Problems with recovering court-awarded assets — and efforts to tackle them — are widespread and potentially growing.
Fifty-eight percent of lawyers said their clients have not been paid the full face value of judgments secured in the last five years, according to a survey of more than 200 litigators by Burford Capital.
“The value of a judgment when rendered is zero dollars,” Carrie Tendler, a lawyer at Kobre & Kim in New York, said in an interview. “Companies spend millions of dollars getting that judgment, and realize there’s not much they can do with it.”
Burford, which invests in law firm litigation, is trying to capitalize on this knowledge gap. The London-based company’s latest financial results, released Wednesday, showed that its year-old judgment enforcement service saw an investment of $1.8 million yield a recovery of $5.9 million. It plans to leverage "services contingently for a portion of whatever we assist in recovering," according to its interim report.
A global problem
A third of law firms surveyed said they have potentially lost more than $10 million in unenforced judgments over the last five years. One in seven put the figure at more than $50 million.
Many find only at the end of a legal battle that what they are owed is squirreled away in impenetrable special purpose vehicles, shell companies and uncooperative jurisdictions, Tendler said.
“In the current economic climate, over the last 10 years and with the global markets expanding to include what I’ll call ‘rogue players,’ based in countries that don’t have the same respect for a U.S. judgment or a U.K. judgment, you really see a rise in parties — whether they’re sovereign or private entities — refusing to pay judgment,” she said.
More than 60 percent of those surveyed by Burford have had clients whose judgments or awards were frustrated by assets hidden in offshore jurisdictions — with Russia and the former Soviet Union being cited as particular problem areas.