Burford Barometer: 2016 Judgment Enforcement Survey

2016 Judgment Enforcement

SurveyUnderstanding and solving the enforcement challenge

BURFORD BAROMETER

Introduction

Burford Capital is committed to providing intelligence and insight to help in-house and private practice lawyers achieve better outcomes.

Our latest Burford Barometer, produced with the Lawyer Research Service, a division of The Lawyer, looks at a problem cumulatively worth billions in lost value to companies worldwide: unenforced litigation and arbitration judgments.

The 2016 Judgment Enforcement Survey focuses on the extent of the enforcement problem, the legal processes and investigatory methods available and how litigation finance can be used to fund enforcement.

The research identifies recoverability as a major challenge.

Indeed, 58 percent of in-house lawyers surveyed in April 2016 by The Lawyer Research Service for this study said that their corporations have not been paid the full face value of judgments secured in the last five years. Of this number, 38 percent have been able to secure just 70 percent or less of their judgment—and 19 percent were only able to secure 50 percent or less.

Put simply, unenforced judgments are a problem affecting the majority of corporations—a problem worth millions to individual businesses and billions of cumulative corporate value. As a result, lawyers and in-house counsel must do better at understanding what to do about it.

It is in that spirit that we commissioned the 2016 Judgment Enforcement Survey.

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Overcoming the “legal paper” challenge

© Burford Capital 2016 – All rights reserved

The challenge

Judgment enforcement is a significant problem for corporates and the firms who work with them.

Being left with little more than a piece of legal paper after a lengthy courtroom battle is an unpleasant outcome of litigation and arbitration. It means that another fight—to secure the judgment—still lies ahead.

And lacking the right partner, this fight can be just as expensive and time-consuming as the case itself.

The following research explores the extent of the problem and awareness of the potential solutions.

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Enforcing judgments is not a forgone conclusion

37%of corporates

have unenforced judgments amounting to

over $10 million


2016 Judgment Enforcement Survey

1. Enforcing judgments is not a foregone conclusion

2. Most clients have experience with unenforced judgments

3. Unenforced judgments are a significant unrealized corporate asset

4. Enforcement options are available, including financing

5. Understanding of the options available remains a significant barrier

4 © Burford Capital 2016 – All rights reserved

Key findings

of corporates have not been paid the full face value of a

judgment or arbitration award (last five years)

58 %

Enforcement challenges are widespread

61

39

93

7

73

28

92

8

Agree Disagree Agree Disagree

Enforcing and recovering judgments/awards is a matter of procedure It is not inevitable that the full value of judgments/awards is recovered

Private practice Corporates


Enforcement impacts conversations between firms and clients

60%

33%

6% 1%

Always Most of the Time Rarely Never

How often do you discuss judgment/award enforcement and recovery with clients at the outset of litigation or arbitration?


89%

11%

Yes No

Have any of your clients ever not pursued a claim due to concerns regarding enforcement?


of in-house executives say ease and likelihood of recoverability

is the most important factor influencing whether to pursue

litigation/arbitration

74%“Enforceability must be the first question when thinking about whether to pursue a fraud case.”

Bernard O’Sullivan, Partner Olswang

Enforcement influences decision-making


12%

76%

11%1%

74%

22%

4% 0%

Most important factor Very important factor Not an important factor but is considered

Never factored into our decision making process

Impact of ease and likelihood of recoverability on decision to pursue claim


Most clients have not been paid the full value of an award


86%

14%

58%

42%

Yes No

In the last 5 years, have you/your clients ever not been paid the full face value of a successful litigation or arbitration judgment or award?


Unenforced judgments are a significant unrealized corporate asset

67%

13%

6%

14%

63%

25%

6% 6%

Under $10 million $10-$30 million $30-$50 million Over $50 million

What is the potential value of your / your clients’ unenforced judgments in the last 5 years?



Judgments often go unenforced because money is hidden offshore


62%

8%

30%

Yes No - all of our judgments/awards have been satisfied

No - some of our judgments/awards have not been satisfied but money being hidden was not

the primary cause

Have you ever had a judgment/award that was unenforced because money was hidden in offshore jurisdictions?

The economics of enforcement play a role


45%

33%

22%

61%

22%

17%

Economics of settlement more favourable Legal barriers Lack of resources to pursue

Typically, what was the main reason the full face value of the successful award was not paid?


Judgment enforcement solutions

• Asset tracing and investigations – Identify assets that are commercially pursuable and strategically important

– Prove legal and beneficial ownership– Overcome other bars to enforcement

• Understanding your opponent – What is their commercial tipping point– Understanding jurisdictional and political context

• Case management – Strategic and tactical oversight and direction– Select experienced local counsel– Effect efficient and timely settlement or recovery


Partners like Burford are able to provide a range of enforcement services

half of private practice lawyers have clients that have used asset

tracing services

1/2

Judgment enforcement solutions

• Burford is able to offer a range of financing options for judgment enforcement and asset tracing services—enabling corporates to move cost and risk off their balance sheets if desirable

• Range of options depending upon needs of clients:1. Fixed or capped fee basis where our expertise is sought, not our capital

2. Fully contingent arrangements where all costs are covered until recovery is made

3. Purchase of judgment or award


Corporates are less aware of the financing options available for enforcement

of corporates are unaware that they may finance asset

tracing and enforcement services

1/4

Private practice firms are aware of enforcement options

59%

22%

11%

32%

65%69%

9%13%

20%

Judgment enforcement fee-based advisory services (including asset tracing, proof of

asset/vehicle ownership, etc.)

Contingent arrangements (where judgment enforcement costs are covered and no fees are paid unless and until cash proceeds are realized)

The sale of unsatisfied judgments and awards

What type of judgment enforcement services have your clients used in the past year?

At least one client None (but aware of service) None (not aware of service)


Clients are less aware of enforcement options

31%

14%

8%

50%

60%58%

19%

26%

35%

Judgment enforcement fee-based advisory services (including asset tracing, proof of

asset/vehicle ownership, etc.)

Contingent arrangements (where judgment enforcement costs are covered and no fees are paid unless and until cash proceeds are realized)

The sale of unsatisfied judgments and awards

What type of judgment enforcement services have you used in the past three years?

At least one client None (but aware of service) None (not aware of service)


Litigation funding for enforcement

• The funder will cover the costs of enforcement, including legal and other costs in return for a proportion of damages recovered

• Importantly, the claimant does not pay any fees until cash proceeds are released

• This type of funding is still relatively new: only 11 percent of surveyed lawyers have clients that have secured funding at this stage

• Litigation funding for enforcement is becoming more popular as knowledge and understanding of financing grows


How does it work?

Conclusion

• Corporates are ceding staggering sums to unenforced judgments. According to a third of private practice lawyers, the value of their clients’ unenforced judgments in the last five years exceeds $10 million. Some 14 percent said this figure exceeds $50 million.

• The top two barriers to judgment enforcement and litigation finance today are 1) lack of awareness and understanding and 2) ignorance of available financing options.

• The research confirms conditions are ripe for both private-practice lawyers and in-house counsel to embrace judgment enforcement. Those who do will demonstrate their ingenuity by helping their clients and their companies to restrain costs and spread risk. The findings of the survey demonstrate an extraordinary opportunity to use litigation finance in ways that are extremely beneficial to their businesses.



About the research

In April 2016, online surveys were distributed to over 200 private practice litigation and arbitration lawyers, in-house counsel and corporate C-level executives. The majority (61 percent) are private practice lawyers. The remainder are in-house counsel (32 percent) and C-level Executives (7 percent). The majority (70 percent) of respondents are located in the UK. The remainder are located in North America, continental Europe and Asia. The survey was conducted in April 2016.

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About Burford Capital

Burford Capital is a leading global finance firm focused on law. Burford’s businesses include litigation finance, insurance and risk transfer, law firm lending, corporate intelligence and judgment enforcement, and a wide range of investment activities. Burford’s equity and debt securities are publicly traded on the London Stock Exchange. We work with lawyers and clients around the world from our principal offices in New York and London.

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Leading global finance firm focused on law


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ContactLiz [email protected]+1 212 235 6820

Click here to access the full Judgment Enforcement Survey, and here to access the prior surveys.


Burford Barometer: 2016 Judgment Enforcement Survey

Economy & Finance

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