RE: New FT article appeared an hour ago.9 Aug 2019 23:16
The UK litigation financing firm at the centre of a devastating attack from a hedge fund started out as a hobby for its Canadian chief executive Christopher Bogart.
Over dinner with a friend from law school, who was frustrated trying to tally his need to be paid by the hour with his clients’ demands for contingent fee deals, Mr Bogart conceived a new company to fund legal cases.
A decade after Burford Capital floated on Aim, with a value of £80m in 2009, it had become one of the most remarkable successes of the London junior stock exchange, worth more than £3bn last week.
That all changed with the publication of a damning report by Carson Block’s Muddy Waters on Wednesday, which sent Burford’s share price crashing by almost half.
The document raised questions about Burford’s accounting practices and governance, including the relationship between Mr Bogart and his wife, who is the company’s chief financial officer, and could cast a shadow over the litigation funding industry if its most prominent player fails to win back investor support.
Mr Bogart admitted on Friday that the report had led to sleepless nights. “It has certainly taken over my life,” he said.
The chief executive started out at white-shoe law firm Cravath, Swaine & Moore before launching Burford with Jonathan Molot, then a law professor at Georgetown University.
“There was a perfect storm,” Mr Bogart recounted. “The pressure from the financial crisis led companies to dramatically increase their demands for alternative economic arrangements on law firms, leading to a funding vacuum that we set out to fill.”
Mr Bogart and Mr Molot, who is now chief investment officer, listed Burford in its first year to rapidly raise capital, naming the venture after the medieval Oxfordshire town where one of its early executives, Selvyn Seidel, owned a property.
The company rode a litigation boom after the financial crisis and its success sparked the launch of similar companies. “Burford didn’t create litigation funding but it put it on the map,” said one former member of staff.
Mr Bogart and Mr Molot each made more than £60m last year when they disposed of a third of their shares in Burford — the first time either had sold a single stock. Mr Bogart talked at the time of his “reluctance” to do so “given our enthusiasm for the future of the business”.
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