4 Biglaw Trends Shaping Litigation Finance
Recent developments in Biglaw appear likely to benefit legal finance—and the law firms that are open to working with funders.
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Litigation finance is now a $16 billion industry, when measured by assets under management. And in contrast to the early days of the sector, Biglaw is now a big player: large law firms accounted for 37 percent of new commitments of capital in 2024, according to a report by the Westfleet Advisors consulting firm.
Because of this, the future of litigation funding is very much tied to the future of Biglaw. And certain trends in the firm world bode well for litigation finance, according to Christopher Bogart, CEO of Burford Capital (and my former podcast guest).
On Tuesday morning, I attended a briefing that Bogart held for journalists at Burford’s Manhattan offices. Here are some of the Biglaw developments he discussed that have implications for litigation funding.
1. Biglaw billing rates continue to accelerate.
Last year was a very good one, at least in financial terms, for large law firms. In 2024, Am Law 100 firms collectively grew total revenue by 13.3 percent and profits per equity partner by 12.3 percent, according to the latest Am Law 100 rankings. And my prediction is that 2025 will be an even better year for Biglaw (but with greater variation in the performance of individual firms).
Much of the growth was driven by rate increases, i.e., firms charging clients more for their time. And this trend has continued into 2025, Bogart said, with rates continuing to grow at a pace significantly higher than inflation (which is currently around 3 percent in the U.S., in case you’ve been wondering).
These rising rates put even more pressure on the already stretched budgets of corporate legal departments, forcing in-house lawyers to do more with less. As Bogart put it, “If you’re a general counsel or chief legal officer, you’re sitting there thinking, ‘How do I get everything done that I’m supposed to be getting done, given that the company doesn’t want to just keep giving me money?’”
Here’s where funders come in. Imagine a company sitting on a potentially lucrative legal claim. That claim could be worth a lot, but pursuing it would cost money—a constantly growing amount of money, in light of increasing billing rates.
A litigation finance firm can provide this corporation with the funding it needs to turn its cause of action into cash. This allows the company to focus its scarce capital on its operating business—which is what it knows best, as well as what the stock market will give it the most credit for. As Bogart said, “Shareholders don’t give credit to companies for doing a good job on the legal side; it’s table stakes.”
2. Corporations are increasingly open to utilizing dispute-resolution processes, including litigation.
For decades, many if not most large companies were averse to being plaintiffs in litigation. But over the past 20 years, that has been changing. The new mindset, according to Bogart, is that “it’s not an act of war to file a lawsuit—and if we’re in a dispute with another company, it doesn’t mean that we hate each other if we ask a third party to say who is right.”
As a result, a growing number of companies are engaging in unemotional, matter-of-fact dispute resolution. Some corporate legal departments are even turning themselves from cost centers into revenue generators, by launching what are now called affirmative-recovery programs—in Bogart’s words, “a fancy term for ‘trying to get the money we think we’re due.’”
“There’s a greater corporate willingness to participate in significant claims, especially if there has been industry-wide misconduct,” Bogart said. For a good example, look at Europe (which Burford is quite familiar with, as a global company that was first publicly traded on the London Stock Exchange). For a long time, European companies were reluctant to engage in affirmative litigation. But after the European Commission found illegal price-fixing among the manufacturers of diesel trucks, the companies that had bought these trucks—and overpaid for them, because of unlawful collusion—were willing to bring suit.
And what does more companies willing to bring lawsuits mean? More potential clients for litigation funders.1
3. Managed-services organizations (MSOs) are on the rise.
What’s a managed-services organization (MSO)? Here’s a good explanation, from Reuters:
Under a managed service organization model, a law firm’s back-office operations—billing, IT, marketing—are spun off into a separate MSO entity. That entity, funded by outside investors, provides services to the law firm for a fee. The MSO doesn’t share in the firm’s profits, sidestepping the provisions against non-lawyers owning law firms or receiving a cut of legal fees.
“It has the promise of modernizing the practice of law in a really material way,” said Trisha Rich, a partner at Holland & Knight who is advising both law firms and investors on MSOs.
One can definitely see the appeal of MSOs to Biglaw. The MSO model lets law firms and their lawyers focus their time, attention, and capital on the actual practice of law, while leaving other work—typically work with a lower profit margin—to another entity.
MSOs are already widely used in other professions, such as accounting and healthcare, and they’re gaining traction in law. As Travis Lenkner, Burford’s chief development officer, told Reuters, law firms are “seeing what’s happening in other jurisdictions, in other professions, and responding to the competitive challenges in their own market.” Firms are “looking for a solution to the otherwise inefficiency of the partnership structure”—and MSOs represent one possible solution.
And one can also see why the MSO structure is attractive to Burford, as Cecy Graf explained in Law.com:
Litigation finance is volatile. Some cases pay out large sums, others collapse, and many take years to resolve. MSOs are the opposite. Infrastructure services are boring but consistent. Payroll must run. Invoices must go out. IT systems must stay secure. These functions create recurring, dependable revenue streams that investors can model and scale.
From Burford’s perspective, this is not just about diversifying. It is about building a business line with steady cash flow. And when an MSO supports multiple firms, the math gets even better. Costs can be spread, vendors can be negotiated with, and processes can be standardized. That makes the MSO not just a support system but an attractive portfolio asset.
In his remarks on Tuesday, Chris Bogart expressed optimism in the MSO model, for both law firms and for Burford. Although Biglaw firms “have not been as speedy as one might have thought in embracing that kind of structure,” he pointed out that many new boutiques are organizing themselves in a way that lets them separate out the core practice of law from all the other tasks that firms have historically performed. Boutiques organized in this way can work with an MSO as soon as they launch, or they can move to the MSO model down the road—because they’re already set up to accommodate that structure. [UPDATE (12/7/2025, 7:46 a.m.): For more on MSOs, with a focus on legal ethics, see this article from Holland & Knight, Everything Old Is New Again: Why Law Firm MSOs Fit Comfortably Within Existing Ethics Rules.]
4. Some jurisdictions are exploring reforms to legal-ethics rules that would allow investment into law firms or the provision of legal services by non-lawyers.
MSOs offer Burford Capital and other litigation-finance firms one possible way to invest in the legal sector without violating legal-ethics rules that prohibit ownership of law firms by folks who are not lawyers. But another emerging trend is that states are looking into permitting investment into law firms or the provision of legal services by non-lawyers—with at least 10 states exploring the space, per Bloomberg Law.
And as Bogart mentioned on Tuesday, at least one state is already there. Through its alternative business structure (ABS) program, Arizona allows non-lawyers to invest in law firms—and Burford is exploring these opportunities. A number of jurisdictions outside the United States already permit outside ownership—and in one such jurisdiction, the United Kingdom, Burford has a minority stake in a litigation firm.
Given the profitability of Biglaw, one can see the appeal of investing in law firms. But why would outside investment appeal to law firms and their partners?
For a long time, one common response to the possibility of outside investment in law firms is that the practice of law isn’t a capital-intensive business. Law firms aren’t building factories or plowing billions into R&D, so why do they need outside money? Most firms don’t own much in the way of assets; their main “assets” are their lawyers.
But two developments are changing that calculus. First, investing in lawyers—the “talent,” if you will, in a talent-focused business—is getting more expensive. Firms are hiring lateral partners with increased frequency—and for increasingly large sums, including multiyear guarantees of eight-figure annual pay packages. This can be expensive—but current partners of a firm are understandably not enthusiastic about reducing their own pay to invest in lateral hires (especially if they might themselves move to another firm down the road).
Second, firms must now invest more and more in technology—and as artificial intelligence continues to transform the practice of law, the required investment in AI and other cutting-edge tech is only increasing. Back in 2022, one study showed technology overtaking real estate as the second-largest expense for firms (after employee compensation)—and I wouldn’t be surprised if today, tech has already outstripped real estate as a cost.
And, of course, accepting outside equity investment would allow law firm partners to reap more fully the financial rewards of what they’ve built—i.e., to “cash out.” Under the current system, partners might make capital contributions to their firms, but that capital doesn’t appreciate; instead, when partners leave, they get their same capital back (sometimes after a long delay).
Meanwhile, other providers of professional services, such as investment bankers and accountants, are able to enjoy appreciation in the value of their stakes in the businesses they’re helping to build. That wasn’t always the case—but those professions transformed themselves in ways designed to enhance value for their practitioners.
Can the legal sector do the same? I’m often asked, as someone who has been writing about Biglaw for decades, whether I’m optimistic or pessimistic about its future. Overall, I’m optimistic—but my optimism rests upon the assumption that firms will be willing to innovate.
When we think of innovation, we typically think of technology and its potential to transform the practice of law. But innovation can also take an economic form, if lawyers and law firms are open to exploring new structures and approaches to optimize the business of law. And for firms that are open to embracing such innovation, litigation funders are ready, willing, and able to work with them.
Earlier:
Disclosure: This post, which arose out of a briefing attended by multiple journalists, is not a sponsored post, but Burford Capital does sponsor other content on Original Jurisdiction.
As Bogart highlighted in his remarks, Burford Capital focuses on commercial rather than consumer litigation finance. In other words, it typically funds lawsuits brought by one business against another business, arising out of a breach of contract, business tort, or similar conduct. So if you’re skeptical of lawsuits filed by individual consumers against businesses—e.g., suing Subway over “foot-long” subs that aren’t actually 12 inches long—that has nothing to do with what Burford and other commercial funders handle.
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