Burford Shares Outlook on Funding Growth in Australia

While commercial litigation funding has been present in Australia since the 1990s, there are signs of continued industry growth within the country. 

In a recent podcast, Burford Capital’s Matt Lee discussed the factors which are building momentum for further growth within the litigation finance industry. Mr Lee points out that while third-party funding has historically been used in class actions against companies, it has become apparent to these same large corporations that this funding is a useful tool to alleviate costs and manage litigation risk. In particular, Mr Lee sees increased adoption in the mining and energy, construction, M&A and commodities sectors. 

Outside of domestic commercial litigation, the other main catalyst has been the changes to arbitration regulation in 2021, which was the first time third-party funding had been mentioned. These new rules released by the ACICA include the ability to recover the costs of funding during arbitration, further minimising risks and offering the potential benefits of recouping costs. Secondly, Mr Lee highlights the new clarity around disclosure rules as being a previously murky area that now offers clarity to funders, lawyers and clients alike.

Mr Lee argues that international arbitration or investment treaty arbitration will be some of the most active areas for litigation finance in the coming years. This is due to the fact that funding helps offset the disadvantages of Australia being an adverse cost jurisdiction, the lengthy duration of international disputes and the challenge of enforcement and collection outside of national borders.