Earnings Call Transcript - BUR Q2 2025

Operator, Operator

Hello, and thank you for joining us. My name is Bella, and I will be your conference operator today. I would like to welcome everyone to Burford Capital's Second Quarter 2025 Financial Results Conference Call or Audio Webcast. I will now turn the conference over to Josh Wood, Head of Investor Relations at Burford. You may begin.

Josh Wood, Head of Investor Relations

Thank you, Bella, and good morning, everyone. We hope you've all been enjoying a nice summer, and we appreciate you joining us today to discuss Burford's second quarter results. On the call, we have our Chief Executive Officer, Chris Bogart; our Chief Investment Officer, Jon Molot; and our Chief Financial Officer, Jordan Licht. Earlier this morning, we posted a detailed earnings presentation, which we'll refer to during the call, and also filed our Form 10-Q, both of which you can find on our Investor Relations website. But before we get started, just a reminder that today's call may contain forward-looking statements that involve certain risks, uncertainties and other factors that could cause actual results to differ materially from those discussed during the call. For more information regarding these risk factors, please refer to our earnings materials relating to this call posted on our website and our filings with the SEC. We'll also be referring to certain non-GAAP financial measures during the call. Please refer to today's earnings materials and our filings with the SEC for additional information, including reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures. And with that, I will turn the call over to Chris.

Christopher Peter Bogart, CEO

Thank you very much, Josh, and thank you to everyone for joining us today. It was interesting to see Bloomberg run a piece titled, "Litigation Funder Burford's Week of Big Wins" just after the quarter ended. The piece noted that it had been a good week for Burford Capital, which was certainly accurate for several reasons that we'll discuss. However, it wasn't just a good week; it has been an excellent quarter and a very strong six months. I am referring to Slide 6 to highlight some key points. In terms of new business, we experienced a robust period, with the second quarter showing significantly higher new definitive commitments than any quarterly period we've had in the last couple of years. On a year-to-date basis, we are up substantially compared to the same period in 2024, with an increase of 71%. This demonstrates the strong demand for our capital in the market and our ongoing ability to make significant commitments related to substantial litigation and arbitration globally, showcasing the advantages of our global reach and outstanding team. Looking at the income statement, we saw increases across the board both on a quarter-over-quarter and year-to-date basis. Net income was particularly strong, with a fivefold increase on a year-to-date basis compared to 2024 and a 63% increase for the quarter. This growth extended beyond net income; revenues increased as well. As Jordan will discuss, operating expenses have returned to a stable run rate. We are pleased not only with the level of new business generated but also with the financial performance of our existing portfolio. This performance indicates that the combination of new business growth and the results of existing assets positively affect the portfolio's overall value, which is not tied to fair value but is observable through definitive commitments and costs. That figure is up 15% year-to-date, representing a higher growth rate than what we need to achieve our long-term targets set out during the April Investor Day. Additionally, we continued to see cash inflows from cases, which is clearly a positive trend. We have four key financial metrics that remained strong during the quarter and year-to-date. I also want to mention a couple of other points. Shortly after the quarter ended, we successfully raised a new $500 million issuance with strong market support. The deal was executed very quickly, in just over 24 hours. We not only increased the size of the offering but also achieved tighter pricing against indices than ever before, with many new debt investors joining the offering. This success reflects our market maturity and the acceptance of our value proposition, providing us with a favorable cost of capital compared to our competitors. There is no one else in this market who can access capital at that scale, timeframe, and pricing. Finally, I want to touch on YPF. We made notable progress during the quarter, including a tentative oral argument date in October for the main appeal, which we have been anticipating for some time. This is a positive development. We also made general progress in both the United States and other jurisdictions regarding our enforcement activities and achieved a specific victory in New York where a judge granted our motion for the turnover of some of Argentina's YPF shares. While this will lead to further legal proceedings and is currently on appeal, it marks another significant advancement in the case. I understand that investors are keen to hear about YPF, which is an essential part of our narrative. However, I hope you recognize the limitations we face in discussing our strategy and assessing the situation in detail. There is ample public information about YPF, allowing investors to engage with the case at whatever level of detail they wish. This isn't a situation where it's difficult to obtain information. However, discussing the case presents challenges, as the litigation environment can become contentious. A couple of quarters ago, I provided an extensive update on YPF, which investors found helpful, but Argentina has cited that information numerous times in courts globally, creating unnecessary complications. We will keep you updated on significant developments regarding the case, but we ask that you do your own research for commentary on it. With that, I will hand it over to Jordan to review the numbers.

Jordan Licht, CFO

Thank you, Chris, and good morning to everyone. I will begin with Slide 9, which shows the combined results of our two segments, Principal Finance and Asset Management. Starting with total revenues, we see a significant increase year-to-date compared to last year, reaching $280 million versus $168 million for the same period. Our net income has also increased to around $120 million, compared to $24 million last year, and our earnings per share have risen to $0.53, which is nearly five times higher than the same period last year. Next, I will discuss the Principal Finance segment, with Jon assisting me, before moving on to Asset Management and reviewing our expenses, capital, and liquidity. Turning to Page 12, we will look at the portfolio's size. The fair value is $3.8 billion with undrawn commitments of $1.7 billion to $1.8 billion, reflecting substantial growth since 2020. Breaking down the $3.8 billion fair value, YPF comprises about 43% of the assets, along with $1.6 billion of deployed cost. Additionally, there’s a fair value markup of approximately 33%, about $550 million. When considering this 33%, it suggests that there is potential revenue linked to historical returns that has not yet been realized. Looking at the pie charts on the right, we see our geographical exposure. Our clientele is not limited to the U.S.; we operate globally, with 51% in North America, primarily the U.S., and around 25% to 26% in EMEA, along with approximately 20% coming from a truly global portfolio. The asset types are diverse, shown in the pie chart below with 20% in pizza slices, 21% in a mixed portfolio, 20% in antitrust, 20% in intellectual property, and 18% in arbitration, illustrating our team's diversity and asset variety. On Page 13, I will discuss the asset's growth. Our capital provision income reflects realized and unrealized gains comparable to last year, showing total capital provision income of $246 million compared to $140 million year-to-date, which is a good mix from both YPF and the broader portfolio. The two bottom charts illustrate similar trends. On the left side, focusing on the second quarter and on the right, the year-to-date bridge, we notice that asset growth stems from deployments, which represent cash outflows, and the passage of time, reflected in the duration impact as assets approach completion. We have observed favorable discount rates during this period. Our assets, valued at net present value, increase in worth when interest rates decline. The discount rate for our assets was around 20 basis points this quarter, similar to last quarter, contributing to a $25 million increase. Other inputs include model inputs and the milestones we track as cases develop, while realizations, which reflect completed cases turning into cash, show growth from $3.6 billion to $3.8 billion. Moving on to Page 14, we see how new definitive commitments contribute to asset growth, defined as cases we have underwritten. As Chris mentioned, the second quarter demonstrated strong business activity. Year-to-date 2025 commitments amount to $518 million compared to $300 million in the same period last year, with the second quarter reaching $361 million, our largest in the last nine quarters. In the bottom left pie chart, we can note that new definitive commitments now exceed $1 billion. We previously discussed growing the portfolio, and the commitment growth from under $800 million at the year's end to $1.065 billion now is a direct result of this strategy. It's important to remember that these commitments are not readily accessible; clients must do the necessary work to invoice us before we can disburse the funds. Overall, our deployments have been consistent with last year's figures. Lastly, on Page 15, we examine our realizations. Thus far, realizations have outpaced last year's pace at $225 million compared to $219 million. Reviewing the ROIC at the bottom, we have reached 37% year-to-date. It's essential to remember the heterogeneity of our assets; some have longer or shorter durations and different risk profiles. For example, an asset originated in 2024 concluded early in 2025, leading to a low ROIC for that particular asset, but its IRR at 40% was robust and above average. Consequently, we expect the year-to-date 2025 ROIC to be slightly lower than historical averages. Notably, we have had six more assets generate $10 million or more in realizations year-to-date in 2025. Now, I’ll turn it over to Jon for further insights on the portfolio.

Jonathan T. Molot, CIO

Thanks, Jordan, and thanks to you all for joining. As Jordan said, we have different ways that cases resolve and generate cash for us. And if you turn to Slide 16, you see that not just in a particular quarter, but over our lifetime. And we have now had realizations exceeding $3.5 billion over our lifetime. And you see it's not that complicated a business, right? I mean there may be variation, as Jordan said, with shorter-term, lower-risk, high-dollar things that produce quick settlements and great IRRs, but lower ROICs. And then you have some things that go all the way to trial through appeals, and you can earn large multiples. And we see that breakdown on Slide 16. Of that $3.5 billion, roughly $2.5 billion is coming from settlements. 78% of our deployments result in settlements and about just under $1 billion has come from adjudication wins, which comes from just 15% of our deployments, but earning much higher returns. In contrast, our adjudication losses are only 7% of deployments. Like, when you think about this slide, it really shows you why Chris and Jordan are able to say we had a good quarter, and we're able to say that again and again. I'm focused less on any particular quarter and more on how the business performs over the long haul. But to generate the 83% return on invested capital, 26% IRR with a weighted average life of 2.6 years, like, how do we do that? Well, the asset class lends itself to that because there's 2 ways that things resolve. They either settle or they go to trial. The second part of it is we're good at what we do. You can see that we pick cases that win more often than they lose, much more often than they lose at trial, and that defendants recognize our strong cases as you move along, and therefore, they come to the table and settle. So this slide, I think, is capturing in numbers the quality of our team and the attractiveness of the asset class. And if you turn to Slide 17, which I've spoken to before, it hammers that home, but in a dispersion of all of our investment outcomes representation. So what I mentioned before, our losses are fewer; they're also smaller. You look at the left side of the chart, the black bars, the wins are more plentiful, but you also see some of them are very large. Those red bars where we are earning greater than 200% return on invested capital. That's a triple or better with most people's lingo. So the asymmetry of returns makes this a really attractive asset. And the way our team does it, we're able to get the most out of it. I can't think of another place to invest capital that produces these kinds of returns because of the nature of the asset class. if you do it right. And if you turn to Slide 17, you see that representation. This time, it is over time by vintage. And what's interesting about this table is, again, you see the same IRR and ROIC in the upper right over the life, and you see that breakdown differently year-to-year. As Jordan said, there could be a year where you have a very large short-duration matter that the money goes out and comes back in relatively quickly, we earn a very attractive IRR, but a lower ROIC. And other matters go the distance, take longer, and can produce truly outsized returns. Over time, and across the portfolio, these are where the numbers come down. And we're very happy to have that diversity. And Jordan mentioned, we have diversity across geography, subject matter, counterparty, you name it. A lot of the diversity is in terms of risk and duration and size as well, and we're very happy to have that. It makes for a robust portfolio that has performed very well over time, and that is poised to continue to deliver. So one thing that's interesting about this is not just comparing the red bars to the black and gray. That's the first. When you look at this, you say, well, how much did you put out? How much did you get back? Those red bars are quite attractive. And you see, not surprisingly, the older vintages, the red is going to be higher relative to black and gray because more things have had time to work their way through the system and resolve, whereas for the more recent vintages, things haven't resolved yet, so the red isn't going to be as high. And so over time, we see the red bars go up. But I also don't want you to think the black and gray are stagnant. Jordan mentioned before when we talked about how good this past quarter was as a matter of definitive commitments. We make commitments at the beginning, but it takes time for the lawyers working on the case to incur costs and to bill hours, and the money then goes from being a definitive commitment to an actual deployment. So the black and gray go up in the more recent vintages as well over time, and then the red will follow. And it's just, as I say, it's not that complicated. I guess it's complicated to underwrite any piece of litigation. But when you have a book like this with a team like we do, it just continues to perform, and I'm very pleased. So with that, I will turn it back over. Thanks so much.

Jordan Licht, CFO

Thanks, Jon. I'll quickly switch over to the Asset Management segment. On Page 22, you can see some of the highlights depicted in pictures. The Asset Management income year-to-date of $21 million compares favorably to where we were at the same point last year. And in the first quarter. I'll remind folks again that we recognized for the first time, proceeds from the Advantage Fund. This is obviously a good first step in seeing that fund and its performance and value to us. Overall, you look at the size of the Asset Management portfolio, it's around $2 billion. You have $1 billion in the partnership with the sovereign wealth fund and then slightly under $1 billion with respect to our other private funds. You then look at our overall cash and our liquidity. I'm on Page 24. And you sit here and say we've got $440 million of cash at the end of the quarter. That number obviously doesn't include the recent debt issuance that Chris just mentioned. But it was overall, absent that, still a very strong period with respect to cash year-to-date. If you look at the bottom right-hand side, you can see that we've got $306 million of cash receipts year-to-date, which compares very favorably to the year-to-date of $245 million same point last year. Overall, we also still have $118 million of receivables on the balance sheet as of the end of the quarter. You look at our expenses on Page 25. And as Chris had mentioned, the quarter and year-to-date increases in expenses are predominantly attributable to variable noncash drivers in the comp and benefit line, and I'll spend a little bit of time walking through that. First and foremost, I've talked about this before, movements in the share price impact the share-based and deferred compensation line. When our employees elected to defer their compensation and select Burford stock, that liability moves with the share price, and we hedge that. Unfortunately, it doesn't come through the income statement, but we buy those shares in the market to offset that. The other piece that you'll see is long-term incentive comp is up. But, of course, it's up. It should be. That is directly tied to our revenue as it represents our carry program. And we had a lot more revenue in this year-to-date period versus the same time last year. And then finally, you can see our G&A line that has come down to around $7.6 million, and that's right in line with the same quarter last year as well as the average throughout all of 2024. I'll finish up with our capital. Chris talked about the success of the issuance around the 2033s. And you can see that we've pro forma'd the end of the quarter numbers on this page. First off, $123 million will be going out the door next week to pay off the 2025. But more importantly, you can see that we've extended the maturity schedule. We enjoy the laddered debt maturity schedule. It compares very favorably to the way in which our assets perform. That's been pushed out to 5.2 years. The weighted average cost of debt has only moved around 10 basis points. We're at 7.4% in terms of our weighted average. And overall, our metrics with respect to our covenants are well within covenant levels at 0.9x, which puts us in a great place to continue to maintain the balance sheet, to continue to invest in new assets, and we have plenty of capital to do that as we look to continue to grow. And so, with that, I'd like to turn it over to Chris for some closing remarks and then Q&A.

Christopher Peter Bogart, CEO

Thanks very much, Jordan. And I'm on Slide 27. Just I'll leave you with a couple of thoughts that we've already hit during the course of the presentation. The first is around new business. We wrote a lot of new business. We're happy with what's happening there. As we said during the last call that we had with you, one of the factors affecting new business is the extent to which we have big cases, which are usually multiparty cases. And sometimes we do and sometimes we don't in the period. This period and the period before, we did. And so that's a good thing. It's not predictable. It's episodic. But when it happens, it just adds, as Jon was describing, to the overall value of the going-forward portfolio because those are cash flows. Those cases do often settle, and those are cash flows that will come back to us during the course of future years. So we're thrilled with the new business that we've written. We're thrilled with the overall growth in the portfolio base, again, as I said before, exceeding the level that we would need to be able to meet the longer-term commitments that we outlined for you before at Investor Day. We're delighted as well that things are happening in the YPF case. Nobody ever says litigation goes faster than you want it to, and the YPF case is an example of things that have not gone as quickly as we would have liked. But once you have forward momentum, that's a good thing, and you've seen obviously a whole lot of press coverage and media reaction to those developments. And Jordan just talked about our ability to access the markets. That's a really significant competitive moat for us. You don't see anybody else doing this. We remain the only litigation finance firm in the world that is either publicly listed on the New York Stock Exchange or accessing the U.S. public debt markets. So with that, we're pleased with where we stand, and we'd be delighted to take your questions.

Operator, Operator

Your first question comes from Mark DeVries with Deutsche Bank.

Mark Christian DeVries, Analyst

Appreciate the incremental comments on YPF. I have a few follow-ups that I think you can respond to without providing more fodder for Argentina's efforts to distract the courts. More on timing. Any sense for what the timing is for the Second Circuit to hear the appeal for Argentina on the order to turn over the YPF shares?

Christopher Peter Bogart, CEO

So there's sort of a 2-part procedure going on there. So what happened is Judge Preska on June 30 issued her order requiring the turnover of the shares. And then Argentina went back to her and asked her to stay that order pending appeal. And she declined to do so. She issued a written order saying basically that Argentina had been dragging their feet. So Argentina then went to the Second Circuit Court of Appeals and again did 2 things: one is they appealed the underlying turnover order; and the second is they asked the Second Circuit for a stay of the order. And so the Second Circuit, first of all, is going to decide whether to stay the order. And that's something that one would imagine they would decide fairly quickly. The matter is calendared next week before a motions panel, but who knows when that motions panel, especially since we're in August, will issue a decision. So that's the stay portion of it. And the decision on the stay probably has an impact on the speed of the appeal itself of the turnover order being heard. So there's not a briefing schedule in place yet for the appeal of the turnover order.

Mark Christian DeVries, Analyst

Okay. That's helpful. And then on the broader appeal of the case of the Second Circuit, can you just give us a sense for how long it might take the Second Circuit to give its judgment once it's heard the case or the appeal?

Christopher Peter Bogart, CEO

Yes. Unfortunately, there's really no answer to that. It depends very much on the workload of the individual members of the panel that hear the case. Just to back up from that, the Second Circuit is composed of 20-odd judges, but only 3 of them hear individual cases. So you'll get a panel of 3 judges. And the timing of a decision will depend on the workload and speed of the member of the court who ultimately is assigned to write the decision. You would hope that this would be measured in months, but it's very difficult beyond that to predict anything.

Mark Christian DeVries, Analyst

Okay. Got it. And then just one last one. On the YPF-related unrealized gains in the quarter. Was that mainly driven by the Southern District's ruling that they had to hand over the shares? Or was it related to some of the other progress you mentioned, Chris, in other jurisdictions?

Jordan Licht, CFO

Yes, appreciate it. There's a couple of components. Obviously, there's what you just mentioned as well as duration, just given the fact that we moved forward a quarter and some interest rate change. So Mark, that's not something that we're going to detail how every single component there works, but those are the factors that moved it.

Julian Roberts, Analyst

I have a couple of questions. It seems that the YPF fair value gain from the case progress wasn’t the only contributor to the fair value gain in the quarter. Can you provide any insight into how many other cases added to the fair value gains due to progress on individual matters and if there was any case that made a significant contribution? Additionally, my second question, which has two parts, concerns the schedule of new assets for the first half of 2025. Regarding the investments in Asia, it seems there were no investments made in that region last year. Are those investments connected in any way to the litigation and contract cases there, which I see are both single? Furthermore, it appears you've had initial success in two other cases, including a global mixed IP single case with $5 million in realizations, while $24 million in deployments are still pending. Is it reasonable to interpret some success from that, given it is a single case? How optimistic can we be about those realizing in the near future?

Christopher Peter Bogart, CEO

So Jordan, do you want to take the first half of that and, Jon, the second, perhaps?

Jordan Licht, CFO

Yes. So Julian, appreciate the fact that you studied the website table. The first piece in terms of individual cases moving in, and you know, we don't speak a lot around any individual cases. But on Page 13, we do break out YPF versus the rest of the portfolio. I wouldn't say that, in particular, is one case or not. As I mentioned also, when we look at the realizations, we did have 6 different realizations besides the one that I had mentioned in the first half of the year that were over $10 million. So I would say, broadly speaking, it's an array across the book.

Jonathan T. Molot, CIO

And Jon, do you want me to touch on IP or do you want to do that?

Christopher Peter Bogart, CEO

Yes. Well, Julian, thanks for the questions. We haven't actually talked all that much about the way intellectual property cases work. And so maybe it's worth just 30 seconds on that point because like lots of other kinds of litigation, they fall into different categories or different buckets. So sometimes we are, for example, financing a university that has developed some innovative technology and believes that there is an infringement going on of that technology, and the university doesn't have a budget to go and pursue it. And so we might there have one patent against one potential infringer. But the other thing that might be happening is that you might actually have a category-wide dynamic. So again, early technology development that in a patent that people have overlooked and now the university or whoever the patent holder is, is saying, well, look, this wonderful new technology that lots of people are using, all of their uses infringe my patent. And so there, you might have litigation, you might have licensing, you might have a combination of the two. And those you can often have a campaign-style approach in a not dissimilar way that we have multiparty campaigns in the core commercial business. And so seeing one realization, as Jon said, suggests that somebody out there believes they're vulnerable and therefore, have settled, but that might just be the beginning of that campaign's potential over time.

Randy Binner, Analyst

I apologize if I missed this in the prepared presentation. The Asset Management income of $7.1 million for the quarter was below our expectations in the model, and I didn't catch why it was lower than in recent quarters. Can we review that, please?

Christopher Peter Bogart, CEO

Sure. Jordan, do you want to take that?

Jordan Licht, CFO

Sure. When examining our Asset Management segment, we first need to consider some of our historical funds that still need to meet certain criteria for us to generate income. Many of these funds were part of the Asset Management acquisition from years ago. For the funds we created, those assets are typically mixed with our balance sheet and generally move in line with our recent vintages. Randy, I apologize, but I can't specifically address your model. The funds themselves are not growing at the same rate they have historically. Our priority has been to continue strengthening the balance sheet as we progress.

Randy Binner, Analyst

Okay. That's helpful for the model. I guess a higher-level question, if I may. There was a lot of back and forth around the tax and budget bill in Washington last month. And I think it was a great outcome for Burford, but there were some op-eds that continue to talk about litigation finance as it relates to the insurance industry. And I'm just wondering if you can share like what you think the next iteration of that debate is and if there's a way to maybe find common ground with the other side there. Just be curious your review of how July went and how that debate may continue.

Christopher Peter Bogart, CEO

I believe there's nothing new to discuss on this topic. Litigation finance fundamentally takes away structural advantages that defendants or frequent users of the justice system used to have. Jon has extensively covered this topic, and many of you are familiar with his influential work that contributed to the formation of the industry. It's not surprising that those who are affected are unhappy about losing those advantages and the equalizing effect that finance on both sides of cases brings. Since Burford's inception, we have faced opposition from wealthy corporate defendants and the insurance industry, and I don't think that will ever change. However, we have successfully managed this opposition because, ultimately, the argument they must present is not appealing. They are essentially claiming they want an unfair advantage and aim to make it harder for people to have their disputes resolved fairly and quickly. This is why, globally, governments and courts highlight that litigation finance is crucial for their justice systems. For example, a recent review from the English government stated that without litigation finance, they couldn't maintain a fair and equitable justice system for everyone. While there will always be noise surrounding this issue, we have proven effective at managing it, as those who make decisions recognize the importance of maintaining fairness in justice systems, which is vital for the rule of law.

Alexander Bowers, Analyst

I have two questions, if I may. The first is about the pipeline. Are there specific industries or regions, especially outside the U.S., where you currently see significant growth opportunities for new cases? My second question pertains to what you mentioned during Investor Day regarding broader opportunities in the legal ecosystem. Could you provide an update on any initiatives you are considering in areas such as law firm equity stakes, legal tech, and alternative delivery of legal services?

Christopher Peter Bogart, CEO

We have a broad and well-diversified pipeline because we collaborate extensively with many of the large global law firms, which operate across various industries. These law firms represent a range of sectors, so the business we receive spans multiple industries. Some industries are more prone to litigation than others. For instance, hotels typically do not have much litigation activity, as they rarely sue. In contrast, the technology sector experiences significantly more litigation. However, there are instances where other industries may face unexpected litigation. For example, the U.S. protein producers' industry was recently found to be involved in price fixing, leading to notable litigation in that sector, even though food is not usually viewed as a major litigation area. Geographically, we are continuing to expand our operations. While we have operated globally for years, we are enhancing our presence by establishing teams on the ground in key markets. Recently, we added personnel in both Korea and Spain. Although we have conducted business in these regions for a long time, having local representatives is likely to boost our business growth there. Regarding noncore areas such as law firm equity and legal technology, we are actively reviewing potential opportunities and anticipate making progress there. We have already invested small amounts of capital in these sectors and expect that to grow over time.

Trevor Griffiths, Webcast Participant

Page 16 of the presentation shows radically better economics on adjudication results for only a 6-month increase in average life. Why are your clients prepared to give up such attractive economics for such a brief acceleration in timing of outcome? Jon, did you want to comment on that?

Jonathan T. Molot, CIO

Sure, I'm happy to. So for people's reference, you can see that adjudication wins has an average life of 2.9 years versus settlements 2.4 years. And I think that's what Trevor is referring to. It's a good question. The big difference between that $1 billion that we've gotten in adjudication gains with close to 250% ROIC versus the $2.5 billion we've gotten from settlements was very attractive, but lower IRRs and ROICs, is risk as much as duration. If a case settles on the eve of trial, and we do not take the risk, that binary risk of losing the suit, it makes sense, a, that the settlement is going to be lower than the trial outcome if you win, right? You're taking a discount in exchange, not just for the accelerated payment, but also the elimination of risk. And also, b, that sometimes our terms will be structured to take less proportionately than if it goes to trial. If the plaintiff chooses to go to trial and risk our capital on the outcome, there's going to be additional risk premiums sometimes charged for that decision to go to trial, whereas if they settle and eliminate the binary risk for us, then it may be cheaper for them. So there's a discount that the plaintiff is accepting from the defendant, but then there could be a further difference in the charge for our capital depending on whether we take trial risk. But it's a good question.

Christopher Peter Bogart, CEO

Thank you, Trevor. We received a question from Fraser Lang about how Burford is positioned to evaluate and finance cases involving AI and corporate data. Our approach remains consistent with how we handle all new and evolving activities. We have a solid foundation in technology-related litigation, which we've been engaged in for a long time. Some of our team members have backgrounds in technology firms, and I personally led a technology media venture capital firm before establishing Burford. We find these matters interesting and actively pursue them. However, our primary focus is on large, complex commercial litigation rather than individual cases. For example, if there's a personal data breach, we would not typically involve ourselves in those situations. Nevertheless, the rise of AI certainly raises intriguing legal questions, some of which are already being addressed by courts. Currently, issues surrounding copyright and the use of protected material in training large language models are particularly noteworthy. As with most technological advancements, AI will bring significant changes for businesses and society, as well as potential disputes and litigation, and we are ready to participate in that landscape. As for any further questions, it seems we might have reached the end of inquiries during this slow August period. Thank you all for joining us. We truly appreciate your support and interest in our business. As always, we are available to discuss any questions you have about our performance, and we look forward to speaking with you again in a few months.

Operator, Operator

This concludes today's conference call. You may now disconnect.