New Burford Capital Research Reveals how Businesses are Preparing for Likely Rise in Global Energy Transition Disputes

Rhea-AI Summary

Burford Capital releases new research on energy transition disputes, revealing significant challenges businesses face as they shift to renewable energy. The study, based on insights from 300 GCs and heads of litigation across key industries, shows that 76% of GCs are already experiencing energy transition-related disputes, with 47% expecting further increases in the next decade. 63% of GCs anticipate legal fees exceeding $4 million per case, while 29% expect costs over $10 million. The research highlights that 77% of GCs predict increased contractual disputes, with 75% considering legal finance to offset dispute costs.

Positive

• 75% of GCs are open to using legal finance solutions, indicating strong potential demand for Burford's services
• Growing market opportunity with 76% of GCs already experiencing energy transition disputes
• 47% expect increase in dispute volume over next decade, suggesting sustained long-term demand

Negative

• 52% of GCs cite high costs as barrier to pursuing disputes, potentially limiting market size
• 50% of GCs indicate need for additional capital sources, suggesting potential resource constraints

Insights

Legal Expert

The research reveals significant implications for the legal and business landscape surrounding energy transition disputes. With 76% of General Counsels already encountering related disputes and 63% expecting costs exceeding $4 million per case, this represents a substantial financial consideration for companies involved in energy transition projects.

The anticipated rise in contractual disputes, commercial arbitration and investor-state conflicts signals a complex legal environment ahead. The high cost barrier to pursuing claims ($10 million per case for 29% of cases) could create a significant advantage for well-capitalized companies while potentially limiting access to justice for smaller players.

The increasing acceptance of legal finance solutions (75% of GCs considering their use) indicates a structural shift in how companies approach dispute resolution financing. This trend could reshape the competitive dynamics in energy transition disputes, particularly benefiting firms that can effectively leverage these financial tools.

Market Research Analyst

This research highlights a significant emerging market opportunity in the legal finance sector. Burford Capital is well-positioned to capitalize on the expected surge in energy transition disputes, with their established expertise in litigation financing. The high anticipated costs per case ($4-10 million) represent substantial revenue potential for legal finance providers.

The data showing 50% of GCs acknowledging the need for additional capital sources, combined with 75% openness to legal finance solutions, suggests strong market demand. This trend could drive sustained growth in Burford's core business as the energy transition accelerates. The company's early focus on this sector and comprehensive research demonstrates market leadership and strategic foresight in capturing this opportunity.

Nearly two in three GCs expect legal fees and expenses to exceed $4 million per energy transition case

NEW YORK, Nov. 12, 2024 /PRNewswire/ -- Burford Capital, the leading global finance and asset management firm focused on law, today releases new research entitled "Energy transition disputes: GCs and senior lawyers on the business impacts of legal challenges to come," which demonstrates how businesses are preparing for a likely rise in legal disputes related to the global energy transition. This transition―or the shift to renewable sources of energy―is likely to cause an increase in expensive commercial disputes.

Businesses are investing significant sums in this transition, and corporate commitments highlight the scale of economic engagement as they invest in the new technologies, infrastructure and other resources that will be needed. But multifaceted legal and commercial pressures present businesses with a myriad of potential challenges including contractual disagreements, regulatory compliance issues and the need for intellectual property enforcement or litigation. Burford's research report aims to offer a unique perspective on how corporations foresee the expected rise in litigation and arbitration related to this energy transition, examining the areas of business impact related to this evolving landscape.

Burford commissioned this independent research by capturing insights from 300 GCs and heads of litigation across key industries impacted by the energy transition and spanning North America, Europe, Asia and Australia.

Key findings from the study include:

Disputes relating to the energy transition are rising

• 76% of GCs report they are already encountering disputes related to the energy transition and nearly half (47%) expect a further rise in the volume of such disputes in the next decade, driven by evolving laws, new technologies and infrastructure requirements.

Disputes relating to the energy transition are expected to be costly

• Almost two in three GCs (63%) expect legal fees and expenses to exceed $4 million per energy transition case; a notable minority (29%) expect per case costs to exceed $10 million.
• Over half (52%) view high costs as a significant factor in deciding not to pursue disputes.
• Half (50%) of GCs agree that the energy transition will create the need for additional capital sources for the business.

Expected disputes span all types of business conflict

• GCs are most likely to predict (77%) that the energy transition will result in more contractual disputes and commercial arbitration.
• Joint ventures are expected to be particularly prone to disputes over profit allocation (76%) and intellectual property rights (65%).
• Over half of GCs (57%) also expect their businesses to face arbitrations to resolve investor-state conflicts relating to the transition.

New tools are needed to manage the rising dispute costs

• Legal finance is increasingly used to mitigate the financial burden of these disputes; three in four (75%) GCs have used or would consider using legal finance to offset the cost of disputes relating to this transition.
• In particular, GCs value monetization―or advancing some of the expected entitlement of a pending claim, judgment or award― to generate liquidity from claims tied up in litigation and arbitration. With legal finance, companies can also offset the cost of pursuing affirmative litigation to generate liquidity, shifting legal departments from cost centers to value drivers.

Christopher Bogart, CEO of Burford Capital, said: "Businesses face significant challenges related to the global energy transition due to cross-border projects, differing legal frameworks and rapidly evolving policies. Additionally, long-term energy contracts may not keep pace with energy markets and technologies, resulting in conflicts among stakeholders. Burford's latest research demonstrates the value of corporate finance for law, as legal finance helps companies manage the high costs of energy transition disputes and allows them to pursue meritorious claims without depleting resources."

Burford's research is based on a 2024 survey conducted by GLG and is supplemented by interviews with ten global energy transition experts conducted by Ari Kaplan Advisors.

The research report can be downloaded on Burford's website.

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 offices in New York, London, Chicago, Washington, DC, Singapore, Dubai and Hong Kong.

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

This announcement does not constitute an offer to sell or the solicitation of an offer to buy any ordinary shares or other securities of Burford.

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SOURCE Burford Capital

FAQ

What percentage of GCs expect legal fees to exceed $4 million per energy transition case for Burford Capital (BUR)?

According to Burford Capital's research, 63% of GCs expect legal fees and expenses to exceed $4 million per energy transition case.

How many GCs are currently experiencing energy transition disputes according to Burford Capital's (BUR) 2024 research?

76% of GCs report they are already encountering disputes related to the energy transition.

What percentage of GCs would consider using Burford Capital's (BUR) legal finance for energy transition disputes?

75% of GCs have used or would consider using legal finance to offset the cost of disputes relating to the energy transition.

What is the expected increase in energy transition disputes over the next decade according to Burford Capital (BUR)?

47% of GCs expect a further rise in the volume of energy transition disputes in the next decade.