWARDS AND JUDGMENTS, AND HOW
MONETIZATIONS SOLVE IT
Companies often fight long and hard to get to a positive judgment or award in
commercial litigations and arbitrations. But those judgments are only as valuable
as the paper they’re written on if the other party doesn’t pay up—and that happens
more than one would think. 70% of in-house respondents to Burford’s 2020 Legal
Finance Report have unenforced judgments worth $20 million or more. Those that
require enforcement can take years to collect and cost many millions more than a
party has already spent getting to a positive judgment.
Companies are doubly harmed by these delays. First, the initial wrong a claimant
suffered has yet to be rectified. Second, the claimant is forced to continue to spend
money pursuing enforcement—money that is diverted from the business, leading
to yet more lost opportunities. It may take several years for this company to make
itself whole after suffering initial damages—an unacceptable outcome from both
accounting and business perspectives.
Monetizations solve the “timing problem” by providing immediate liquidity to
companies with judgments or awards. Burford can provide non-recourse capital to
the judgment or award holder in a successful litigation or arbitration, in exchange
for some portion of the final recovery. Because Burford’s capital is non-recourse,
it is repaid only in the event of a successful ultimate outcome. Monetizations are
always bespoke to the needs of the client, and thus clients may choose to monetize a
portion or the entirety of an award or judgment—they may even choose to monetize
an ongoing claim.
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TIMING IS EVERYTHING
THE BENEFITS OF MONETIZING
ARBITRATION AWARDS
Monetizing an award or judgment is an easy,
risk-free way for a company to realize that
asset’s value without needless delay. Here are
a few obvious benefits:
• Outside capital from a monetization
allows the claimant to invest in its
business, even as it waits to recover its
award or enforce its judgment.
• Outside capital from a monetization
mitigates risk. More specifically,
companies can reduce their exposure
to the risk of challenges to awards or
judgments, whether in the form of a “
reduction of damages or a reversal or set 70% of in-house
aside of a judgment.
respondents to
• Award and judgment monetizations
are cheaper than other forms of pre- Burford’s 2020 Legal
settlement legal finance. When companies Finance Report
seek to monetize outstanding awards or
judgments, the risk tends to be lower, have unenforced
meaning that Burford seeks a smaller judgments worth $20
return on its capital than in conventional,
single-case legal finance arrangements. million or more.
”
Burford is the leader in providing such
solutions. We have more available capital than
any of our competitors, and our investment
team of 65 lawyers—the largest of any legal
finance provider—conducts all diligence in
house, giving us unmatched speed.
In dispute resolution, timing is everything—
monetizations eliminate the problem
of timing, so that companies accelerate
recoveries, leveraging risk-free capital to
bolster cash and invest in their businesses.
Companies don’t have time to wait—with
monetizations, they don’t have to.
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Legal finance
valuation
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LEGAL FINANCE VALUATION
W hen prospective legal finance users come to Burford, they
frequently ask how we value claims and calculate probable
damages for the cases we finance. To their benefit, that process begins
with a team of in-house quantitative analysts and investment modeling
experts. Our in-house team can help litigants and their law firms better
understand the value of the matter in question, leveraging years of
collective legal and financial experience.
Different types of cases have different factors that need to be assessed
when determining damages and likelihood of success.
To learn more about how Burford quantifies and monetizes
claims, watch the archived webcast featured at the bottom
of this blog post.
BURFORD INSIGHTS:
How important are
accurate damages
expectations?
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CASE STUDY:
Generating working capital
through monetization
$75 million monetization
CHALLENGE
A Fortune 100 company with a global footprint was a claimant in high-stakes,
protracted litigation.
SOLUTION
By providing $75 million in non-recourse capital to the client that could be used for
general business purposes, Burford delivered an accelerated and guaranteed financial
result ahead of the resolution of the case. Burford’s monetization was a complement
to the client’s contingency arrangement with outside counsel in that the law firm
covered litigation cost, while Burford’s financing delivered the client a timely and
substantial cash infusion based on an anticipated value of the claim. This provided
a solution that simultaneously offloaded the cost of pursuing the high-value claim
and generated significant capital for the company with no downside risk. Capital was
provided on a non-recourse basis, offloading duration and outcome risk from the
client to Burford.
IMPACT
Flexible deal terms reflected the client’s business priorities and Burford’s alignment
with the client’s success in the litigation.
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Burford Capital has earned a reputation as the leading provider of
commercial legal finance in the world. Since its founding in 2009,
hundreds of corporations from startups to the Fortune 500 have
worked with Burford.
Award-winning team Industry-leading expertise
Band 1
96%
ranked for litigation
funding, asset tracing
& recovery and
international arbitration
by Chambers
9 Lawdragon 100
global leaders in
legal finance
In 2021, Burford predicted returns
on concluded matters in its portfolio
with 96% accuracy
160+ 55+
1 Financial Times
top 10 innovator
Three
New York Law
Journal trailblazers
employees drawn
from top firms and
corporations
Lawyers
Institutional-quality finance partner Unmatched scale
NYSE-listed $1.1B
committed in
$5.5B
current investment
the only finance provider to be publicly
listed in New York and London 2021 portfolio
93 & 89 Multiples larger than next
AmLaw 100 firms Global 100 firms largest publicly traded
have sought our funding for their competitor ¹
clients or firms
1 Based on reporting of combined litigation finance investments, unfunded core litigation finance investments and other investments as of March 28, 2022.
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LEGAL FINANCE SOLVES “MONEY OUT” AND “MONEY IN” PROBLEMS
The gold standard in
legal finance.
“Working with Burford, you
have sophisticated people...
who really understand
litigation risk and how to
assess cases.”
—JOHN B. QUINN, CO-FOUNDER, QUINN
EMANUEL URQUHART & SULLIVAN LLP
“Burford, as one of the earliest and most
successful funds, has attracted really smart,
talented lawyers and that has helped them gain
a reputation for being able to pick winning
cases and assess cases that are likely to win.”
—PARTNER, AML AW 100 L AW FIRM
“Burford [was] not there just to provide
financial muscle. They also played a crucial
and significant role.”
—PARTNER, LEADING L AW FIRM
“Burford's integrity, professionalism and
legal skill are second to none.”
—BARRISTER, LEADING LONDON CHAMBERS
“[Burford was] quick to pick up on important
points that could turn a case in either a
negative or positive way and also the key
strategic issues that would have to be decided.
As funders I believe that they would bring
value to the table by virtue of the varied
experience that they have across jurisdictions
and also types of cases.”
—PARTNER, LEADING L AW FIRM
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