If the old adage that “time is money” is true, then the length of time it takes to file a case, see it to completion and actually receive the award, can be unpredictable at best.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
If the old adage that “time is money” is true, then the length of time it takes to file a case, see it to completion and actually receive the award, can be unpredictable at best.
Burford Capital reports that the 2021 Legal Asset Report Survey of Finance Professionals explores this very issue. Some arbitrations, such as ICSID, take an average of two years to be resolved—and can take another year or more for payment to be received. Commercial matters can take years to even reach trial.
It’s clear that winning a case and getting paid happen in two very different time frames. Therefore, factoring duration into budgetary calculations is essential.
Take, for example, a company with a high-value dispute that hasn’t been resolved after more than a year. This can cost the company in lost business and disappointed customers—leading to reduced liquidity. In this case, the potential recovery was large, and the company didn’t have the cash flow needed to both pursue the case and continue day-to-day operations.
Enter legal funding. In this instance, Burford provided the needed capital on a non-recourse basis, allowing the company to pursue litigation without being forced to redirect operating funds to pay legal fees. If the case wins, the company keeps whatever is left after meeting the terms of the funding agreement. If the case doesn’t win, the company is protected because the funding doesn’t have to be repaid.
Yet another example of how pending litigation can be an asset to boot-strapped companies.
