03:56, July 31 104 0

2017-07-31 03:56:06
Burford and Shepherd & Wedderburn seal first financing deal

Shepherd & Wedderburn has secured a litigation finance arrangement from Burford Capital, the first of its kind to be offered to a top 100 UK law firm by a major funder.

Burford Capital has offered Scotland-headquartered firm Shepherd & Wedderburn a financing arrangement to offer alternative fee arrangements to clients and to grow its commercial litigation and arbitration offerings.

US law firms, including those practising in the UK, have set up similar portfolio arrangements that enable law firms to manage cash flow better and reduce risk.

Shepherd & Wedderburn’s head of commercial and international disputes Guy Harvey said: “This portfolio arrangement enhances our capacity to take on new matters on an alternative fee arrangement basis without adding risk to the firm. For clients, that makes us a more flexible and more competitive partner. We are pleased to be partnering with Burford, the clear leader in providing portfolio finance arrangements to law firms.”

Capital is provided on a non-recourse basis in the portfolio, meaning that if the borrower defaults, the issuer can seize the collateral but cannot seek out the borrower for any further compensation. Burford will receive a portion of the proceeds from the litigation that succeeds on a cross-collateralised basis.

Burford London managing director Craig Arnott said: “The UK legal market is changing and becoming increasingly competitive. Portfolio finance is an essential tool to help UK law firms be nimble and innovative to attract clients, and Burford is unmatched in its ability and experience in portfolio finance for firms around the world.  We are delighted that Shepherd & Wedderburn has taken a leadership position in the UK legal market in using portfolio finance to grow its business.”

Arnott joined Burford Capital from Fried Frank Harris Shriver & Jacobson, where he was the head of competition.

Earlier this month, Burford recorded its best ever results, with profit in the first half of 2017 surpassing that achieved in the whole of 2016.

Income increased by 130 per cent to $175.5m (£130m), driven by a 148 per cent in investment income to $161.6m, compared with $65.3m in the first half of the previous year.

In eight years, Burford has gone from an £80m startup to having a market cap in excess of $2bn, in an ample illustration of how much ground funders have gained in the litigation market.

Shepherd & Wedderburn has also enjoyed good financial results in recent years with turnover growing by 26 per cent to £48m, while profits increased to £18m. The results reflected the contribution since October 2014 of the firm’s acquisition of Tods Murray.