Burford Capital in talks to buy stakes in US law firms
Legal financial firm Burford Capital is in talks to buy stakes in a US law firms, the identities of which have not been disclosed.
Speaking to the Financial Times, Burford co-founder Jonathan Molot said the funder was in talks with several firms across the Atlantic about acquiring a minority stake.
The New York and London-listed funder is already in the UK legal market after buying a 32 per cent stake in a London disputes boutique, PCB Litigation, in 2020.
However, it is notably more difficult for private equity and other funder types to buy into law firms in the US due to tight laws that restrict non-lawyers from owning law practices
Some States, such as Washington, Utah and Arizona, have allowed alternative business structures (ABS) to come into force, which permit non-lawyers to invest in legal service providers.
Molot told the FT: “It’s a crazy thing that the capital markets and the market for legal services have had no interaction historically, when law has grown up to be a multitrillion-dollar industry and there are US firms that are multibillion-dollar revenue businesses.”
The co-founder refused to name names but said he was “confident that in the years ahead this will become a bigger part of our business and of the market”.
Burford Capital, which was listed on the London AIM in 2009, often finances its portfolio by investing capital in multiple commercial litigation and arbitration matters.
The firm is involved in a high-stakes legal battle with Argentina, dating back to 2012, over the expropriation of the oil company YPF. Burford, acting as a litigation funder, acquired claims from shareholders who were not compensated after Argentina seized a 51 per cent stake in YPF.
The case has already faced a landmark trial, with a US court ruling in favour of YPF, awarding them approximately $16bn in damages, a decision Argentina is appealing.
Across the Atlantic, Burford is pitching itself to law firms as a company with “a lawyer’s orientation and mentality” and a more palatable alternative to a private equity group.
Molot said the firm would expect to take a board seat to monitor the financial relationship between the two sides of the firm, but added its investment would enable US firms to invest in AI and give them the financial flexibility to move away from hourly billing.
Speaking to Morning Wire in December, CEO Chris Bogart pointed to issues around litigation funding in England following a Supreme Court ruling in 2023, and said Burford was rolling back its use of London as a disputes hub due to “uncertainties.”
Bogart said due to government delays in the UK, Burford “is less focused on using dispute resolution in London than we would have been a couple of years ago”.
“We have options, and those include New York, Paris and Singapore, so right now we’re migrating some dispute resolution activity away from London and towards New York, for example,” he added.