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New research shows companies with large claims recover more and preserve budgets by using legal finance as part of their class action opt out strategies

Burford Capital, the leading global finance and asset management firm focused on law, today releases new independent research demonstrating the value of legal finance for companies with valuable commercial class action claims. In recent years, Burford has seen an increasing number of major corporations choosing to opt out of class action lawsuits to pursue high value claims individually and has commissioned independent research to examine the trend in greater depth.

Although companies are currently still more likely to remain in the class than they are to opt out, the research reveals that their reasons for doing so are economic—and solvable with legal finance, which de-risks the choice to opt out and provides a clear benefit to corporations with high value claims. As most legal finance is non-recourse, companies can receive risk-free funding to pursue meritorious claims as individual plaintiffs, as well as to accelerate the often-significant value represented by pending claims.

Given the results of the research, Burford expects the trend toward opt outs will continue, with major companies choosing to rethink their opt out strategies with legal finance.

Christopher Bogart, CEO of Burford Capital, said: “Burford’s independent research on commercial class actions demonstrates the clear benefit that legal finance provides to companies with significant claims. If you’re a GC and you have a claim that’s big enough to merit opting out, you should, because you’ll recover more, and you can do so without budget implications by using legal finance capital. Further, your competitors who are already using legal finance are opting out three times more often. As a former GC, I recognize the importance of maintaining control and maximizing returns in litigation, and Burford works with many GCs to use legal finance to reduce risk, maintain greater control and enhance the likelihood of achieving greater recoveries.”

Key findings from the research include:

  • Use of legal finance correlates to opting out.
    • Use of legal finance is 3x likelier among companies that mostly/always opt out vs. companies that mostly/always remain in the class, and 2x likelier than all companies.
  • Companies’ top reasons for opting out are maintaining control and maximizing return.
    • The #1 reason large company GCs opt out is their fiduciary duty to maximize recoveries to their company.
  • Companies’ top reasons to stay in the class are economic.
    • Not being able to justify the cost of pursuing an opt out claim (64%) and not having the budget to do so (61%) are the top 2 reasons companies remain in the class.
    • Legal finance ameliorates both cost and budget constraints.
  • GCs say the availability of legal finance would impact their opt out strategy.
    • 1 of 2 (52%) say that while they have not used legal finance, its availability would positively impact the decision to opt out. 

The Report on Class Action Recoveries can be downloaded on Burford’s website, where full results are also available. The research report was conducted in June 2022 by GLG via an online survey, with responses from 150 US GCs, heads of litigation and other senior in-house lawyers responsible for their companies’ commercial litigation.

About Burford Capital

Burford Capital is the leading global finance and asset management firm focused on law. Its businesses include litigation finance and risk management, asset recovery and a wide range of legal finance and advisory activities. Burford is publicly traded on the New York Stock Exchange (NYSE: BUR) and the London Stock Exchange (LSE: BUR), and it works with companies and law firms around the world from its principal offices in New York, London, Chicago, Washington, DC, Singapore, Sydney and Hong Kong.

For more information, please visit www.burfordcapital.com.

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Oklahoma Moves to Restrict Foreign Litigation Funding, Cap Damages

By John Freund |

In a significant policy shift, Oklahoma has enacted legislation targeting foreign influence in its judicial system through third-party litigation funding. Signed into law by Governor Kevin Stitt, the two-pronged legislation not only prohibits foreign entities from funding lawsuits in the state but also imposes a $500,000 cap on non-economic damages in civil cases—excluding exceptions such as wrongful death. The new laws take effect November 1, 2025.

An article in The Journal Record notes that proponents of the legislation, including the Oklahoma Civil Justice Council and key Republican lawmakers, argue these measures are necessary to preserve the integrity of the state's courts and protect domestic businesses from what they view as undue interference. The foreign funding restriction applies to entities from countries identified as foreign adversaries by federal standards, including China and Russia.

Critics, however, contend that the laws may undermine access to justice, especially in complex or high-cost litigation where third-party funding can serve as a vital resource. The cap on non-economic damages, in particular, has drawn concern from trial lawyers who argue it may disproportionately impact vulnerable plaintiffs without sufficient financial means.

Oklahoma’s move aligns with a broader national trend of state-level scrutiny over third-party litigation funding. Lawmakers in several states have introduced or passed legislation to increase transparency, impose registration requirements, or limit funding sources.

For the legal funding industry, the Oklahoma law raises pressing questions about how funders will adapt to an increasingly fragmented regulatory landscape. It also underscores the growing political sensitivity around foreign capital in civil litigation—a trend that could prompt further regulatory action across other jurisdictions.

Commercial

Litigation Funding Isn’t an ‘Anti-Woke’ Weapon, Says Consumer Advocacy Group

By John Freund |

A new opinion piece pushes back against recent cultural and political rhetoric characterizing third-party litigation funding as a partisan instrument, arguing instead that it remains a neutral financial tool in the legal system.

An article in the Consumer Choice Center emphasizes that while some political actors and commentators have portrayed litigation funding as a means to challenge so-called “woke” corporations, such framing misconstrues the role and function of funders. According to the piece, litigation funding serves a straightforward purpose: to provide capital to litigants—be they individuals or entities—who lack the resources to pursue claims. The authors argue that this mechanism is neither inherently ideological nor driven by political outcomes.

The article calls for clearer regulatory standards and heightened transparency to avoid potential abuses and maintain public trust. It warns against allowing litigation finance to be co-opted by political narratives, which could derail substantive policy debates around disclosure, ethical boundaries, and market oversight.

In a landscape increasingly shaped by culture wars, this intervention underscores a foundational point: litigation finance is not a proxy battlefield for partisan interests, but a tool with the potential to improve access to justice—provided it is governed with clarity and care.

Commercial

WSJ Editorial Calls for Ending Tax Breaks for Foreign Litigation Funders

By John Freund |

A recent opinion piece in The Wall Street Journal advocates for closing tax loopholes that allow foreign investment funds to avoid U.S. taxes on profits earned from financing lawsuits against American companies. The editorial argues that the current tax code inadvertently incentivizes predatory litigation funding practices by exempting foreign investors from taxation on lawsuit proceeds, thereby disadvantaging domestic businesses.

The article contends that this exemption creates an uneven playing field, enabling foreign entities to profit from U.S. legal actions without contributing to the tax base. It suggests that such practices not only strain the judicial system but also impose additional burdens on American companies, which must defend against potentially frivolous or opportunistic lawsuits financed by these untaxed foreign investments.

The editorial calls on Congress to reevaluate and amend the tax code to eliminate these exemptions. By doing so, it aims to deter exploitative litigation funding and ensure that all investors, regardless of nationality, are subject to the same tax obligations when profiting from the U.S. legal system.

The piece emphasizes that such reforms would promote fairness and protect domestic businesses from undue legal and financial pressures.