fbpx
News
July 2, 2014

Litigation-Finance Firm Survives Chevron Debacle, Learns Lessons, and Thrives

by Paul M. Barrett
Originally Posted at BusinessWeek

Burford Capital, a litigation-finance firm, was just getting aloft in 2010 when it invested $4 million in a controversial pollution lawsuit against Chevron in Ecuador. The transaction went sour very quickly.

Burford’s chief executive officer, Christopher Bogart, a former executive vice president and general counsel of Time Warner, says his firm has benefited from having extricated itself swiftly from the pollution suit and has seen its profits expand. Burford’s fortunes matter because it’s the largest competitor in a nascent litigation-finance industry that provides capital to law firms and corporate litigants in exchange for a share of eventual recoveries.

In the Ecuador case, Chevron turned the tables on the main American plaintiffs’ lawyer, Steven Donziger. In March, it persuaded a U.S. federal judge in New York that the long-running pollution suit had evolved into a massive extortion scheme involving coercion, bribery, and corrupt Ecuadorian judges. Donziger is appealing that ruling, which could make it difficult for him ever to collect on a $9.5 billion judgment he won on behalf of thousands of poor Ecuadorian residents of the rain forest.

Claiming it had been deceived about rampant fraud in the Ecuadorian courts, Burford says it managed to offload its $4 million stake to an unnamed investor—someone who obviously has a very high tolerance for risk. Even if it could emerge financially whole, the litigation-finance firm appeared to have suffered a black eye to its reputation.

All this unfolded amid skepticism about the small-but-growing litigation finance industry. Critics such as the U.S. Chamber of Commerce claim that third-party investments in lawsuits encourage frivolous courtroom hostilities.

Read the full post here.

Cookie Notice

By clicking “I Accept”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

Cookie Notice

By clicking “I Accept”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts. Review Settings