How does the solitary lawyer boost flagging business? Convince a peer to set up in opposition in his town. Finance works similarly to support more suits, as litigation and its exponents are known. Funding lawyers has proved very lucrative for Aim-listed Burford Capital, and some of its peers. Its success in the UK begs questions about the long-term viability of this niche investment industry.

Litigation funders raise money for big cases. These need their own capital, in turn. Burford uses its own balance sheet as well as third-party funds. A sovereign wealth fund is backing Burford to the tune of $1bn. For every dollar spent by Burford, its new patron will add two bucks. Burford keeps 60 per cent of any profits. The wealth fund is staying incognito. Is it embarrassed to be seen hanging out with lawyers? Or vice versa?

It is a sweet deal for Burford either way. The lure for the wealth fund is the chance to quadruple its money. This explains high profit margins at Burford, more than 80 per cent at the operating level this year.

Businesses such as Burford typically pay claimant expenses, worth perhaps a tenth on a large claim. Once the merits of the case are agreed and financing agreed, the claimant (and the law firm) need not worry about any requirement to pay these back.

That kind of profitability should attract rivals the way a picnic attracts wasps. Hot capital pushes down returns, as has happened in hedge funds and insurance. With $8bn of capital committed to funding litigation, according to Liberum, lots of big trials are needed. Funds will inevitably back more cases that fail. Back in 2016 Juridica, an early entrant to funding, stopped taking on more cases after big losses. Calunius, reportedly, has closed its fund to new cases.

Burford, with treble the investments of its closest rival, argues that scale matters. Investment banks and private equity firms mostly see litigation finance as beneath them. Not for much longer.

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