Burford Capital’s German affiliate, Burford German Funding, is facing legal action from a client, Financialright Claims GmbH, over accusations that Burford concealed its partnership with Hausfeld Rechtsanwälte LLP, the law firm appointed to lead several antitrust cases in the German trucking industry. Financialright alleges that Burford failed to disclose Hausfeld’s ownership stake in the affiliate before finalizing their funding agreement.
The complaint, filed on June 27 in Delaware state court, asserts that Burford’s non-disclosure and direction for Financialright to hire Hausfeld resulted in a hidden contingency fee arrangement. Such arrangements are prohibited under German law due to concerns they may compromise an attorney’s independence.
Financialright is concurrently pursuing legal action against Hausfeld in Germany. It seeks a ruling from the Delaware court to invalidate an arbitration agreement included in the 2017 deal with Burford, which mandates resolving disputes outside of court. Burford and Hausfeld opposed this, pushing for arbitration as they believe the agreement requires. A detailed overview of the complaint can be accessed here.
Burford had backed Financialright’s lawsuits aimed at German truck manufacturers over alleged price-fixing practices. Under the agreement, Financialright would share any litigation proceeds with Burford in exchange for funding.
The issue has garnered attention as it brings to the fore the intricacies and legal challenges of litigation financing, particularly concerning transparency and compliance with local legal standards. A more comprehensive recount of this unfolding dispute is available here.