Burford Group Challenges Call by US Chamber of Commerce for More Regulation

NEW YORK, Oct. 24, 2012 /PRNewswire/ -- The US Chamber of Commerce says it stands for free enterprise and the growth of the private sector and small business.  But today, at its annual legal reform summit, it abandoned its roots in the name of fund-raising and released a proposal to regulate litigation finance, and called for a group of small businesses like Burford to be subject to a brand new "comprehensive" federal "licensing" and "regulatory regime."

The Chamber of Commerce also attacked the competence and independence of courts across the country, suggesting that they can't tell good cases from bad and can't control what goes on in their own courtrooms.

How can this flip-flop of the Chamber's principles be explained?  Because the Chamber of Commerce is pandering to large corporate special interests who pay it millions of dollars.

Burford is a relatively new business.  It was only founded in 2009.  Today, it employs several dozen people in the US and the UK.  It is publicly traded and already subject to regulatory oversight in three different countries.  Its business is entirely legal and it complies with all of the many laws that govern it.  It provides corporate finance to businesses with meritorious litigation claims so that they can afford to pursue them.  This is a business enthusiastically endorsed in many Western democracies, including England: as part of an overhaul of the justice system, Lord Justice Jackson has recently said that litigation finance "is beneficial and should be supported.  It promotes access to justice."

But some of the Chamber's big donors don't like what we are doing – because Burford levels the playing field and stops small businesses from being steamrolled by larger ones.

Christopher Bogart, Burford's CEO, said today:  "The Chamber's suggestions today for federal regulation of litigation finance are just plain silly.  They're probably not even legal."  But they expose the hypocrisy of lobbying groups like the Chamber, whose President, Tom Donohue said only last month:  "Free enterprise has been the cornerstone of America's incredible economic might. The day we begin undermining it will be the day we truly begin to decline as a nation.  So let's boost certainty ... Let's weed out all the regulatory red tape. Let's reward the risk takers, the entrepreneurs, and the business people who create ideas, products, and services.  If we do that, I think we'll see a dramatic increase in business confidence, more business investment, and more jobs."

Tom Donohue is right.  And Burford is recruiting right now for five open jobs.  The Chamber should be helping Burford and other risk takers put America back to work rather than suggesting a "three-pronged approach" to "comprehensive" "federal oversight."

Comments on the Chamber's specific assertions:

The Chamber of Commerce identified four "negative public policy consequences" of litigation finance.  All are unsubstantiated and inaccurate:

Frivolous or abusive litigation:  The fastest way for a finance provider or investor to go out of business is to make bad loans or investments.  The economic incentives here are only to finance strong and meritorious cases.  Anything else simply does not make sense.  And the Chamber is also implying that courts are not capable of managing their dockets or sorting out good cases from bad – which is what they do every day.

Control over litigation:  Burford has consistently and clearly said publicly that it does not control litigation in which it invests.  And our world-leading courts are perfectly capable of handling any issues in this regard.

Settlement:  The Chamber's position is code for saying that well-financed big companies are unhappy that they can't steam-roll smaller ones to accept improperly low settlements.  Lots of parties have an interest in the settlement of litigation – lawyers, insurance companies, investors, lenders, to name a few – and that does not interfere with the appropriate settlement of cases.  Indeed, more than 95% of cases settle today.  There is no reason to believe that litigation finance changes that dynamic.

Lawyer conflicts:  As in the prior point, lawyers already deal with multiple stakeholders in any complex matter:  executives, directors, insurers, lawyers, bankers, investors, debt holders and others, and navigate those relationships without impinging on their professional obligations to their clients.  Again, litigation finance does not change that dynamic.

The Chamber not only fabricates a problem that does not exist, but also advances a solution that would further burden the financial services industry – imposing unnecessary costs on local and regional banks who are the most common source of financing for small businesses involved in commercial litigation.  A business entangled in a commercial dispute typically must pay its lawyers by the hour, as top national and regional law firms do not generally operate on a contingent fee model.  To meet these financial burdens, businesses most often rely on their local or regional bank to provide them with credit.  And banks – similar to specialty finance providers like Burford – generally take a security interest in the business's litigation receivables.  The Chamber is so determined to deprive small businesses of the financial resources they need to protect themselves in litigation, that it has decided to put the interests of a handful of its most powerful contributors ahead not only of those small businesses, but also of the local and regional banks that provide these small businesses with credit. 

About Burford

Burford is the world's largest provider of investment capital and risk solutions for litigation.

Burford Capital Limited is a closed-end $300 million investment fund publicly traded on the London Stock Exchange's AIM market under the ticker symbol BUR.  Burford provides a broad range of corporate finance solutions to lawyers and clients engaged in significant litigation and arbitration around the world.  Burford Group Limited serves as the investment adviser to Burford Capital and has an expert team drawn from major law firms and corporations.

For more information about Burford:  www.burfordfinance.com

SOURCE Burford