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Case Developments Commercial

Burford German Funding Sued Over Hausfeld Ownership Stake

By Harry Moran |

The ownership or funding of law firms by litigation funders continues to be a hot topic in the world of legal funding, with models such as alternative business structures (ABS) gaining momentum in places like Arizona. However, a complaint filed by a client in Delaware reveals a falling out due to the reverse funding model, where a law firm maintained an ownership stake in the funder.

Reporting by Bloomberg Law covers a new lawsuit brought against Burford German Funding (BGF), an affiliate of Burford Capital, by a client who claims that the funder failed to disclose the fact that BGF was partly owned by the same law firm it nominated to lead the client’s antitrust cases. Financialright Claims GMBH (FRC) alleges that when it negotiated the funding agreement with BGF for its antitrust litigation against the trucks cartel, it had no knowledge “that Hausfeld  was  also  a  part  owner  of  BGF  through  an  entity  called German Litigation Solutions LLC (“GLS”) or that one of the lead German partners at Hausfeld responsible for the firm’s representation of FRC had a personal stake.”

The complaint, filed by FRC in the Delaware Superior Court, explains that as Hausfeld is part-owner of BGF, and the funding agreement “provides for a share of FRC’s recoveries in the Trucks Litigations to flow to FRC’s lawyers”, this constitutes a contingency fee arrangement which are illegal under German law.  FRC had filed a lawsuit against Hausfeld in a German court and then applied for discovery from BGF, Burford and GLS in the Delaware District Court, which was followed by an assertion by these parties that the application for discovery “is subject to mandatory arbitration” under the terms of the funding agreement.

FRC argues that “as  a  direct  result  of  BGF’s  fraud  on  FRC,  FRC  did  agree  to  the Arbitration Agreement that—according to BGF—subsumes disputes between FRC and GLS.” However, FRC claims that it “would  never  have  agreed  to  an  arbitration  clause  requiring  it  to arbitrate claims against Hausfeld”, were it not for the concealment of Hausfeld’s ownership stake in BGF. FRC is therefore asking the Superior Court to declare that “BGF fraudulently induced  FRC  into  agreeing  to  the  Arbitration  Agreement”, and that the agreement should be declared both invalid and unenforceable.

Lisa Sharrow, spokesperson at Hausfeld LLP, provided the following statement:  “The US-based Hausfeld LLP and the UK-based Hausfeld & Co LLP hold indirect economic minority interests in Burford German Funding. These are separate legal entities from Hausfeld Rechtsanwälte LLP that do not practice law in Germany. Burford German Funding was of course developed and set up in a way that was fully compliant with all relevant regulations.”

David Helfenbein, spokesperson at Burford, also provided a response to Bloomberg via email: “There is a dispute in Germany between a client Burford has funded and its lawyers. Burford is not a party to that dispute and its outcome has no impact on us. This Delaware proceeding is a third-party discovery request to Burford for material for the German litigation, which Burford believes should be adjudicated in arbitration and not in the Delaware courts.”

The full complaint filed by FRC can be read here.

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Harry Moran

Harry Moran

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Case Developments Comercial

Burford Fights Argentina’s YPF Stay Bid in London

By John Freund |

Minority YPF shareholders Petersen Energia and Eton Park, bankrolled by Burford Capital, are chasing a U.S. $17 billion New York judgment against Argentina into the High Court of England and Wales. Buenos Aires has asked the court to halt enforcement while it appeals in the United States, arguing it holds no attachable UK assets and that creditors will suffer no prejudice.

Reuters details the claimants’ response: if a pause is granted, Argentina should post £2 billion security, roughly 10 percent of the outstanding award, to blunt daily interest accrual of about U.S. $2.5 million. The article underscores funders’ growing role in cross-border sovereign enforcement; Burford’s capital has already fueled a decade-long campaign spanning New York, Madrid and now London.

A London-court showdown would illustrate how litigation finance converts paper victories into real money, even against resistant sovereigns. A security order could tighten Argentina’s negotiating window and validate funders’ appetite for high-duration, multinational enforcement plays. Conversely, a lengthy stay with no bond would spotlight the risk that political defendants can still out-wait private capital—raising questions about how funders price sovereign risk going forward.

Case Developments Comercial

Jefferies, Oppenheimer Target LA Wildfire Mass-Tort Funding

By John Freund |

The January wildfires that tore through greater Los Angeles have created a litigation wave—and a financing arms race. Plaintiffs’ firms face eight-figure discovery and expert-witness tabs while waiting years for contingency fees, so investment banks are stepping in. Jefferies and Oppenheimer are marketing credit lines and fee-purchase deals that could supply tens of millions of dollars up-front, collateralised by eventual recoveries against Southern California Edison and the Los Angeles Department of Water & Power.

Insurance Journal reports that the two banks are circulating pitch decks boasting wildfire-finance experience from the 2019 PG&E saga and promising annualised returns north of 20 percent. The publication notes that some of the 50-plus steering-committee firms have rebuffed outside cash, wary of settlement pressure, but many acknowledge that high-volume tort work is impossible without external capital. Funders, meanwhile, recognise a rare chance to buy into potentially multibillion-dollar fee streams—even if competition is already pushing pricing below the multiples seen in the PG&E deals.

Whether the influx of Wall Street money boosts access to justice or merely fattens lender margins will shape regulatory debates now brewing in Sacramento and Washington. California ethics rules mandate client disclosure, and a proposed federal excise tax threatens to raise funders’ cost of capital. The Los Angeles fire docket therefore doubles as a stress test: can mass-tort finance thrive under closer scrutiny and thinner spreads, or will rising compliance costs cool what has become one of litigation finance’s hottest niches?

Case Developments Comercial

Burford Counters Tyson Foods Over Chicken-Price Settlement Fight

By John Freund |

Burford Capital has moved to knock out Tyson Foods’ interference lawsuit, telling an Illinois federal judge that the meat-packing giant—not the world’s largest litigation financier—scuttled talks to resolve sprawling chicken price-fixing claims brought by food distributor Sysco. In a motion to dismiss filed this week, Burford branded Tyson’s allegations of settlement meddling as “threadbare” speculation aimed at diverting attention from the underlying antitrust accusations.

An article in Reuters details Tyson’s April complaint accusing Burford of trying to “co-opt the legal system” by blocking a deal Sysco had weighed. Tyson says the funder leveraged its $140 million financing stake to push for a richer payout, impeding Sysco’s autonomy in the long-running poultry cartel litigation.

Burford’s filing counters that its 2019 funding agreement explicitly allows the financier to participate in settlement talks and notes Tyson rejected Sysco’s last offer back in 2021. After Burford thwarted what it viewed as sub-par settlements, Sysco transferred its claims to Burford affiliate Carina Ventures, removing the food-service giant from the case while preserving its potential recovery.

The skirmish comes as congressional Republicans revive proposals to tax litigation-finance proceeds at nearly 41%, underscoring a season of heightened scrutiny over how much influence funders wield in antitrust and class actions. Burford, which has repeatedly defended its model as bolstering access to justice, says Tyson’s suit would chill capital-backed claims by re-writing freely negotiated contracts after the fact.

For funders, the outcome may clarify how far investment contracts can reach into settlement strategy—especially when the underlying defendant wants a bargain exit. If Burford prevails, expect financiers to lean harder on contractual rights; if Tyson scores traction, future deals could feature stricter carve-outs to avoid similar challenges.