Burford Capital Limited (BUR) Earnings Call Transcript

Hello, everyone. Good morning. I'm Josh Wood, I lead Investor Relations for Burford Capital, and I want to welcome all of you to our 2025 Investor Day. Just a quick note, as we start, a quick anecdote. Burford was recently referenced in a CNBC piece on All-Weather Stocks. And I think that's a good list to be on today. We'll see, but we have a great crowd here in New York Live. We appreciate all of you being here on what I know is a tricky day. And I know we have many more watching and listening on the webcast around the globe. A warm welcome to all of you as well. A few important things before we get started. Today's presentation will include forward-looking statements, which are subject to certain risks and uncertainties that may cause actual results to differ from what we discuss here today. You should refer to our latest 10-K filing for more information on those risk factors. We'll also refer to certain non-GAAP financial measures during the presentation. Reconciliations to the most comparable GAAP measures are also included in the appendix of our presentation. We have a great agenda for you today. And we built it to accomplish two things: First, of course, we want it to be a really comprehensive update for those of you who know us well and who have followed Burford for a long time. But importantly, we also wanted to be an immersive introduction to the company for investors who are newer to our story. Ultimately, it's about how we drive shareholder value through the business of law. You can see the agenda here on screen. You're going to hear not only from our senior leadership team and Chris, Jon and Jordan, who you know very well from our earnings calls, but you're also going to hear from a larger group of senior professionals who reflect the deep bench of talent that we've built at the firm. A few logistical notes on the day, you'll see that we have two breaks built in. One is in the middle of the program, and another one right before the management Q&A at the end. That last break is for those of you here in-person can grab some lunch just outside here. Regarding the Q&A session, we will ask you to please hold all of your questions for that session at the end. We'll get to as many as we possibly can. For those of you on the webcast, you can also participate in the Q&A, we'd certainly encourage you to do so. [Operator Instructions] So again, thank you all for being here. Without further ado, I will turn things over to Chris to get us started.

Thanks, Josh, and welcome. We're excited to have -- to be able to spend the next several hours sharing with so many of you both here live and on the webcast, our vision for what a much larger and more valuable Burford can look like 5 years from now. We're really excited about the opportunities that are present for us in this business, in the business of law. We are superbly positioned to take advantage of those opportunities in a rapidly growing and evolving market that is one of the very largest markets in the world. And here, we've got a management team that is really all in and fully aligned with shareholders at a level that is rare to see in multibillion-dollar public companies. The management team is the largest shareholder of this business. We own 10% or more of the equity, we have about $300 million or more of equity value at risk, and we just bought last month another $18 million of equity. So we are excited about this opportunity, and we're all in with you in continuing to pursue it. I'm going to take just a minute to outline what's going to happen today, and then I'm going to start talking about the business. We're going to give you -- I'm going to talk about where the business is today, where it's going, the opportunities for growth in the core business and some of the really interesting things that we see coming up. Jon Molot, the Chief Investment Officer and my Partner and Co-Founder in this business for 15 years is going to talk -- he's going to do a deep dive into the portfolio, talk to you about our data science and our modeling. We're going to show you two panels of our people, and you have their bios in front of you, if you're here in the room or online, if you're participating by webcast, two panels of our senior people, many of whom you haven't been exposed to before as investors, and we think you'll be interested in seeing just the depth and quality of the team that we have put together. One of those people, Craig Arnott, the Deputy Chief Investment Officer, will be coming in by video from London. Unfortunately, his Passport was stolen a couple of days ago. And in the current world, that just doesn't work to get into the U.S. But from afar, he can run our new trade and tariffs department. And then you'll hear from Travis Lenkner about some interesting slightly wider opportunities we see for the business. And Jordan will come back and pull it all together and talk about the portfolio economics and how we get to the returns that we're enthusiastic about being able to deliver in this business. We have built a big business here. We started this 15 years ago, and it has grown and grown and grown. And that is going to be a key theme of our presentation is how much growth we've already experienced and what the future growth potential of our market and of the legal industry in general portends. We're going to talk to you about our returns, how we have generated significant returns over the period of our existence, and those returns have been generated on a strong asymmetric, uncorrelated basis across more than $3 billion of cash that we've brought back more than frankly, $5 billion, if you throw in our managed funds. And we're going to talk a little bit about YPF. So let me start by giving you a couple of examples of what we actually do. All of what we do is based on the idea that we're a specialty finance firm focused on the business of law. And we're providing capital out there in the market based on the underlying asset value of legal claims, litigation, arbitration, regulatory matters and trade matters. Here's an example of the basic business, if you will. There's a strong demand out there, especially as litigation volumes continue to increase and as legal costs continue to rise. Today, you've got lawyers charging $3,000 an hour. So with that demand, there is a -- with that dynamic, there is a strong demand for alternative solutions to simply writing checks every month to your law firm. And that's a solution that we've been pursuing for the entirety of our business. It's how we started. Here's one example, which is a global big 4 liquidator, one of the global accounting firms regularly takes on assignments where they go in, obviously, to insolvencies and run the insolvency for the benefit of creditors. Often, the dynamic there, as in the case of many business, is that there's simply not enough cash left in the business to be able to pay legal fees, but there are good claims. And so the question is, how do you pursue those claims? And here, we did a $10 million deal with this liquidator during COVID and we helped the liquidator progress the claims notwithstanding the presence of the pandemic. And that's an essential service because the liquidator is not capable, obviously, of reaching into its own pocket to pay the lawyers. In fact, the liquidator can't even take the risk of a bad outcome. And so in addition to providing financing, we own and operate a captive insurance company, and that insurance company writes adverse cost insurance for those jurisdictions where there is cost shifting if you're unsuccessful in litigation. So this is a pretty typical, what I call, sometimes litigation finance 101, where we're just stepping in to pay the legal fees. We do it for people who can't pay their own legal fees, whether they're insolvent or frankly, whether they're some of you. And some of you sitting here are, in fact, our clients, you may not even know it, because people who run investment funds often also don't have capital to be able to go and pursue a claim. You can't take shareholder money. You can't take investor money from a fund and say, "Oh, well, let me go and pay millions of dollars of legal fees with that money." You need a different solution to be able to pursue a claim if you've got one. And we work with some of the world's largest asset managers. But there are also this demand from just plain old corporates, who want to keep their capital and use it for something other than collateral litigation expenses. And as you can see, when these things go well, as this one did, they can be very profitable. The next level or the next layer of what we do, you can almost call it litigation finance 202 is, again, with the theme of looking to the underlying asset value of legal claims. Here, what we're doing is we're not paying the legal fees and expenses. In fact, this is a growth stage company that was in a fight with a big Fortune 100 company. And they went all the way through the litigation process without us. They did it entirely on their own. They paid their lawyers, and they were successful in getting a very large arbitration award out of this proceeding. But it's a growth stage company, it needs cash to continue to do what it does. And of course, the Fortune 100 company knows that and doesn't pay that arbitration award and instead drags out the litigation process. So what can you do if you are the successful recipient of that arbitration award in that instance? Well, you can go and raise another round of financing, dilutive, expense of or you can come and do a deal with us. So we gave this company $100 million right off the bat. And that meant that it didn't need to go and do that next round. The other thing that it did is it showed the Fortune 100 company that they had the resources to go the distance. And so instead of folding and having to take a lowball settlement offer, this company was able to hold out longer, get an appropriate settlement offer from the big company, end of the thing, pay us back and not ever having to dilute their shareholders. And as you can see, this is the kind of deal that sometimes will resolve quite quickly. This was only an 8-month or so deal. In those kinds of circumstances, and Jon is going to talk more about this later, we will sometimes generate quite desirable IRRs, as you can see that we did here. But obviously, our capital is not out for that long, and these are not very high-risk transactions sometimes. So the aggregate returns on a short-dated piece of business like that are going to be lower. And that's absolutely fine with us. We're delighted to do these kinds of deals all day long. So stepping back from those examples, again, we're doing a couple of things here. We're serving litigants of all shapes, sizes and stripes. Law firms, big companies, small companies, asset managers, you name it, when they have a clear economic problem that they're trying to solve. And we're serving law firms. We work with 94% of the AmLaw 100. Those are the largest law firms around. When we help them be able to say and calibrate the risk that they're going to take in their own portfolios because they all still run an hourly fee business model. So we have both of those client arms, if you will. And what do we do? The two things that I just described. We pay legal fees and expenses. We also monetized the underlying value of claims or we do both in the same transaction. And we can do these one case at a time, as you saw in the second example, or we can do them across a portfolio of litigation. When businesses or law firms have a whole bunch of litigation, we can reduce the risk and therefore, reduce the cost of capital without changing our net returns, but also getting the benefit often of some cross-collateralization. So that's a very attractive market proposition. It's something that we pioneered quite a long time ago, and it's an important dynamic in the overall market. We've grown to be the global leader in this business. We today have a $7.4 billion global portfolio of these assets. As I said earlier, we've already generated more than $3 billion in cash returns. And these numbers here are cash. These aren't fair value accounting numbers. We've generated more than $3 billion in cash returns, more than $5 billion, if you look at also the managed funds that we manage, and we've done so producing attractive returns. As an equity matter, we've been pleased with our ability to develop the equity story. We started as a pretty small business just listed in London. We've now been listed on the New York Stock Exchange for more than 4 years. We were added to the Russell last year. And Jordan will talk some more about the developments that, that listing and our progression to a full U.S. issuer status have created. And along the way, we've led the market in evolving what we do and what this is all about. Across the top, you see a whole variety of product innovations that we have developed and that are now commonplace in this market, and we continue to innovate and evolve every day. And along the bottom, you can see how we've spread the business to become a global instead of just a U.S.-focused business. The U.S. remains our largest market, but there's an awful lot of opportunity out there as you're going to hear from some of my colleagues who have come in today from Asia and Europe to talk about those opportunities. So turning from that basic overview of who we are and what we do to the all-important question of growth. We've grown an awful lot already in our history. We raised $130 million when we IPO-ed this business in 2009. We've been able to grow that into a $7.4 billion portfolio over 15 years. And we believe that we're just getting started. I'll give you some market data down the road that will show you the enormity of the potential here. When you think about what that growth has achieved and how the business has scaled a little bit, there's some interesting statistics to unpack here. So the portfolio has a lot of cases in it. We count assets. And we have, we say, 236 assets, which means basically deals, financing deals. Sometimes that's one case, but sometimes it's a lot of cases, as I talked about with portfolios. And so in fact, underlying those 236 assets are thousands of individual litigation cases. And that provides a real level of diversification for us to be able to take advantage of. Another real evolution over time has been check size, deal size. When we started, most of the deals that we were doing were those litigation finance 101 deals where we're paying the fees and expenses and 15 years ago, the fees and expenses were cheaper. So our check size when we started was sort of $4 million, $5 million, $6 million, $7 million. Today, we've more than quadrupled that to an average check size of $22 million. And that's because while we still happily do those single case investments, we also do any number of larger, more significant investments. And that's important as well because we gained some operating leverage from doing that. It would be pretty hard to have a $7.5 billion portfolio comprised only of $5 million deals. And as you can see along the bottom of this chart, that's paid off in terms of a continued growth rate of realizations. Again, these are cash numbers. This is the cash that we're bringing back from successful investments and the profits that we're making on those investments. And along the way, we've continued to generate interesting returns. As we grew the business a lot, one of the key questions, frankly, both for us and often asked by you, was, as you grow and scale, can you continue to maintain returns? Or instead, are you going to find yourself in a world where the price of growth is a considerable compression of returns and those returns being competed away to the mean. And we said at the time, we didn't think that was going to occur for a bunch of reasons that we gave. And sure enough, it has not. We've been able to show that level of growth while maintaining strong desirable returns. And as Jon is going to demonstrate in depth, those returns are particularly attractive because they're asymmetric and they're uncorrelated. And book value has grown along the way. So people often ask me about the TAM. And look, I used to be a technology venture capital investor it's pretty easy to compute TAM for some of the things. You know how many people have phones in their pockets. You know how many people buy the software, you can run some math here. The challenge with this business and with law is that law is an absolutely enormous global industry. Just looking at the money that is spent on legal fees and associated expenses with the legal process, that's $1 trillion a year globally. Now that's not all addressable to us, obviously, but it just shows you the enormity of the numbers that we're talking about. And that's only the litigation finance 101 part of our business. The litigation finance 202 part of our business is the underlying asset value, not what the lawyers are getting paid, but what the claims are worth. And that is a huge market. It's so large that nobody has actually successfully quantified it, but it's perfectly clear that you can call it a multitrillion dollar annual market. And if you're curious about how you get to those numbers, there's a bunch of backup in these slides that takes you there. But there are even individual components of the market that are multitrillion dollar. And so this is an enormous opportunity that we still today are just scratching the surface of. This business, the issue as we go forward with this business is not about TAM and market size. The issue, frankly, is about adoption. It's about how rapidly we can persuade people one new client at a time, that this is something very much in their interest to do. And that's something we're successful at doing every year and four of my colleagues are going to come up in a few minutes and tell you just how we do that. So what about the future? So we've grown this business as I've shown, pretty significantly. And if we just use this very bare metric, the cash that we have put out the door already and the cash that we have committed in the cases that are actually ongoing to put out in the future. That number has grown already by about a 16% CAGR over the last 4 or 5 years. We believe that we can double the size of that number over the next 5 years. And as you look at these curves, you'll see that we don't need that high an annual growth rate to be able to achieve that. We can grow at a slower pace than we've grown historically and still achieve that result. And we believe that the addressable market is sufficient to allow us to do that, and we believe that the ongoing growth in client demand that we see is sufficient to allow us to do that. Why do we believe some of this about us? So it's fine to say, fine, there's a giant market out there, but this is now obviously a hot thing. I was on Bloomberg TV a couple of weeks ago and the intro, they call this a booming market in a hot space. So why is it that Burford as opposed to other people in this market are going to be able to capture that TAM and that demand that we see. Well, I think that there are a number of things in which we have individual structural advantages, moats to use the invoked term. We're the largest player by a long shot. We basically compete with two kinds of players in the market. We compete with pure-play litigation finance-only firms. Those firms are all dramatically smaller than we are. They simply don't have anything approaching the scale and that has lots of knock-on consequences in terms of access to people and data and capital. And we compete with large multi-strategy asset managers who find this area now attractive as well. But they similarly don't have our scale and our proprietary data and our market reach. They're doing this as a way to spike the performance of their credit funds. They're creating a desk or a group of people that look at this stuff, but they don't have the 175 people, the global presence and the brand recognition. So it's not just scale that is important to us, although that is certainly a moat. It is not just that we have the most recognized brand in the industry for doing this. It's not just that we have permanent capital and the lowest cost of capital in the specialty litigation finance business. It's not just that we have 15 years of proprietary data that we believe nobody else has a data set like that, which is of enormous assistance to us, both in new business generation and in making quality investment decisions, and Jon is going to touch on that some more. And it's not only that we have the resources to be able to invest in data science and artificial intelligence in a way that we don't think anyone else is doing in the industry. It's the combination of all of those things. Our moat, our competitive advantage is the combination of all of those individual things, and we are uniquely positioned with that combination. So what does that actually mean? What do we do here? How do we grow? Well, there are some simple steps. Some of these are in no way unique to Burford or legal finance. One of them is the most basic. You do more with the clients you already have, and we've been successful in that world. We have 3/4 of the law firms that we work with come back for more. We also have people all over the world. This isn't a high manufacturing style business, we can launch in a market with one person. So we have people sitting around the world in as many as 2 dozen cities at any given time. We cover those geographies, and we add new clients in those geographies because we're there. We go out to the social events with lawyers, we meet them, we talk to them, we educate them. The other thing we've done over our history, and we'll continue to do is we add new geographies. We do it moderately. And again, we don't have to make a giant capital investment to go into a new market. We're not even like an investment bank. I don't need a whole structure of analysts and associates and so on to make something work. I literally can put one person in a market and start to generate new flow from that market. And Quentin Pak in particular, who runs Asia for us, who's going to come up and talk to you about just what he's been able to achieve in Asia without that kind of infrastructure. And as we talked about earlier, we're going to continue to expand our product offerings. We've got a long history of being able to do that, and we will continue to do that and Travis is going to touch on where we're headed with that. When we talk about growth, I want to make a couple of data points to you because the evolution of the business has left us with more complexity for you to deal with. And that's, from my perspective, a welcome thing because we can generate incremental profit dollars from all of the different things that we're now doing. But it does mean that for those of you who have followed this business for a while, the metrics that we use, that we used to use are not necessarily suitable any longer. It used to be the case that we would talk about commitments and deployments. How much new business have we written and how much cash have we put out the door. And investors would sort of take those numbers and slap a multiple on them and use that as the vehicle for trying to predict the future when you model this business. The answer today is that, that isn't really a suitable way of looking at this business, and it's not something that we do anymore. We don't track those metrics in that same way internally. And the reason, as you can see in the graphic on the left here, is that we have seen a real dispersion in risk-weighted returns. So we're doing a lot of different kinds of business today, and we're making different levels of return based on the relative risk. And as you can see, and Jon is going to take you through this in more detail. As you can see, that dispersion of returns makes it very difficult to just slap a single number on. Instead, we've now devoted close to a decade of resource and time into our data science and our proprietary modeling. That's how we manage the business today. We use the output of that modeling, and Jon has a long segment to take you through that. And so what we're going to give you, we gave this to you 2, 3 years ago, and we're now going to give it to you more regularly. We're going to give the data in the middle of this slide to you every quarter, and we're going to give the data on the right-hand side, the Jon data, at least every year. And what that tells you is what's going on in the book. What is our risk assessment and what is our modeling output? And what that will let you do, in our view, is join us as a management team in looking at the same kind of data that we use when we manage the business. There's a big difference between how much money we put to work in low-risk, low-return investments and how much money we put to work in high-risk, high-return investments. And so when you look at this through our eyes, we've seen very significant growth over the past. We gave you -- we last gave you these output numbers in June -- in the fall of 2021, as of June 2021 at our Investor Day then. Then we were projecting modeled realizations from the portfolio of $3.4 billion. That number has grown by more than 30% to $4.5 billion. And Jon, again, will take you through what lies behind that. But this is how we look at the business, and this is how we'd encourage you to look at the business going forward. Another dynamic in thinking about returns is the presence -- and frankly, growth rates is the presence of large cases. So we did our first $100 million deal in 2015. Since then, we've done 13 of them. They're significant in the business. They make up more than 1/3 of the capital that we've deployed, and they have -- even though most of them have not yet concluded, they already represent more than $1 billion of cash back in. So the thing about these large deals, though, is that they don't come like a charm at the -- in the third month of every quarter for us to be able to have a nice smooth quarterly progression. In fact, we're not a quarterly based company at all. We don't even have quarterly targets for our people. It's too short a period for what we do. We look at the business on an annual basis. And even then, you get variability in our -- the presence of these large deals. In any given year, we'll have 0 or 1 or 2 of them. And so you have to have a longer-term arc to look at the growth of the business as opposed to looking at it quarter-by-quarter because one quarter is going to weigh up because, hey, we closed one of these big deals. The next quarter is going to be way down because, hey, we didn't. And in our minds, that is not significant. What's significant is the multiyear progression of this business. So what's our focus here? We've talked about growth, we've talked about our optimism about being able to double the size of that base portfolio in the next 5 years. We already have a very large portfolio that has significant cash and profit generation potential. Jon is going to walk you through why we believe that has at least $4.5 billion of realization potential in it. And our historical accuracy in being able to project those numbers. And all of that, Jordan is going to wrap together for you and talk about why he thinks that takes us, as we've historically said, to an ROE around 20%. And that's an ROE number, by the way, that we have hit in a majority of years in the last decade. I made this point at the outset that there's a lot of alignment here between the management team and shareholders. I'm not going to belabor this point again, except to underline that what that means is that we care a lot about the share price. As do you. We don't care about it necessarily on a daily basis. I can't help the fact that our uncorrelated assets are nevertheless going to take the stock price down a little bit today, given the blood bath that is going on globally. But if you look on a longer-term basis, we have outperformed any index you would care to compare us to on pretty much any duration you'd like to look at, 2-year, 5-year, 10-year, since inception. We're proud of that record, and I just want to leave you with the thought that it's something we care a lot about on a longer-term basis. We're -- this isn't a charitable operation. We're looking to make money on the stock just as we make money for you, and that's something that is important to us. It wouldn't be complete for us not to talk a little bit about YPF, but I'm only going to talk about it for a little. Jon is going to talk about it a little bit more. And I'm sure that we will have questions about it, notwithstanding the fact that we remain constrained about what we can say about even a really big asset for us that it's an ongoing litigation. But I know that there are people who are newer to the story, and so what we've done in 2 slides is we've tried to give you, first of all, on this slide, the historical progression of what has happened here and why we've ended up with this very large asset. And second, we've set out all of the relevant numbers for you to the extent that you want because I know investors can't control themselves just like our data science people can't, to try to model these things even though this one is particularly difficult to model. So we've given you all the data in one place that you can look at and really understand what's going on financially. The bottom line with YPF is that litigation risk remains here. And so within the context of that litigation risk, something can always go terribly wrong. But in any positive state of the world, in any state of the world with a positive outcome, there's not really a path for there to be something less than a 10-figure outcome for Burford itself. So we're excited by the presence of YPF and what can happen to it over the next couple of years. And finally, Travis is going to talk to you a little bit about opportunities that we see to do more. When I was talking to you before about our moats, one of the things I talked about was brand and market position. We have built, by far, the leading firm in the business of law. Before we existed, this concept didn't exist at all. There were simply law firms and there were service providers, and that was it. There was nobody providing capital to the market in any institutional way, and there was nobody pulling this market together and helping it grow. We have this unique position in the legal ecosystem. We spend hundreds of millions of dollars a year. We're one of the largest buyers of legal and ancillary services in the world. We have a deep level of knowledge about this stuff. And we plan to take that base of knowledge and do a little bit more with it. We've historically focused just on the law firms, but there are lots of things that go into taking a case to trial. You need an expert witness, you need a trial graphics firm. You need a jury consultant. You need a settlement administrator. You need all of these component pieces that we know and frankly, pay for today. And there are interesting opportunities that Travis is going to unpack for you there in addition to the opportunity to continue to invest in law firms themselves as that becomes more of what we're capable of doing. So I'm grateful for your time and attention. We're excited about this business. We think we're very well positioned to continue to grow it, to continue to make this a materially more valuable company over time by doing what we've been doing today but doing more of it in more places and by widening the aperture a little bit about where we head with it. And with that, my partner, Jon Molot, to take a deep dive into the portfolio.

Thank you, Chris. Thank you all for joining us today. I'm very excited to be here to talk to you about Burford's past, present and future. I'm going to, as Chris promised, go through the portfolio returns to date and show you just how we've been able to achieve what we have achieved, unpacking with a little more granularity, the results we've achieved from inception to today and recently. I'm going to talk about the present that Chris mentioned a bunch of competitive advantages that really do distinguish Burford from others in the space. And I'm going to focus, in particular, on our probabilistic modeling and our proprietary data set which really do set us apart and then I'm going to explain how they help us price to risk, which is very important for our business. And then I'm going to talk about the portfolio potential. That modeling tells us a great deal about the value of what we have that can deliver returns to you, our shareholders and us, our shareholders, as Chris said, going forward. So as Chris mentioned, we have delivered over $3 billion, $3.3 billion of realizations on $1.78 billion out. And with attractive returns. The returns on invested capital, the IRRs, they're very attractive. And I will say a big part of that is we're best-in-class. We're very good at what we do. But there is something inherent in the asset class that lends itself to the return profile we've been able to achieve. So I have to give some credit to the asset class. I can't take all of the credit. There's basically only 3 things that can happen when we invest in a litigation. It can go to trial and win, it can go to trial and lose. Or we can settle. And you see from the numbers, the vast majority of our matters do result in settlements, and those are great. They generate attractive returns. It happens sooner than an adjudication, and we're not bearing the binary risk of loss. And then when things go to trial, you also see we win much more often than we lose. And when we win, we win much bigger than we lose. You can see that 16% of deployed capital goes to adjudication wins. But if you run the numbers, that accounts for almost 30% of our realizations because the trial wins are bigger. What that means is this asset class, if done correctly, which I think we do, we do better than anyone. It lends itself to lots of singles and doubles. Those singles and doubles are the sorts of returns that any business would be very happy with. They're enough to make the business profitable after covering costs and losses and they're great. But that's interspersed with the home runs. The truly outsized returns that make this business a truly extraordinary business with very few strike outs, right, to have a low loss rate with the potential for that kind of high return. It's a wonderful asset class. And I can break that down with greater granularity by looking at all of our results, right? This is -- each of those bars represents one of our investments that has concluded and delivered returns. And you see on the right those are matters that have greater than a 200% return on invested capital. For those who speak MOIC, that's better than a triple. On the far left, the black, those are losses. They're fewer and they're smaller. There's an asymmetry to this return profile because when we lose, we can't lose any more than we invest. When we win, we can win many times what we invest. It's a wonderful thing. And then the blue and turquoise in the middle, those are the singles and doubles, mostly settlements, but some adjudications that came in slightly lower than the full home run. And the spread of those returns is what makes this such an attractive business. And what's really interesting about it is this representation graphically of all of our results to date it's not that far off from how a single investment if you undertake probabilistic modeling, run a Monte Carlo simulation for a single investment that we put on they're going to be the potential for loss, the potential for home runs and lots of outcomes in between. The business is set up to deliver. It's not surprising that the portfolio would deliver that because individual investments have the capacity to deliver that range of returns. Now not everything we put on has that dispersion, right? When we model it at the beginning, and I'll talk about the modeling a bit, not everything looks just like that, there are some matters that are much higher risk, higher return. So there's a bigger risk of loss and a bigger chance of a big hit. And there are other matters that are lower risk, potentially low return, usually shorter duration may be a big matter that's going to deliver attractive returns in the near term without as much risk that we can churn the capital and turn it over. And what I want to talk about now is how we price to risk and we're really good at it. The results show that. Chris threw this up here and promised a little more information. I don't think we've shown you this before. But the numbers on the left there, the modeled risk of total loss, that is our quantitative modeling. At the outset when we decide whether to make an investment. We do -- we measure it on lots of metrics. It's not as simple as, are you going to win or lose. I remember somebody asking me like, what's your batting average. It's a much more complicated question than that. But this is just one of the metrics in the modeling. What are the chances of a total loss? 0% to 10%? 10% to 25%? Over 25%? The numbers on the right, those are the actual returns on invested capital. We have achieved across that category of cases, including wins and losses. And what you see is for the higher risk cases, we made more money. For the lower risk cases, we made less money, but still very attractive returns on investment capital, we didn't take as much risk and often they are shorter duration, I'll get to that. We have a blend of matters from the high risk to the low risk and in between and we price to risk. Without our quantitative modeling, you could never achieve those results. You'd look at a suit at the beginning and you can offer cookie-cutter pricing for whatever the suit is no matter how high risk or high low risk, that is not a recipe to maximize returns for you, our shareholders and us, our shareholders. So I want to talk about how that plays out, like someone could say, "Oh, well, if you can price to risk and there are some that are really high return, why don't you just do the highest octane returns on invested capital." It would be an enormous mistake and would be leaving a $20 bill on the floor, on the street. Because we see lots of opportunities that are shorter duration, lower risk that can recycle our capital, bring in returns that we then can reinvest. So one might mistakenly look at a chart like this and say, oh, what happened in '22 and '23, Molot? You fell down on the job, right? You made a bad investment. What did you do? What was wrong? Nothing was wrong. Look on the right, we had a couple of very large, over $100 million deals that generated IRRs that are really quite attractive. In a year, we recycle the capital, the ROICs are below our average, so that's going to take down the average. Are you disappointed that we did those deals by no means. We're thrilled we did those deals. Chris mentioned another one, too. Those are just two examples. He mentioned the one where we put out $100 million. got $125 million back in 8 months, 40% IRR. Of course, we want a balance. We want matters that are going to turn capital producing healthy, robust returns with operational leverage because you're putting out a lot of money with fewer man hours. And we also want the high octane swing for the fences matters that can deliver enormous returns in the future. We want both. And we have both. It just naturally comes to us. If you understand it and model it properly. So it's not just risk that determines return levels, it's also duration and time. And this graphic shows you that not surprisingly, you look at 2024, right? 2024, that money hasn't been out very long. So not surprisingly, the relatively small portion of the 2024 vintage that has resolved with very attractive IRRs, but lower returns on invested capital. As you get to more mature vintages, the returns on invested capital go up. That stands to reason. Remember, I explained before, when we go to trial, it takes time, but we win bigger, right? It also makes sense that when things settle on the eve of trial, later in the litigation, they settle for more than when they settle at the outset, right, after a motion to dismiss because you're closer to trial. People are more scared and they'll pay more money. Also, you'll hear from Evan Meyerson, who runs U.S. commercial underwriting a little bit later, who is going to unpack our pricing. We usually build and in fact, always build duration protection into our deal terms, which means if it goes longer, we want compensation, both for the time value of money, but frankly, also for the additional risk we're taking by going through additional stages and hurdles of litigation. So as things are more mature, they can produce more outsized returns. What does that mean for our portfolio? I've used this slide before for a number of purposes. I love it because it can tell you about the past and the present and the future. But just to start, I want to unpack, if you look at the checked box and you look at the blue bars, you've got $837 million of deployed capital in mature vintages from 2015 to 2020. Although 2024 was a great year in so far as they've cleared some of the COVID backlog and we produced record cash realizations. There's still a lot left in there that's poised to deliver that, frankly, I think a lot of that may well have resolved by now, but for COVID. Now are we disappointed with those investments? By no means they're in great shape. Might it depress IRRs when those come in? Sure. Although if I were somebody buying shares now, I'd be thrilled that that's still in the portfolio. In fact, we did just buy shares right now. So we got the benefit of that. There's a lot in the portfolio that is potentially poised to deliver in the future because it hasn't resolved yet. So what's great about this slide is it shows you the past, you compare the black bars to the red, that the black is the money out and the red is the money that came back in from the black. And you can see the IRRs and returns on invested capital by vintage. And then you see the blue, which is what's in the portfolio today poised to deliver in the future. And that's what I want to turn to now. The present, what we have, how we've built it, what its value is and what it can deliver in the future. So I mentioned before, one of our core competitive advantages is our quantitative modeling and our proprietary data set. Before any matter comes to the commitments committee, not just to decide to deploy capital, but we have a 2-stage process at intake to decide whether it is something we should devote resources to underwriting. And then it comes back again if it makes it through that underwriting to decide whether we should actually pull the trigger and commit capital. Before it gets there, of course, there's going to be a legal underwriter, many of whom you'll hear from today, who's going to engage in merits-based analysis. We are the best in the business at that. We have tremendous team of talent, and they will go through and look at the law, the facts, the jurisdiction, all of the various paths that the litigation could take and the obstacles that it may face and the potential damages and the range of potential damages. But that's not enough. We would combine that with the underwriter, the legal underwriter will work with one of our quantitative analysts. We've got a really smart, really experienced group that will build a model for that investment. To translate all of those risks, all of those possibilities into numbers that we can quantify and incorporate into that model data. What kind of data? Sure, there is some public data. We take it into account. It's there. It's tells you things that useful on like what's the time to trial in a particular jurisdiction, how clogged is the docket. That's important. But the public data is lacking something that we have in our proprietary data. For one thing, it doesn't talk about settlements, it's all about adjudications because the settlements are confidential. They're not public. For another thing, it mixes together a whole bunch of stuff that creates noise because it's not just the high octane commercial disputes we invest in. It's also going to have small commercial disputes, personal injury disputes, things that aren't really relevant to our analysis. In contrast, our proprietary data, we've got 15 years of wealth of analysis and experience looking at thousands of commercial disputes. That have lots of data that's really important to incorporate. So by the time it goes to the commitments committee, we've put those things together. Otherwise, I showed you how good we have been our track record on pricing to risk we could never achieve that if we didn't have this ability. And I don't think anybody else has anything close to it. I don't even think they try. So we use this not just to decide whether to put money out in our underwriting process, but also managing cases through the litigation process, and you'll hear more about that from our team, from Andrew Farthing later today and Craig Arnott a bit. We also use it for balance sheet management, financial management, cash planning. It's very useful to finance team. We've been doing this for a while since 2017, about $1.5 billion in realizations have come from matters that were modeled and half of those were from matters that were modeled at the outset when we decided to put out capital. So how good is it, what does it tell us about our book, right? I'm telling you this is great because it helps -- it puts us at an advantage in building a book and making sure we're putting good investments in. What does it tell us about the value of the book? And I want to unpack Chris threw a number out there comparing 2021 to today. If you add up all the models, right? If you take -- because every model, remember, it's probabilistic. It's going to be a weighted average of all the possibilities for each investment. So each one is going to boil down to a single number that's all those possibilities. It could go to trial, it could settle. It could win. It could lose, it could come at high. It could come at low, weighted average. You add them all up, the number you get is $5.7 billion. Is that the number we're putting out there today? We want to give you as much information so you can model us whoever you deem fit. A lot of it, we will see is going to depend on how often cases settle versus go to trial. We apply to this for your benefit, but you can do it differently, and I'll explain why we do it. A 79% experience adjustment is what we call it. That's what generates the number, the headline number Chris talked about before, $4.5 billion, which could lead to about $2.4 billion in modeled realized gains. 110% return on invested capital, which is not a reach, right? We did that in 2024, if you look at realizations, that's right on what it was. Where is that 79% coming from? How do you determine that? Well, to decide how accurate our modeling is, it's not a simple question of how good is your modeling. You have to look at the different outcomes. Remember, when I started talking, I said there's three things that can happen. You can win, you can lose or you can settle. If you compare the model to what happens when we win, and this 114% number is not just wins and they pay the judgment. It's also settlements after an adjudication win. You win a trial, pending appeal, it settles and at a discount from what you're entitled to, to deal with the risk and time benefit of not having be through the appeal. But still, we've won. It's not surprising, we do better if you win a trial, then the probabilistic weighted average of all potential outcomes because that's a good outcome. If you take losses into account the number drops to 88%. You may say, Molot, you're falling down on the job. Why isn't 100%, right? And I would say for one thing, all modeling is inherently when you're in an investment function going to be optimistic because you don't make investments unless you think they're going to do well. But I'm not sure that's a bad thing. I think if we were 100% accurate in our modeling, that would tell you, our investors, and they would tell me that my underwriters are being too conservative and aren't willing to take on an investment that's a little murky where the prediction isn't going to be perfect. They're going to leave something on the side. They're only going to take things in where the model is perfect. I think that would be mean we are being too selective just like if you're at 100% win rate that you're doing something wrong, right? You have to have some losses. Our loss rates are very low, right? I showed you before, I skipped by it because we've been saying it for so long, but it's like, it's well under 10% of our deployments. And that's good. But if it was 0, I'd start to say, "hey, guys, we're turning down too much good stuff. The next number, the 73% that is settlements. Is that surprising? No. I've said from the beginning. When we go to trial, we do really well. When we settle, we often happily take less than we could get in a trial, but we eliminate the risk of loss and we get the money sooner. So the experience adjustment that I'm talking about is looking at the balance of how many cases have gone to trial versus settled, blending them together, that's how you end up with a 79%, meaning across wins, losses, settlements, we bring in 79% of what the model said. If things settle less, we'd be bringing in more than that. If they settle more, that's how we end up there. And it's very hard for an underwriter as good as we are at the outset to predict with precision whether a matter is going to settle or what the odds are. I remember before Chris and I founded Burford, talking to a lawyer, I have tremendous respect for and you guys should all if you know them, have tremendous respect because he's gone on to do a lot for Burford and made us a lot of money, all of us. But what he said to me was, at the outset when he's deciding whether to take a case on contingency, the thing he finds most difficult is predicting how the other side is going to react and whether they're going to come to the table to settle. It's one thing to predict what a judge or jury is going to say and how you're going to maneuver. But does the General Counsel have rivalry with the CFO, where he wants to show he's tough? Does the CFO have more power and want to clear this off the books? There are lots of political questions that can go into whether a case is settled. This case is going to settle that are not totally about legal analysis, factual analysis, there about the inner workings of the company. So -- but if we look at the last 3 years, there has been a marked uptick in settlements, right? We have less than half of our realizations coming from settlements before the last Investor Day or at least the last time we put these numbers out in June '21. Since then, it's more than 75%. And that 79% number is just coincidence. It's not the same as the other one. This is the percentage of proceeds coming from settlements. The other was the percentage of proceeds compared to the model. So just random coincidence. Why the uptick in settlement is that a trend? There are a couple of reasons why I would say it may not be a trend. For one thing, COVID. COVID led to crowded dockets, which meant that judges who wanted to clear their dockets really leaned on parties to settle. That's the easiest way to get a matter off your docket. And parties often agreed to settle because they were sick of the delays of litigation. We've been at this long enough. Let's go ahead and settle. If that's the case, if that's why we've seen such a marked increase in settlement these last few years compared to our lifetime over the 15, then you wouldn't expect that to last as the COVID dockets have cleared, you expect to revert back to the numbers we saw before that. Another reason is I mentioned, we had a couple in '22 and '23, we had a couple of very large portfolios that resolved with lower ROICs, high IRRs, and those were going to come in because they resolved so quickly below what the model result would have been the average because we price them for risk and duration. If it had gone on longer, we would have made more money, but the IRRs were very attractive, having them come in early. So those are a couple of reasons why I wouldn't expect that necessarily a trend. And frankly, when I used the baseball analogy before, I said there's lots of singles and doubles. You go a couple of years with mostly singles and doubles and some home runs, and then you hit couple of really big home runs it changes the numbers, right? So it could revert back. There's one reason why maybe it is a sign of a trend, which as Chris has talked about how we have become so mainstream. Litigation finance is an accepted part of corporate finance now. Burford is a brand name, not just among law firms, but among CFOs. So we've done a lot of deals with larger companies, with Fortune 100 companies. When a Fortune 100 company is the plaintiff you can imagine the defendant is going to take that case more seriously than when it's a smaller company. Smaller company says, oh, if you haven't breached the contract, we would have made hundreds of millions of dollars and they say, do we really believe that? Do we really believe you're going to be able to show a jury of that? But a big company says that and they say, maybe we should go to the table and settle. So we don't know the answer. We wanted to just explain to you why the increase, why we're applying this experience adjustment. But we're assuming the trends continues for purposes of these numbers. You may say it's going to revert and the numbers could end up higher than this. That's why we've taken the $5.7 billion number applied the 79% discount, brings it down to $4.5 billion, which generates about $2.4 billion of realized gains and 110% return on invested capital, which is spot on with our experience in '24, just what we've done. Now I want to make clear, this is all ex-YPF. It doesn't include the YPF investment at all, which, as Chris said, is something that under all non-negative outcomes, we would expect to deliver a 10-figure return to Burford, right? There's still litigation risk. But if it goes well, it's going to go very well. What's happening in YPF, we all know because it's been pending. There is the appeal pending in the U.S. Court of Appeals for the Second Circuit. And there's the enforcement process, both in New York, where there's enforcement proceedings and we filed recognition actions in multiple jurisdictions throughout the world. In the appeal, you can read the briefs. Argentina's lead argument is, this doesn't belong in New York that it should have been dismissed in a doctrine called forum non convenience. It would have been more convenient to litigate in Argentina. You'll also see from our briefs, that's a very difficult argument to win, both because trial judges have a lot of discretion in deciding that question, but also the calculus changes dramatically after you've gone through all the litigation and trial, right? If the doctrine is about convenience, is it really ever going to be more convenient once you've tried a case and devoted all those resources for a decade, to say, oh, let's throw it out and start again in Argentina. So that's their argument. We just -- it's going to be up to the second circuit to decide. I do want to spend a couple of minutes, though, on what has happened in Argentina in the time since we won this judgment. Before he took office, President Milei said, the debts have to be paid, he was asked specifically. Does that include the $16 billion for YPF? And he said, yes, it includes the $16 billion for YPF. Then shortly after he took office he's under the hood and sees just how bad things are in the economy and in the government's fiscal situation. He says, the problem is we don't have the cash, there's a willingness to pay, but not the cash. No hay plata, was the term he used. What has happened in Argentina since then? When he took office, there were rampant budget deficits, enormous inflation, the country risk they made it impossible to borrow and an IMF facility that just seemed impossible to get over, you can understand why he would say there's not the cash to pay. But there have been big changes, amazing progress. The deficit went from 15% of GDP back then to a 0.3% surplus. Monthly inflation was 25%, that's per month, not per year, down to 2.4%. The country risk went from close to 2,000 basis points. You can't raise debt when you have that kind of country risk in the 700s, and it has dipped at times into the 600 range. And the IMF facility that seem daunting, the largest the IMF has ever done. There are public announcements from officials that the IMF and Argentina are very close to a deal that would give Argentina the breathing room it needs. Does that mean this is all smooth sailing? I'm not making predictions about that or saying that. In fact, it's going to be noisy. It has been noisy. It will even get potentially more noisy. Why? Any big piece of litigation is going to be accompanied by that kind of noise. People don't just cut checks for $16 billion without a little bit of noise. And in fact, you may hear more noise now than you had in the past. Why? Well, a year ago -- a few months ago, when Argentina clearly didn't have the money to pay, they had so many gating issues to be able to return to the capital markets to attract foreign investment to grow the economy again. They had to deal with inflation, the deficit, country risk, the IMF debt, lots of things. As progress is made on each of those other fronts, and there are some others to deal with our issue, the judgment debts, the country faces becomes a more prominent gating issue for the country to be taken seriously by the capital markets to attract foreign investment and return to the capital markets. So that's all I'm going to say about YPF. I want to step back and just summarize what I've said. On the past, we've delivered great returns, right? It's $3.3 billion in with very attractive returns on invested capital and IRRs. The present, we have a best-in-business approach to underwriting that prices to risk using our probabilistic modeling and proprietary data. And as to the future, we've got a very valuable portfolio that model realizations would say it's $4.5 billion, 110% ROIC ex-YPF, plus the very valuable YPF-related assets. So that's the past, present and future. The question you probably want to turn to now is what is the market opportunity, meaning how did we build this portfolio, right? How do matters come in? And how are we going to bring them in, in the future? It's a great moment to ask that question because we have done historically very well during times of market turbulence, not just our stock being uncorrelated, but people end up in litigation during times of economic uncertainty. I'm going to turn it over to Katharine Wolanyk to talk to you about the Burford market opportunity and how we build our portfolio and bring new matters in.

Good morning, everyone. My name is Katharine Wolanyk and I lead Burford's intellectual property business. I've been with Burford for 9 years now. And before I came to Burford, I led intellectual property strategy for multiple technology companies. And in addition to being an attorney, I'm also an engineer, having begun my career at a Hughes Aircraft Company in California. So I'm excited to introduce our panel today on the Burford market opportunity. My three colleagues and I are engaged in different parts of Burford's broader business, and we are keen to speak to you today about how we work together to navigate the enormous global litigation market. And it all begins with business development. Burford's business development, comprehensive approach to business development has made us the market leader. If you've ever watched Burford's webcast, read our articles, seen us speak at conferences, you might be struck by how much of the Burford team is market-facing. And that's intentional. We all view business development as a key part of our role. And there are many benefits to that approach. First, we're proactively educating the market. What is possible, how they could use legal finance in their businesses. We're also demonstrating to them how smart and experienced our terrific team is. And third, by engaging broadly with the market, we are hearing their problems and it allows us to innovate our offering and our financing structures to best solve our counterparty's issues. We selected four areas of Burford's broader business to speak about today. And now I'm going to turn it over to my colleague, Emily Slater to talk about our U.S. commercial business.

Thanks, Katharine. Good morning, everyone. I'm Emily Slater. I'm a Managing Director at Burford. I've been with Burford for 15 years. Before I was with Burford, I was a litigator for 10 years, at leading law firm in New York. I work on Burford's underwriting team and with the U.S. commercial team, and I'm going to talk a little bit about the U.S. market today. U.S. market remains an incredibly important part of Burford's opportunity set, both in terms of our existing portfolio, where 50% of our assets are U.S.-based assets. And it's an incredibly important part of our opportunity growth and putting out significant capital and generating returns. And here's why. The U.S. litigation market is massive. It regularly returns multibillion-dollar verdicts and settlements. And just in 2013, over 13 million civil cases were filed in the U.S. between federal courts, state courts and the leading arbitration institutions. So there is an almost unlimited amount of opportunity in the U.S. market. The question is, how do we boil down 13 million cases into a number of high-quality investable assets for Burford. We separate the market into two basic segments: One is single party -- bespoke single-party litigation, which is this company A suing company B over a specific dispute -- a dispute that's specific to them, a breach of contract, anticompetitive behavior, other kinds of specific disputes in between them. And then we have multi-party litigation where multiple parties are injured by a similar course of conduct perpetrated by 1 or 2 or 3 big companies. So let's talk about bespoke single case finance. We love single cases. It's the core of Burford's business. It's where we started, and it delivers a lot of those singles and doubles that Jon talked about in his presentation. It's really important for us. The challenge is, there's two big challenges, big single cases. One is finding the cases when the disputes are generally private, and we don't know about them oftentimes until a case is actually filed and then the whole market knows about it. And the other problem is scale. How do we scale. They're pretty time consuming to underwrite individual cases. And so we've been looking for ways that we can scale our opportunity set and grow the business more quickly. So in terms of opportunities, we are the market leader. Everybody knows if they have -- if they want litigation finance, they know call Burford. Everybody knows that. But we have deep relationships in the market, over 15 years of developing relationships with lawyers and companies and many of the leading lawyers in the U.S. and many in-house counsel, know, not just call Burford, but they know who to call at Burford because they've talked to them, they've met with them. They've met with our senior leadership. So if you need to get something done, you know who to call. And so that relationship obviously drives a lot of important opportunity to us before it hits the market. Scale. In scale, we look really at two opportunities. One is efficiently putting out a lot of capital in one single case. And Chris talked about an $100 million opportunity like that in his presentation, where we put out $100 million into a single case. And portfolios. And those are an incredibly important part of building our capital, building our opportunity set over time, committing significant capital to a single law firm or a company particularly with law firms, we do this over and over again. We've committed a significant amount of capital to that firm. We have prenegotiated economics and we have some exclusivity with them. So when they have good cases that are -- they would like to take risk on, those are going to come to Burford, and they're not going to hit the market. So we're capturing pipeline with the best lawyers and the best law firms. And those cases are efficient for us to underwrite and put into a portfolio. And we have one of a great example of that. One of our largest portfolios, it's over $100 million. We pioneered this structure, we call it a going-forward portfolio, pioneered the structure in 2015. And with that law firm, we started with 1 or 2 cases. And over time, since then, it's still ongoing over 10 years, we've put over 20 cases into that portfolio, committed over $100 million of capital, and those are throwing off returns year in and year out over time as that portfolio continues. Talking about multiparty litigation, this is all about scale, right? This is -- we are looking for high conviction opportunities where we can invest with multiple companies that have a very similar or the same claim in one big litigation. So we underwrite it once. There's a simple, very quick process for us to underwrite what the damages are. And we can offer significant monetization to companies in a very efficient manner. So one example for that is proteins cases. If you've been following us, you've probably heard about proteins price fixing cases. There, we have producers of chicken, pork, beef and other products have engaged in a price fixing conspiracy over many, many years and have overcharged every grocery chain, every food distributor, every restaurant chain by billions of dollars for inputs of purchasing chickens, pork and beef. I mean, Hooters went bankrupt this week. They purchased billions and billions of dollars of chicken every year. They've been overcharged over many, many years for their products. So that's an opportunity for us. We have multiple investments with many large companies that have been injured in those cases. And those cases have been going since 2016. So they have been waiting for a very long time to get remunerated for their injury. So we've been able to monetize, and we have one investment of over $100 million that we deployed with a single company, and we have many other significant investments in that same litigation across the industry. So that's an example of the way that we've scaled and we really think that's a huge opportunity for us in the future. Just last year, four large cases were MDL, that means there is going to be a very large litigation, and that's a huge opportunity for us to do more of this kind of multiparty litigation. And with that, I'm going to turn it back over to Katharine, who's going to talk a little bit more about our IP business.

Hello again. So talking about intellectual property business, there's three things: One, trends in U.S. patent law have made patent litigation incredibly challenging. Two, we've evolved Burford's intellectual property business to best adapt to that dynamic legal environment. And three, as a result, Burford is seeing higher quality and a broader array of attractive patent opportunities. From context, patent litigation is a relatively small part of the overall commercial litigation world. Every year, 3,000 to 4,000 patent cases are filed primarily in U.S. federal court. It's about 10% of the federal court filings that Emily mentioned in her presentation. And of those cases that ultimately go to trial, they're very valuable. Every year, there are multiple 9- and 10-digit patent awards in the patent space. And while they should be for what they have to -- they have to survive to get there. So let's talk about that. Over the last 15 years or so, U.S. patent law has trended against patent owners, making cases more expensive, higher risk and longer duration. So patent owners who want to protect their intellectual property, who want to monetize their intellectual property, have to adapt by asserting more patents, by pursuing multi-jurisdictional litigation strategies, so perhaps filing in the U.S. and in Germany and in the U.K., perhaps the new unified patent court in Europe, perhaps in Asia. All of which -- and they also have to survive long running, hard fought, litigation battles with high stakes against some of the biggest technology companies in the world. All of this costs money and most patent owners, even well-capitalized large operating companies simply aren't able or willing to self-fund cases that have budgets of $10 million or more. So to sum it up, patent cases have become too risky and too expensive for patent owners to self-fund, and their law firms aren't willing to take contingent risk for these long-running cases. All of this makes patent legal finance essential for patent and is giving Burford access to an even broader array of higher-quality patent opportunities with very attractive returns. As legal finance has become more necessary, we took the opportunity to optimize Burford's patent investment mix. In the early days of legal finance, most patent investments were of the David and Goliath variety, where a small company, perhaps a university was filing suit asserting a couple of patents against a much larger company. And where, but for our capital, they would not have been able to bring that suit. Such cases tend to be narrow in nature, but if selectively chosen can be very valuable, and we still invest in these single cases today. But as we all know, technology has become more prevalent and more important to our world and patents have become more valuable. And corporate patent owners began to seek out options to monetize their intellectual property. And such corporates typically have global businesses and the patent portfolios to match, which can number in the hundreds to many thousands of patents. All very expensive assets to maintain with carrying costs annually of millions of dollars. So in response to this new interest in the corporate market, we leveraged our growing traffic across the entire corporate world, which is true of all of Burford, not just the patent business as well as our global presence to engage directly with these corporates and help them understand how legal finance could help them unlock some of that trapped intellectual property value. And as a result, our patent portfolio now includes a much broader mix of cases, global patent campaigns, patent divestitures, still a good mix of the single cases, broad-scale patent licensing, larger overall deal size with attractive returns. And as of the end of 2024, Burford's patent investments made up 21% of Burford's overall portfolio, ex YPF. We also reinvented our business development and underwriting processes to best succeed in this challenging legal environment. In the early days, most of the IPR -- IP looked for litigation-ready patent cases. These are cases that largely came to us via law firms with the litigation strategies already set and really didn't allow us to display the full range of our value as a strategic adviser. As time went on, we now engage with corporates directly and in much more of a consultative manner. We engage with our very experienced patent team, which has years of experience both in the law firm world and like me in the corporate side of intellectual property, to work very closely with the companies and help them understand what's possible. We begin the conversation by discussing what are their business goals. Are they trying to protect their intellectual property, perhaps vis-a-vis a competitor? Are they trying to generate revenues from the intellectual property, maybe they're trying to reduce costs. We then talk to them about what's their preferred approach to leveraging their intellectual property. Perhaps it's to assert their intellectual property directly as a plaintiff or to outsource the monetization via divestiture. We then iterate with them focusing on their specific patents and the related technologies to develop a strategy that will help them achieve those business goals. And this iterative process has the value of allowing us to engage very deeply with these companies understand their businesses and perhaps unlock multiple deals and also gives us the ability to discover perhaps more attractive opportunities because we're working within perhaps hundreds or thousands of patents. And we get the added benefit of them having a strong innovation story and pedigree, which is helpful in the litigation that might come. So to recap, our intellectual property business operates within an increasingly global environment, and against the backdrop of a lot of legal challenges, but with our deep experience in the patent space and our innovative approach, we are the go-to partner in the intellectual property market. I'm now going to turn it over to my colleague, Philipp, who's going to talk to you about our business in Mainland Europe.

Thank you very much, Katharine. Good morning, everyone. I'm Philipp Leibfried and I'm responsible for finding opportunities in Europe. I'm based in the London office of Burford and joined from Freshfields some years ago. I'm actually from Germany, though. So I'm an English lawyer and a German national. So that's been quite useful for Burford's growth, as will become apparent. Right. Let's talk about Europe. Europe is an enormous market of great significance. It's diverse, it's complicated, and it brings opportunity, which is what matters for you. And if there's one thing I'd like you to take away today is that Europe is really one of the absolutely key growth opportunities for Burford and its shareholders. Let's unpack that a little bit. I'll focus on two jurisdictions in Europe. One is Germany and the other is Spain. But it's very important to bear in mind that there are lots of other important jurisdictions there. And they're all connected and diverse, and we understand them all and tackle them in the right way. With respect to Germany, I'll talk about something called the assignment model, and that is a way of efficiently bundling different claims in one structure and obtain redress in that way. And I'll also talk about Spain, and I'll talk there about corporate portfolios, which is really an idea that many of my colleagues have talked about before. That is already big in the U.S. It's also happening in Europe now, and that also means growth. Let's talk about Germany. Germany, of course, needs no introduction. It's a massive market. It's a critical EU member state. It drives much of the EU agenda and that sort of thing. And it's also undergoing a significant degree of fiscal expansion under the Merz administration. That is unprecedented. It's a generationally significant thing. It will have a huge impact on the country. So it's a big market. And if you think back 10 years ago, Burford essentially had no business in Continental Europe. And now thanks to our efforts in Germany, we're probably the largest funder in Germany easily, and we have scale. That is very, very significant. One reason we have that scale is the assignment model. And let me explain that to you by reference to a concrete example. So there's a big ongoing litigation in Germany called the round timber litigation. So this is about round timbers, the logs from the forest that are bought by timber companies and then cut up into pieces and sold. It's actually a very significant industry in Germany. And what's happened there is that the timber buyers have been overcharged by the states that sell the timber from the forests in a significant manner. And in fact, many of the businesses have gone out of business. So the class of these people are SMEs. Most of them are quite small. Some of them are a bit larger. And there is -- if you think about it, if you're a small SME company somewhere in the German forest there is no way of you suing your state and probably, you're probably too afraid to see your state with a high-quality law firm and a thought-out strategy and the capital to go to the end. So what we've done is that we are essentially backing the entire German timber industry in a collective action, a collective redress model to pursue antitrust claims against a number of German states that have essentially fixed prices for timber. And the problem in the past was that there was no way of doing that in an efficient way in Germany. The assignment model means essentially that you transfer your claim into a collective structure that is backed by Burford Capital with its capital and it enables each and every one of those members of the group to benefit from the eventual outcome. That is dramatic, and that has really changed the landscape in Germany. The assignment model has been backed not just by the German Supreme Court, but also by the European Court of Justice, the highest authority in the system. So that is very, very significant. And that has been a key reason for Burford's growth in Germany and its market-leading presence right now. And this assignment model is very, very significant, by the way, for the entire European Union. You see it being used in the Netherlands. It's beginning to be used in Spain, which I'll talk about shortly. And that is very important because we're at the forefront of it, and it means growth. Right. Let's move to Spain. It's very interesting to contrast Spain and Germany. Because Germany we've already tackled and we are very big there. Spain is different. Spain is a very interesting market. Let me give you some of the features. Legal fees are quite low in Spain, but it's a large economy. Lawyers can take risk, which is quite unusual in Mainland Europe. And they're also very, very notably -- very notably open to legal finance. So lawyers, they are very, very open to using it companies are using it. And that's what I'll talk to you about now. So this is this topic of corporate portfolios. Spain has a lot of very important international multinational companies. The [indiscernible] is the main example. But it applies in other European countries, too. But in Spain, it's very interesting to talk about it. So we're in a market position now at Burford where we regularly field inquiries from large corporations for multi cases, single cases and entire portfolio of cases. And one interesting trend that's happening in Spain right now, for example, is tax disputes, tax litigation. It's complicated, it's difficult and it's something that we can actually look at. So what does that mean for growth though? And this goes back to the moat that Chris was talking about. When clients come to us with a large portfolio of cases that entails probably a multitude of different things, it could be an IP matter that we can attack with Katharine's team. It could be a tax matter. It could be a large arbitration against another large company or even a sovereign that we can tackle with our arbitration team. So the point is taking all the features that Chris and Jon were talking about we can address these portfolios for corporates in a way that no one can because we have the scale of the capital, we can diligence all of these different matters in-house. We have the proprietary data and the modeling to look at it all. We don't need anyone else to do it. No one can do that. No one can do that. And we have the brand. And that means people are calling us, and it's something that is just an enormously significant growth opportunity in Europe. And to go back to where I started, that is what I want you to take away from this. Europe means growth. Right. With that, I'll turn you over to my colleague, Quentin Pak, who will talk to you about another significant growth area, and that is Asia.

Thank you, Philipp Leibfried. Good morning, everybody. My name is Quentin Pak, and I'm based in Burford, Singapore office. I have now been at Burford almost 8 years now. So time really has flown. And so prior to Burford, I was actually in investment banking for about 13 years, but I started off my career as a lawyer. I was a derivatives lawyer. So now I'm combining both legal and finance and joined Burford. So today, I'd like to talk to you about the Asia business. First, by sharing with you some of the observations of the legal landscape in the region, what the opportunities are that we see and more importantly, how Burford captures those opportunities. Now we all know that Asia has some of the world's largest economies. That's not new. But what you may not know is that some of the most important global dispute resolution hubs are also located in Asia. So Singapore and Hong Kong are actually two of the most popular arbitration seats in the world. Now that's all very interesting. What does that mean for us? Is there a market for what we do. And that's where policy tailwind comes in. There are three jurisdictions in Asia, so Hong Kong, Singapore and imminently Malaysia that actually have formal arbitration funding framework. Policymakers and governments in Asia are also very supportive in the use of legal finance. And this is significant if you think about it, because we are in a new industry, and we have the government actually trying proactively building a market for us, a market in which we are the leader. So that's why for Burford it is a sizable market of opportunities. Now let's dig a little deeper, what are these opportunities we're talking about. First, again, on the left-hand side of the slide, again, you see Hong Kong and Singapore. So two of the most established jurisdictions in the region and where Burford has offices. Now these two jurisdictions have a lot in common. Both are English common law-based jurisdictions, both allow arbitration funding, and both also allow the funding of insolvency practitioners to bring claims on behalf of insolvency estates. Even more interestingly, and Asia is a region full of big economies, we work with companies in those large economies like Korea and India, helping clients there with the global dispute portfolios. Now I'll give you two examples. So recently, we worked Katharine and I actually, in the intellectual property space. We worked with a Korean tech company that has a portfolio of patterns that are being infringed by a much larger global player. So we worked together and came up with some funding solutions allowing the company to bring patent infringement claims in the U.S. District Court as well as a trade secret misappropriation claiming at the ITC. Now another example would be India. We're now currently working with insolvency resolution professional of an Indian company in the aerospace industry. And it has a dispute of quality and also delivery of parts with a parts manufacturer. And this is exactly the situation that we want to come in because of this dispute, the delivery issues, the quality issues, this company now is on the brink of insolvency. So we worked with the insolvency professional and came up again with a financing solution, allowing the company to bring claims, and this is a big claim, it's a 9-digit claim, and this is an arbitration outside the region. Now you heard Philipp talking about the assignment model. And also, Katharine talked about some of the more complex structures that she sees in the patent world, law firm portfolios that Emily mentioned. In Asia, to be honest, we're not quite there yet. It's a new market. So it's still very much a single case market, which Emily said she loved. So from a product perspective, it's relatively simple. But in terms of market dynamic, it's a very complex region. Asia has over 40 jurisdictions. So how do we navigate this market? How does Burford find suitable opportunities for investments in such a diverse region? Now you can think of our Asia strategy as three simple points. First, we're targeted. So we know the types of companies that we want to work with, we know the law firms that we want to work with. And in Asia, there are some leading local law firms that actually bring us a lot of business. So we know who our partners are. More importantly, we take a one-team approach. Now we have origination capability on the ground. Chris mentioned, we have cities all over the world, some of our staff who understand local market dynamics, who understand -- who have deep relationships with corporates there. So that we have the same in Asia. But when it comes to underwriting, the Asia underwriting expertise actually resides with our global underwriting team. Our market-leading global underwriting team that Jon was talking about. So not only do we have Asia qualified lawyers sitting in Asia, we have Asia qualified lawyers sitting in London, for example. So it's very much a global team. And that is important because it ensures consistency across how we underwrite cases. We make sure that we see the good cases, applying the same standards. And also from a risk perspective, we make sure we can manage the risk profile of the investments that we see in the region. Now the third part of the strategy is that we are selective. We cherry-pick the best case that we see. This again is important. We see deal flow across the region. And again, you can imagine in Asia, the deals that we see fall into a very wide spectrum of risk profile. There are those that come from very established jurisdictions with strong rule of law to some of the other jurisdictions in the region, which frankly, you can say the legal framework is a little bit more murky. And that's where we have collection risk. So we need to be careful. So what we do is we select the opportunities that make sense for us. So these are proceedings where there is integrity in how the proceedings are conducted. There are investments in robust jurisdictions where there is rule of law. And more importantly for us as a business, we make sure we get the returns that we want from the opportunities that we see in the region. So that's, in a nutshell, our Asia strategy, we are targeted, we are selective, and we are also consistent. So going back to our global business. So the four of us have given you a glimpse of the opportunities that we see in the market and also how Burford has demonstrated success in capturing these opportunities. And again, more interestingly for everyone in this room, converted them into returns. And this is the message I want to leave you with. Burford is in the best position to capture these market opportunities because we have specialized teams, best-in-class underwriters, best-in-class originators. We're the pioneers in the industry. So we have a lot of experience in developing the market. We know how to develop the market. We know how to educate people in different industries and in different geographies. And as a result, we know what the market needs. So that's the end of the market opportunity presentation. So thank you very much, and I hope that has been informative. We have now come to halfway through the morning. So it's time for a break. We'll take a 15-minute break. So we look forward to seeing you back here at 10:55. Thank you. [Break]

Okay. Thanks, everyone. We're going to get started back with our second panel presentation that we call the life cycle of a deal, which is going to give you some insight into Burford's underwriting and case management process. And to kick things off there, we have Craig Arnott who, as we mentioned, is virtual today. Craig, are you there?

I'm here, Josh.

Fantastic. Take it away.

Thank you, Josh. Hello, [indiscernible] and welcome back to this part of the presentation to look at what we call the life cycle of our litigation finance assets. I'm Craig Arnott, Deputy Chief Investment Officer. Today, beaming in from London, as everyone has said, after a sorry Passport tale, but nothing stops us. I am joined by my colleagues, Evan Meyerson, Managing Director in our New York office, who leads our U.S. commercial business; and Andrew Farthing, a director in the U.S. based in Texas, who helps lead our case management efforts all over the world, and they are alive with you on stage. So the big question, what is the life cycle of the litigation finance assets? In a nutshell, it's the three stages of a legal finance asset at Burford that will ensure we maximize investment returns. First, it's underwriting. Our underwriters review a case that's looking for finance and recommend that the good case is move to final approval and funding. But it's how they do that, that matters and more of that to come. Second, deal structure. Our underwriters also work as the deal team with the counterparty structuring terms that will protect our capital and maximize our returns. And third, case management. Our case managers oversee our investments once they're in the portfolio, working with our counterparty. So that they can be in the best position to settle and when if it has to go to trial, Burford is their partner throughout. Now Andrew is going to pick up the case management section. And Evan and I are going to look at the stages that move an opportunity to a deal to an investment. Now the next slide shows how we do that. A legal finance opportunity you see starts at the top of an underwriting funnel, shown here on the slide. What happens is that once it comes in through the door, so to speak, it moves through diligence and approval and all the way to a financing agreement and financings. The numbers here, you see on the side, as they so often do tell the real story. And they show how through this process, we filter and can identify the most valuable opportunities. There's a large top of the funnel that you see because there are many thousands of inquiries and opportunities that are brought to Burford every year. Those opportunities come from our own business development outreach, referrals from law firms with which we have relationships, direct engagement from repeat clients, it can be corporate or law firms, as you've heard today, and unsolicited inbound inquiries, which are very numerous because we are the market leader. They come through the door, we then conduct progressive diligence on those opportunities, and this is where our underwriters use Burford's proprietary data, exclusively ours, of course, 15 years of data, thousands of cases reviewed, whether we funded them or not and what happened afterwards. That helps us work out what not just looks good on paper, not just what any legal analysts or researcher would say, but what from real lived legal experience is the type of case that will settle or will win if it has to be dueled out in court. And so ultimately, we take forward just a small fraction of those cases for financing that come through the door. And you see here the 2024 numbers, 2,000-plus inquiries became 806, which were identified as potential opportunities, which then became 296 subjected to a more intensive diligence process. And it's that diligence process and its rigor that Evan is going to tell you some more about now.

Thank you, Craig. Good morning. As Craig mentioned, I'm Evan Meyerson. I joined Burford in 2019, and I head up our U.S. commercial business. And I'm excited to walk you through the three main aspects of our underwriting process. First, how we diligence a new matter; second, how we structure our deals; and third, how we price those deals. The starting point for any legal finance asset that we underwrite, is the diligence process. And as Jon noted earlier, we place great importance on our probabilistic modeling to generate outputs. To inform the inputs of those models, we undertake a rigorous diligence process. So let's talk about that best-in-class diligence process. There are three overarching buckets of diligence that we focus our attention to, and you can see those here. The first are the merits; second, damages; and third, collection risk. The starting point for any conversation internally is the merits. We're trying to answer a threshold question. And that threshold question is, what are the chances of success for our counterparty to our deal and its dispute. And to answer that question, we think about a number of different factors, including the facts of the case, is there a compelling narrative of misconduct by the opposing party, the relevant law, even if there's a compelling fact pattern, does our counterparty have an entitlement to damages under the laws applied to those facts. The stage of the case, Burford is stage agnostic, but certainly, the earlier the stage, the riskier it is, and that's where we'll use our different structures and pricing mechanisms to price around that risk. Jurisdiction and courts. Is this a jurisdiction? Is this a court? That has handled this subject matter before? If not, we'll price that risk as well. And last but certainly not least, duration. Critical to every underwriting exercise we undertake is the question of how long will this matter take to resolve, both at the various inflection points for settlement, as Jon talked about, most of our opportunities settle and if not, through trial and appeal. So once we have all of those inputs, the underwriting team works hand-in-hand with our quantitative analysts to come up with a probabilistic model. And we include all of Burford's proprietary data and analytics to come up with those inputs and outputs. And when you think about Burford's secret sauce, it really is the combination of our scale, our global reach and this underwriting effort taken on by our talented group of underwriters, all doing this in-house. And it's that combination that separates us from the pack in the marketplace and allows us to get it right 93% of the time. So let's talk briefly about how we structure our deals. You saw Chris go through this earlier, Burford prides itself on customizing our deals to suit the needs and interest of our clients. But the simplest way to think about our restructuring is really a 2 x 2 x 2 matrix. For each one of our deals, typically, there's 1 of 2 potential counterparties, either a law firm or the litigant. For each of our deals, there's typically 2 sets of potential collateral, either a single case event, which you heard Emily say, we love or portfolios. And last, there's 2 typical uses for our capital. either to fund the litigation budget, so that's the fees and expenses that can go into actually prosecuting a case or monetizing our counterparty. And by monetizing, again, what we're really talking about is effectively in advance on damages, untethered to the cost of that litigation, treating a legal claim as an asset and providing effectively a corporate finance solution for both law firms and counterparties who have these claims and have those economics. So now we have done our diligence. We've thought about what structure works for this opportunity. Let's talk about pricing. How does Burford price its deals? The answer is simple. We price to the risk. And as you've heard, our capital solution is nonrecourse. So what that means is if our counterparty loses they keep our money with no obligation to repay Burford. And the way we see a return is only in a successful outcome in their dispute. So the risk is real. You heard both Jon and Chris talk at some length about the extraordinary level of effectiveness with which we have historically been able to price this risk. And I can tell you, having spent the last 6 years actively pursuing deals in this market, time and time again, Burford stands alone as the only capital provider willing to commit big dollars to legal risk. Chris talk about our competitive landscape. On the one hand, we have pure-play funders of litigation, none of which have Burford -- none of whom have Burford's scale. So only Burford in that market can commit big dollars. And then we have multi-strats who also participate in our space. And while they have scale, they don't have the appetite for risk that Burford has. They are typically targeting credit return type profiles. And so what you have is a unique positioning for Burford in that marketplace where again, we are more times than not the only provider of capital willing to commit big dollars to legal risk. And to see an example of this, one needs to look no further than the $100 million deal both Jon and Chris referenced earlier in our presentation that we closed in 2024 and resolved in 2025. That was a deal that I executed. And I can tell you, at the start of that process, it was hypercompetitive. There were lots of interested parties looking to provide capital against this asset. And at the end of that process, there was one capital provider left standing, and that was Burford. We were the only ones in the market willing to put up $100 million toward that risk, and we have $125 million to show for it 8 months later. So what does that mean? It means that Burford's competitive advantage is our creativity and our ability to meet the needs of our clients, their interests, their needs, while also generating a meaningful return for our shareholders. And we do that not just through our diligence process, not just through restructuring but through pricing. So back to pricing. In most of our deals, there are three levers that we can pull. And oftentimes, we combine all three. First is a fixed return. A staple of most deals that Burford does is a first dollar return to Burford of its deployed capital at the time a case resolves. And typically, we're also appending a multiple to that return. So that multiple will often rise over time, but that's the fixed portion of our pricing. Then there's a variable return, which is effectively a percentage of the outcome. And finally, as Jon mentioned, duration protection. Given the asset class we operate in and the long duration of those assets, potential long duration, we will typically have a rate of return that applies a few years after we close an opportunity. And again, we're mixing and matching these pricing terms. I'll give you two examples about how we think about this. One is a deal we closed last year where we were very bullish on the merits, the economics were tighter. And so what we did was emphasize the fixed portion of our return to ensure that Burford's downside was protected. In another, we like the merits a lot, but it was riskier, yet there was more home run potential in line with what Jon was showing you in charts earlier in the presentation. And so to maximize our exposure to that potential home run, we emphasized the variable return. And so there, we had a smaller fixed portion. So we still would get our money back, but a smaller multiple, and we have more exposure to the upside with a percentage of the outcome. So that's how we think about pricing. Now that we have diligence to matter, we've negotiated a structure. We've negotiated pricing. I'm going to turn it back over to Craig on the screen to talk about how we execute our deals.

So yes, it's back to the funnel. Where are we in the life cycle? Well, we've been through the diligence process, Evan shown us that. And that's what the team does as well, goes through that process, discusses good prospects with other members of senior management throughout the way, throughout their conduct of the diligence, still needs to get to and through commitments committee. On commitments committee, including me, together, we've got 250 years, actually over 250 years of combined litigation experience, that's all of us together combined. But what do we do? We test the conclusions of the underwriters and the modeling of the quants and they'll all present to commitments committee and especially we'll make sure that the pricing will deliver in a way that is matched to the risk of the case. For instance, to give an example of the type of discussion that could come up. You might get a CC member who will say to the underwriting who's presenting, look, you're modeling strong IRRs, that's good. But we've got some doubts about the assumptions you've made about the appellate duration, for instance. So should we add an IRR floor to the deal terms? And through the discussion, it might turn out that CC is only prepared to move forward with that deal, with that IRR floor because they want to be sure of that return. So again, if you look at the slide, it's the numbers that tell the story of the complete process. Of the thousands we started with 55 went to commitments committee. And then you see most made it through, but not all of them, 41 went on to close. That means 41 new matters in the portfolio, that's where Andrew and the case management team step in and help manage these to resolution. Andrew is going to tell you about that now.

Good morning. I'm Andrew Farthing and I joined Burford about a year ago on the case management team. Before joining Burford, I spent more than a decade at a consumer electronics company you may or may not have heard of. At one time, it was known for thinking different, but I managed a number of commercial litigation matters there in my time. So in case management, what do we do? Our goal is to make sure that the money that come goes out through our funding agreements comes back to us through successful realizations. That's what case management is all about. It's not a passive process. It's very much an active process. But start with the money because that's what in some respects, it's all about. Budgeting, follow-on deployments, how much is this litigation going to cost? That's going to be something that was discussed during the underwriting process. Typically, there's going to be a budget agreed between the underwriter and our counterparty, by us and our counterparty so that we have a sense of what is this going to cost? We're in the case management team is going to follow along throughout the process. We're going to be actively engaged with the law firm, within our counterparty to understand where are we in the case, are we where we thought we would be? Are we spending the kind of money we thought we would be on fees, on expenses, on expert witnesses, whatever it happens to be. It's our job in the case management team to make those in the litigation finance 101 types of deals that Chris talked about at the beginning, to send that financing to the law firms to pay their fees and expenses on a regular basis. And the goal of all this really is to make sure that our counterparties have enough resources to bring litigate to a successful conclusion. The last thing you want is for them to get partway through and then not have enough money to be able to credibly threaten to take the case to and through trial and to appeal because even as we've talked about, winning a trial does not mean you collect the money. You have to be able to proceed further. So what else do we do under the case management team. We also serve as a second set of expert eyes on the case. The way I like to think about this is, how do we win? That's, in my view, the most fun part of litigating, how do we win? And so that takes a lot of different ways we can help to improve the presentation of the case. That's through filings, through complaints, through legal briefs and also through oral presentations by attorneys. So we will sit as a court judge and we will ask questions of the attorney that's going to argue a motion, ask them tough questions, well, what about this? Or had you thought about it that way? Or would you conceive the following things that will help them to prepare for that presentation so that they can be able to provide the best version of the case to the judge. As just a different example of that, I recently had a counterparty come to me and say, "Hey, we have this expert in our case. He's not really working out. We're looking to change to a different expert. Well, we've heard good things about this person. Do you know anything about them?" I said, "Oh, yes, actually, I do. I took a case to trial with that expert 3 years ago. Let me tell you a little bit about them." And so we were able to together, work together come and find a good solution on a replacement expert so that we can bring that case to a successful resolution. And as you've heard several times today, the successful resolution of most of these cases is going to come through the settlement process. On the case management team, we can help provide both quantitative and qualitative assistance to our counterparties in that process. The quantitative side of things comes from our proprietary data. As just one example, I recently had a counterparty come to us and say, "Hey, the defendants are proposing a settlement. Here's the number they've thrown out. We're talking through it with our counsel, but we would be interested to get your take. Are we getting low ball? Or are we getting a fair shake?" So I work with our quantitative team, and I call back to the counterparty and I'm able to tell them, I think helpful news, which is, well, one, it's not a low ball, but two, it's also not really a fair deal. It's kind of somewhere in between, which almost makes sense, right? It's high enough to be attractive, but it's also not so high that the defendants really want to pay that amount quite yet. And so that quantitative input was helpful to the counterparty. But I was also able to give them some qualitative information as well. Been following along with the case, understand what's going on with it, understanding how we're going to win the case and say, here's some of the things you might want to emphasize when you go back to the defendants and say, here's why you need to pay us more. Here are the risks that you're facing and here's why we're going to win. And so it enable the counterparty, empower them to be able to make those decisions in a positive way. And then finally, we can do small things even just like provide settlement calculators to the counterparties, lawyers, math, they don't always go together. But we're able to do that in a way that helps empower our counterparty sitting in the mediation or perhaps later to be able to say, yes, this is what I want to do, if I accept this amount, this is how much I'm going to get, this is how much my law firm is going to get. This is how much my counterparty at Burford is going to get. And by doing that, by following along through the case financially, through the spend and the budget, by following along the case on the merits and providing a second set of expert eyes to our counterparties, and by providing assistance through the settlement negotiation and process. On the case management team, we're able to help maximize the value of our legal finance assets in a way that provides better returns for ourselves and for you as our shareholders. And now to wrap it back up, I'm going to hand it back to Craig in London.

Thanks, Andrew. So where does this lead us? Let me recap the three stages: One, choosing the right matters. Our underwriting team with the exclusive benefit of our proprietary data and experience of what funded cases win, identifies valuable claims with good return profile so that we can focus on the best prospects -- done the best prospects; two, the terms. We need to agree with our counterparty a structure that can deliver the returns we want and keep us aligned to achieve that success; and three, to work with the counterparty and the lawyers to bring in those returns in a timely way and as cash. That is the core of Burford's business. Now we're going to move on to the next section, which is new business opportunities. And Travis Lenkner, our Chief Development Officer, is going to take you through that.

Thank you, Craig. Good morning, everyone. As Craig said, I'm Travis Lenkner. And I'm excited to have rejoined Burford last fall, focused on corporate development and growth. This morning, so far, you've heard about Burford's accomplishments, the strength of our existing portfolio and the opportunity for our existing investment team. But Burford's growth potential is not limited to our case finance business. Right now, we're at a time of significant change and development in the broader legal industry. And thanks to our size and brand Burford is well positioned to take advantage of that change. Over the next few minutes, you'll learn more about our corporate development function, which is focused on Burford's future and on continuing to extend our reach throughout the legal industry. We'll start with an overview of the legal services industry at a high level and then take you through a few of the areas where we're spending some of our time. So let's start by returning to a slide that Chris used at the outset to orient you to the global legal industry. Burford invests in legal assets, primarily claims and judgments in jurisdictions around the world. And as Chris shared with you, that is a pretty enormous TAM. It's so large and distributed all around the world in arbitration, litigation, all the different fora that it's pretty much impossible to quantify, but we know that it's big. For Burford, growth here on the left side of this chart means continuing to innovate around investment structures and strategies and also improving our investment processes to make them even more effective and efficient. But we also see opportunities on the right-hand side of this chart in the legal services sector, which itself is a more than $1 trillion industry each year. And that comprises two main components: One, more than $800 billion in revenue annually for law firms around the globe, including about $350 billion in the U.S., and then another $200 billion in annual revenue for companies that provide services related to legal and regulatory processes. Now there are a lot of ways to illustrate why this sector has grown at the speed that it has and why it's continuing to grow. But as one example, take a look at this. Since the beginning of the 20th century, the U.S. population has grown by 435%. Over the same period, U.S. lawyer population has grown by more than 1,000%. If you find this chart somewhat unsettling, even disturbing, you are not alone. I will let you insert your own lawyer joke here, but I will just say that at Burford, we refer to this chart as market opportunity. But more important, I think, than the number of lawyers is where they are and how they practice. Now it's true, a lot of the attention in the profession is focused on the mega firms, the large firms, the sophisticated boutiques. Indeed, they dominate the headlines, and they also take up most of our attention at Burford in our investing business. But as you can see, the vast majority of U.S. lawyers that are in private practice or solo practitioners or operate within very small firms. And they are increasingly reliant on outside service providers and resources to do their work every day. So that's a quick overview of the $1 trillion legal services market. For Burford, opportunity in this space takes many forms. At a high level, what it means is investing in legal service businesses, including law firms, and extending our reach in a sector where we are already one of the leading institutional brands. We see a future where Burford's capital and services extend throughout the legal industry in ways that enhance our existing business and create new opportunities for revenue. And over the next few minutes, I just want to share with you briefly about three areas where we're spending a little bit of our time, law firm equity, the alternative delivery of legal services, and legal tech, including artificial intelligence. So law firm equity. Regulatory changes in the U.S., the U.K. and around the world are opening up law firms to outside investment. Some of those changes took place quite some time ago now, some are more recent. And when those changes are combined with some of the structures that have been used in other professions to allow outside investment, all of that together is generating a really robust market and a lot of attention now being paid to this space. So first in the U.S. historically and really still today, the dominating rule by far and historically, the rule everywhere prohibited non-lawyer ownership in law firms and a separate rule said that lawyers could not divide legal fees with non-lawyers. That is changing. It's changing very slowly as things do in the legal profession. But unquestionably, the trend is toward a liberalization of those rules. And nowhere is that more apparent than in Arizona. Five years ago, Arizona created and then rolled out in 2021, its own alternative business structure process to allow ABS licenses for law firms that would be owned in part or in whole by non-lawyers. And as part of that program, Arizona has granted more than 100 ABS licenses. You may have seen most recently this past quarter, granting an ABS license for KPMG. Pretty significant development and an illustration of how that space has really come up the market and is starting to become more institutionalized than when it started. So that trend combined with synthetic ownership and service co structures that have been used in public accounting and health care to allow outside investment in those professions is leading to a pretty robust market and a lot of activity around law firm investment in the U.S. In the U.K., the rules changed quite a while ago. Early on, a lot of attention was being paid to publicly listed law firm vehicles. That has cooled somewhat, but in the last couple of years, it's been replaced by an increasingly robust private market. At Burford, we made our first law firm equity investment in the U.K. in 2020. By the way, that investment is still ongoing. All of our capital has been returned. And to date, it has generated a more than 33% IRR. We will continue to invest in this space in the U.S., in the U.K. and in other jurisdictions around the world as those markets and regulations open up and as the attention in that market starts to rise within it, to larger and more institutionalized firms. Natural transition from the topic of nonlawyer ownership in law firms to the so-called alternative legal service providers or ALSPs, is a really clunky name for non-law firm companies that provide lost services but they don't actually engage in the practice of law. And because they're law companies not law firms, they can be owned by anyone. This sector is growing pretty rapidly at a faster clip than the annual growth rate for law firms themselves. And it's increasingly taking advantage of technology to expand market share and enhance margins as well. And the technological developments within the ALSP space are reflective of the broader trend toward legal technology, including AI. Historically, not a shocking statement to make that lawyers were tech resistant, really remarkably so, and have only recently raced to start to catch up. And a lot of the fuel for that effort and the impetus for that effort is coming through artificial intelligence and as a result of artificial intelligence. Now no investor presentation in 2025 would be complete without a mention of artificial intelligence, so you can all consider that box checked now. And I assume we'll see some research reports reflecting that this was discussed for quite some time. But in seriousness, legal is one of the sectors that is poised to be most affected by AI for some pretty natural and obvious reasons. So that is the gas in the tank of a broader legal tech space. Legal tech used to be an oxymoron, and now it's its own specific vertical within legal services, and it's taking off pretty rapidly. And you see that both within law firms that are spending more on these resources and trying to adapt and keep up and within companies and in-house law departments that are devoting an increasing share of their budgets to taking advantage of these tools as they in-source more work from law firms, but then work with outside vendors and companies to perform that work more efficiently themselves. At Burford, we will also continue to lead the market in our own internal efforts to use proprietary AI to enhance our origination and our underwriting platforms. So in these three areas and others, there is a lot of opportunity right now in the legal services market. And as I said at the outset, it's really a time of significant change for a variety of regulatory and tech-powered reasons. But that is a pretty generic point. What matters for you and for all of us, is that Burford is really perfectly situated to take advantage of these changes, perfectly situated to take advantage of this moment. Why is that? Well, we are the world's largest investor dedicated to the legal space. No question about that. We are also, as Chris mentioned earlier, one of the world's largest consumers of these legal services, buyers of services from law firms and law service companies. And as you've seen demonstrated by the breadth of our team this morning, we are learning from and learning about lawyers, law firms and the legal profession every day throughout our business in everything we do. From Craig telling you about the top of our funnel, seeing more than 2,000 cases and investment opportunities every year and us performing diligence on a significant subset of those. All the way to Andrew at the other end of the process, talking about the depth of engagement that we have with lawyers and law firms in terms of how they think about their work and also how we manage our legal spend. So it's for all those reasons. Our expertise, our resources and our global reach that we will continue to pursue organic growth while also remaining open to and opportunistic about inorganic possibilities that the market might present. Above all, we will remain committed to continuing Burford's track record of innovation in the legal space. Chris and Jon founded this company to bring capital and finance principles to a stodgy profession that had been really slow to adapt them. We will continue to lead the way in the legal industry, deploying our capital and our ideas in a disciplined, responsible way. As the market matures. Disciplined, responsible and mature are also three words you want to hear someone use when they describe our next presenter and that's our Chief Financial Officer, my colleague and friend, Jordan Licht. Thank you all very much.

I'll tell you the three words I used to describe Travis. No, but thank you, everyone. It's great to see a lot of familiar faces and also new shareholders in the room. I'm going to focus now on bringing together what my colleagues spoke about into four key themes. The first theme, and we hit upon this all the time, cash. Cash is what drives the business. We've put out for the balance sheet $1.8 billion and brought home $3.3 billion. We're focused on cash. How does that translate though into our unit economics. And I'll spend some time talking about the top of the economic funnel and how that makes its way down to the bottom line. Of course, cash doesn't match GAAP. I wish it did, it doesn't. Craig talked about the commitments committee memo. I promise you our modeling team doesn't actually model out the GAAP. They focus on the cash, but I'll walk through the differences and why they exist. And then finally bring that all together into how we're going to generate a long-term ROE of around 20%. How are we built? We're built into 2 segments. It's pretty simple. We have our Principal Finance segment, which is focused on balance sheet capital. And as you can see, we have a $5.2 billion portfolio which we manage and then a $2.2 billion portfolio, which is our Asset Management business, very straightforward. The Asset Management business includes the partnership with the sovereign wealth fund that I'll continue to describe later. Here, we have a combination of a little bit of that cash versus GAAP that I talked about. On one side, we have our total revenues. And you can see last -- in 2023, a big bump. And what was that driven by? Partially, that was driven by the great results in the YPF with summary judgment. On the bottom, of course, then that falls to the bottom line in terms of net income to you, our shareholders. On the other side, we have realizations. And realizations, obviously were slower a bit during the COVID period and have continued to tick upwards where we were at $641 million last year, and that's driven by the record net realized gains. That's the incremental gain on top of the money that was put out. But that's a big picture. Let's do a little bit of teaching around how does this actually work on just a simple asset level, right? On this slide, we have -- think about it on a cash basis. We put out a deployment. Some time goes by, we'll put out more deployment. Now the thing to remember is that we put out the cash on the DRIP financing when the money is actually spent. So as the lawyers are incurring fees and expenses. And then upon a settlement or a win, the proceeds come back. But that's not exactly how the GAAP works. And so on the other side, I demonstrate fair value. Fair value is fairly straightforward. If you're used to other mathematical concepts in finance, it's a net present value. And what's that net present value of? It's of our future cash flows and the expected return. That expected return though has a haircut against it, and that's the litigation risk, and that risk changes over periods. You start off with the deployment, just like the cash side. And of course, the asset is going to be worth the capital that you put in. You put $10 out, the asset is worth $10. In future periods, you do an NPV. And what changes is when we see a milestone, when we see an objective event that allows us to reduce that litigation risk premium that's assigned to the asset, and we discount it back. It ends the same way though. It ends with the realization, and that's when we focus on the cash. Bringing that together, that was an asset level, let's walk through how that actually impacted the balance sheet in 2024. So we started off with $3.4 billion of fair value on the balance sheet. How did that get larger? It starts off with deployments. We put out close to $400 million in deployments. And then because it's an NPV, you have the impact of duration. That's the asset moving forward in time over the course of the year. Interest rates are volatile. And that impacts an NPV. Now in 2024, interest rates were flat if you look at just 1 date and then the end of the year. That being said, we had a lot of volatility in the quarters, and that's going to cause a change. But overall, in 2024, rates were flat. Then you have milestones. These are the objective events that you see that are bringing the asset up in value. And then finally, realizations. And realizations are going to bring the asset value down. Now that's a good thing. And what happens is when a realization occurs, you're going to see the unwind of the previous fair value that had come into the fair value of the book. And we saw that in the fourth quarter, where the unwind of previous fair values was done because we had large realizations. That was the revenue side of the business. I'll talk a little bit about the expense side. What you see on this side of the slide is our operating expenses, excluding the long-term incentive comp. Long-term incentive comp is the carry program. And I'll remind folks carry is, again, cash focused. We pay out carry to our employees when the asset actually realizes, when the cash comes in. And you look overall, we've been between 3% and 4% of our portfolio of total expenses against the fair value of the assets. And that's been coming down over time as we continue to scale. The pie chart shows how are the expenses, our predominant expenses besides some of the back-office expense is our compensation to the great employees that you saw today on the stage. And how is that broken down? Well, salaries and benefits and an annual bonus compensation, but then you also have 44% of it that align directly with you. We have our long-term incentive comp. Again, that's the carry program that's paid out in cash. But it is recognized in fair value when we see the fair value goes up. And then share-based compensation. The other piece to our business model is we have leverage. And we have built over time, a responsible laddered debt maturity schedule with just under $1.8 billion of debt outstanding, an average interest rate of just under 7.5%, but more importantly, a 4.5-year duration, which is longer than the average duration of our concluded cases. And we're responsible in using leverage right now at just under 0.8x debt to equity. Why do I talk about all these things? It's to bring together to then show you how do those pieces come together into the unit economics. But before I get into the unit economics, I want to tie some of Jon's presentation to the actual fair value on the balance sheet. On this side, we say, hey, what if we want all of our cases? All of them go to a final adjudicated win. Ex-YPF, that number is $9.6 billion. But not every case goes to a win. And so the way that we then think about that fair value is it's adjusted for 2 things, duration of the cash flows as well as that litigation risk premium. And that's the difference then between the $9.6 billion and the $2.1 billion. We then have our net unrealized gains of approximately $500 million above the deployed cost. And that $4.5 billion sits in neatly, and as Jon described, that's the expectation or the adjusted expectation of the model. In addition, we expect to earn using that same model output, around $400 million over the course of the future years related to our Asset Management business. We've seen this chart -- in fact, you've seen it once before today, and I bring it up to show that no vintage is the same. It's not the same when it comes to an IRR. It's not the same on ROIC, and it's not the same in terms of weighted average life. And so it's important to look overall at the total. Again, we have good years. You look at the '18, '19, '20, all with different IRRs with varying degrees of ROIC and varying degrees of weighted average life. So how do you bring that together? Well, you can do that with a very simple chart. And this chart shows you that, which obviously is intuitive, but that shorter duration can bring together higher IRRs. And if you look at this quarter, we talked about an example where we had a 40% ROIC, but if it's only out it for a year, the math's obvious, that's a 40% IRR. You can look at the 110%, the 120% in the middle, 3.5 years can play itself out into the mid-20s, 25% IRR. So you pull that and say, okay, how does that then break down into our unit economics? First, the income, and this is off of a base 100% asset. A 23% IRR is going to earn $23. You have the asset management fee, that's the partnership in this model with a sovereign wealth fund. And you have interest on cash. We do manage a liquidity portfolio so that we always have cash available to do the next deal and to provide to our partners. Our operating expenses and then our long-term incentive comp, interest expense and then a tax rate. And it's very simple, the unit economics breakdown in that middle column, a 23% gross IRR results in a 21% approximate return on equity. But then why isn't that perfect in GAAP? And there are some headwinds to ROE. And some tailwinds, but let's talk about some of the headwinds. The first one is YPF. YPF makes up slightly over 40% of our fair value. And so in a year, when you have an asset that doesn't actually have an objective milestone that we're going to see in recognizing revenue, it's going to be hard to achieve that 20% ROE. Our revenue also is backdated. So when you think about those milestones and that activity and you look at the sampling of recent activity, what you'll see is that 40% to 50% of the revenue is recognized before the conclusion of the asset. Well, let's do the inverse of that. What does that mean? That means that 50% to 60% is recognized at conclusion. So the revenue is going to be backdated when you look at the way our valuation policy works. It also -- it not only being backdated, it's not front dated. When we put money out the door, we don't normally see an actual outcome, a milestone within the first 1.5 years. So both of those combined are going to be headwinds to the ROE target. And the pandemic. The pandemic unfortunately slowed us down. The good news is the pandemic slowed us down, which means that the portfolio, and you've seen that over the last several years, is on the uptick with realizations. And the fact is that we have $768 million of active deployed cost in the pre-2020 vintages. Operating leverage is relevant. It's not just financial leverage. We talked -- Chris mentioned 13 cases of $100 million or more that didn't take much larger teams to execute. We've talked about the concept of claims families. And fortunately, for you all, back office is fixed, like myself. But the other piece is -- Evan talked about our deal structure and how we try to create deals in which we can both protect duration on the short end as well as the long end. So bring it all together. And what does that tell you? Again, where is our focus? Cash is how we focus on the business. Cash is what we look at on a daily basis. But you can bring it together to see the unit economics of our deals with all of the different operating levers and why that's attractive. There will be variance. There will be some noise in GAAP. But we do believe that filling that all together, that we have the ability to generate a long-term ROE around 20%. And with that, I'd like to turn it over to Chris to bring us all together with some final remarks.

Thanks very much, Jordan. I'm conscious that I am all that stands between you and grabbing some food and asking some questions. And so I will not take very much more of your time this morning. But I did want to go back to a few key points that we've made during the course of the morning. When you look at the core business -- and this is the core business without YPF. We've been clear about what we think the opportunity is here. We think there is a very large addressable market that we are still just scratching the surface of. We think this is an area that is going to continue to grow, continue to perform, continue to mature, and we think that we have the opportunity to be right in the middle, right in the heart of making that happen, just as we have for the last 15 years. And that makes us enthusiastic about the idea of being able to double the portfolio base. Again, we're just talking there about the deployments out the door and the additional commitments to put cash out the door by the end of 2030. Jon took you at considerable length through what is in the portfolio today. These are all assets that are sitting there. They're going to turn into cash. The inevitability of the litigation process means that, that will occur. So we can literally do nothing else in this business and just go into harvest mode. And for years, we would generate substantial cash flows from those assets. Think of litigation as a giant conveyor belt. It's going to continue to go forward inexorably. And because of the structural nature of litigation, you can have a high level of confidence that many of those matters are going to resolve positively either by settling most of them or going to trial and winning. Sure, there will be some losses, and we have a historically low loss rate. But those are -- those cases are effectively money good. The only question is exactly when they become money good. And Jordan has given you a fair bit of insight into how those top line outcomes work their way through to bottom line outcomes and ultimately to shareholder value expressed in a number of ways, including ROE. Then we have YPF. YPF, some people describe YPF as sort of the giant cherry on top of the cake, and that's not a bad way of thinking about it. It's a very large piece of our asset base right now. That's because of the demonstrated value that has occurred. Remember, we've already sold a portion of YPF to third-party investors. So YPF is already a solidly profitable asset for us regardless of what happens next. And then, as Jon and I both alluded to, there's going to be noise here. There's going to be twists and turns in the litigation process. But in any positive state of the world, you're going to end up with a very substantial ten figure outcome for Burford. So YPF stands alone as being interesting. And we recognize that YPF creates a challenge for investors because "Hi, I'm a domestic specialty finance investor over here. Oh, by the way, why don't you also go and have a look at Argentine debt? Thanks very much." We recognize that that's not uncomplicated, but at the same time, we think it's a tremendous opportunity to have further value created in the Burford story. And Travis gave you a little bit of insight into what we think of as our ability to widen the aperture a little bit. And let's be very clear about this. This is not some new horizon. This is not style drift. This is not me as a technology venture capitalist saying, "Well, gee, I was doing consumer Internet stuff. But gosh, medical technology looks pretty cool over here, so let me go give that a try." This is core to what we already do. Travis talked a little bit about legal technology, for example, an area that is growing rapidly. We spend an enormous amount of money today on legal technology. When we do a case of any meaningful size that's going to cost $10 million plus, we're going to be spending more than $1 million of that $10 million is going today to legal technology. But we can't do a big piece of complex litigation without being involved in those things already. So this is not new for us. What's potentially new for us is being more directly active in that space instead of only having a secondary relationship with it. And we think there are exciting opportunities there. But this is core to what we do and what we have been doing for the last 15 years. So what does that wrap up to? A solid, growing core business that continues to deliver asymmetric, high returns that are uncorrelated to markets and economic conditions. And by the way, when things go badly in the economy, what tends to happen? People tend to litigate more. Either because they don't want to pay each other and enter into disputes, or because in response to economic pressure, they cut corners and do illegal things and get caught. But virtually everything that happens in the world, frankly, creates litigation and is our friend. Market uncertainty, litigation, tariffs, litigation. So we are in the catbird seat for what happens in times of stress. Then you add YPF and you had some interesting new opportunities. And with that, that's Burford. And we hope to be back to you at another Investor Day, showing how we've been able to perform against those dramatic opportunities that lie before us. So now we're going to take a few minutes. We invite you, for those of you who are in the room, to go and grab some food outside. The faster you come back, we'll start Q&A. The faster you'll come back, the more time we'll have for questions, and we look forward to engaging with you. Thanks very much. [Break]

Okay. And we're back. Welcome back, and the 3 of us and anyone else from Burford are happy to take your questions. We'll intersperse questions live here from people on the webcast. So if people on the webcast have questions, please submit them that way. And then we've got a couple of people with handheld mics to walk around for people in the audience. Sir?

Randy Binner from B. Riley Securities. Thanks for the presentation. I think it's very helpful. The question I have is -- I have it on Slide 43, but it might have been 44 up there, but it's the $2.4 billion of modeled realized gains. And I think that you use a discount rate, and it's probably a rate over time and net present value back. Can you dig into that a little bit more, just kind of what the thought process and assumptions are behind that $2.4 billion? Because it's a big part of the kind of sum of the parts approach to valuation. And then I'll have a follow-up.

Jordan, do you want to...

Sure. I think you started off by referring to the -- Jon's presentation. When Jon presented the gross number associated with the portfolio, there's no form of discounting in that. And so the probabilistic model output versus fair value, both start from the same place, understanding the window, the fair value approach, though, does use a discounting NPV approach. And in that sense, we're using -- right now, it's an approximate 7%. It's based off of a basket of public securities and more indices that are going to generally track with a broader interest rate environment and the duration of our assets. And that's what's going to fluctuate in the discounting of the NPV associated with the model. But Jon's presentation was a gross output.

Okay. So the $5.7 billion down to $2.4 billion that's just -- that's a kind of a gross future number?

Yes. So the $5.7 billion becomes the $4.5 billion when you discount based on that 79% adjustment. And then we're looking at what we project to be the total spend, right? There's a certain amount of money we've already spent, and there's additional spend we're projecting based on budgets and the percentage of definitive commitments we generally spend when things go to conclusion. That's what's going to drive the difference between $4.5 billion and what we project to spend is what results in the $2.5 billion.

Okay. That's helpful. And I guess that the follow-up is it's also valuation related, but I find the 20% ROE framework incredibly helpful. There's a lot of details in -- I'm explaining as an analyst positioning the stock. Do you -- as part of that, do you think as the book grows and there's kind of more kind of larger amortization, if you will, of volatility, do you think your EPS on a quarterly or at least an annual basis can be something that becomes more stable? Or the settlements, right? So like the settlements are double. That should lead to a more steady earnings? Or is that -- is it too simplistic to get to think that the EPS would be kind of more streamlined or more predictable over time?

Well, a couple of things. One can but hope, of course. The challenge with the business historically has been the growth and evolution of it, frankly. So I made a crack earlier in the presentation that it would be really hard if we had just stayed writing $5 million tickets to amass a $7.5 billion portfolio, and that's absolutely true. So the challenge has always been -- because we've had versions of your question over time, of course. And if the business had stayed static, right, if we had simply continued to write $5 million tickets over and over and over again, and now we're writing a huge number of them, then I think you would have some greater hope of achieving that. The problem has been we keep on evolving the business, deal sizes keep on going up, deal risk keeps on changing. I think it becomes more difficult. And look, it represents one of the fundamental conundrums in this business, and Jordan touched on it as well, which is that we operate the business on a cash basis. That's how we think about it. That's how we set targets for people. That's how we incentivize people. And that is in part because we don't think that it's the right thing to do to, for example, pay people on unrealized gains. It's fine for us to say as a piece of litigation is going on. Like this is a different kind of security than lots of the market securities you would see. Even on a crappy day like today, things are not going down by 40%. Whereas fine, we have a piece of litigation and along it goes, gee, it's going well. It's going well. We won this motion. We've won this motion. The jury didn't like the case we lost. So doing anything in the middle of that for us is, from our perspective, pretty risky. And so we like to look at it on a cash basis. But of course, that ultimately then causes some challenges when we try to translate it into EPS and also into ROE, both of which are fundamentally accounting measures that have a whole lot of noise in them that we don't think is all that useful in running the business.

[ James Williams ]. 2 questions. One, when we think about the long-term growth in the business and that -- the chart with the funnel, where do you see as the bottleneck in that process to doubling the book by 2030?

So it's an interesting question because one of the things that people -- lots of people that have investment funnels like that are using them to show selectivity. And they try to make the argument to investors, we are really, really, really selective, and therefore, you should think our investments are really high quality. That's -- if you pick up the random private credit deck, that's what you'll see today. Oh, we only take 3% of the things we do and we get higher returns and we actually, perversely as it sounds, we actually want the top of the funnel to narrow somewhat. because it's expensive to do the diligence process that goes through the funnel. And we've been successful in educating the market over time to increase the quality of the opportunities that we see and therefore, decrease the amount we have to spend on working through opportunities that are ultimately going to be clearly unsatisfactory for our book. So when you talk about the bottleneck, I'm not sure that there is a bottleneck. The issue, of course, as I said earlier, is around adoption. So if I go and talk to a group of CFOs, and I say there's not a single CFO in the land who says, "Oh, yes, I'm happy about what we're spending on legal expenses. And I think it's a good thing for shareholders that we are. There's not a single one that says that. Every single one of them wants to get rid of the legal expenses, wants to get them off their P&L, wants to reduce them. But there is a fair bit of corporate inertia from that wish to the actual execution of it. And we change that every year. But that, I think, if you wanted the bottleneck, that's the bottleneck. It's getting people to prioritize using this capital even though they intellectually understand that it's a good thing.

The second question I was curious about in the space regards competition. So like if I were a competitor, I can see that Burford's returns are fantastic. What stops a prospective CFO from shopping a quote at Burford to another competitor?

Oh, I don't think anything stops them. In fact, they do shop, they do shop the quote. But if you listen to people like Andrew Farthing who are up here today, this isn't a commodity capital business. People are looking at a variety of value associated with the deals that they're making with people, and we bring a lot of nonfinancial value to the party as well as providing them with capital. So do we lose some deals to lower-cost capital providers because people are entirely focused on price? Sure. But the flip side of that happens as well. If somebody -- if one of our competitors goes and pitches a company and gets their interest, that company is very likely going to say, well, presumably, this person in front of me is not the only person doing this. So let me poke around now that I'm interested in this concept, let me poke around and see who else does it. They're going to find us because we're the big name in the space. They're going to come to us as well, and we're going to make them a proposal, too, if there's -- if it's a desirable investment. And so the presence of competitors is a net positive for us from our perspective, not a net negative.

We've seen this play out. If you think about patent -- remember in the patent space 5 or 6 years ago, a little longer, there were a few new firms that came in and tried to compete. They generated a lot of interest, but it fairly quickly got to the point people would call us and be like "Well, you don't have to beat them on the price, just being ballpark and then not even calling [indiscernible].

There was a question back here, I think. Gary?

Investing in law firms sounds like a huge potential growth area long term, and you seem really well positioned to be a leader there. How do you see it becoming a bigger piece of Burford? And how do you underwrite the returns relative to case assets?

Well, since Jon is the original architect of the theory in fact. So Jon, long before this became reality, Jon has been writing scholarly work on this very subject.

Yes. So you carry a softball. Basically, I've written an article about, the very reason that our business exist is that law firms are structured in a way that makes no sense, they're financed like food trucks. They are multi-billion dollar annual business. The cash comes in, the cash goes out, no permanent debt, no permanent equity makes no sense. We were almost first to do what you could call project finance. There's an individual matter that we could finance. And it makes no sense from a client service perspective. As Chris said, CFO [indiscernible] and legal spend. They don't want to be paying hourly fees. If you were a contractor -- if you were a real estate developer and you call a construction company and say "How much will it cost to build an office building" and they say "I'll charge you time and materials" and you're like I can't run a business this way but that's how we usually charge. They cannot charge that -- they charge that way because they don't have a source of capital. It is efficient enough to have done it first with single case finance and then portfolio finance. There's no reason it shouldn't be done with law firm equity, it just makes so much more sense. And I've written articles in the Southern California Law Review saying years ago, we should do this. Before we did it, we made our first law firm investment. Travis may have referred to it in 2020. We've earned a 30%-plus IRR and gotten money back on that. We're off risk. It's been a great investment. And I think that is going to be a big part of our future. We've been talking to law firms about it. We have structures that work and the reason we are really well situated here is forever the market for legal services and the capital markets have not connected. There's a disconnect. So for the law firm that sees the light and realizes that taking outside capital makes sense. It's still a huge leap to go, take money from public markets or from a hedge fund that doesn't understand. We've got law firm DNA running through us. We understand how law firms operate. So they can feel comfortable viewing us as a financing partner that's not going to mess with client relationships, there's duty courts that sort of thing. So I'm glad you asked.

Yes. Now we just need state regulations to catch up with that. We'll take a question from the webcast.

All right. A question from the webcast is around capital management and allocation. Can you explain your capital allocation policy between case investment, new initiatives, buybacks and dividends? In other words, how do you think about the trade-off between growth and value vis-a-vis buybacks?

Chris started off actually answering some of this in the shareholder letter, but we do get this question a lot. Our focus has been to continue to deploy capital into the asset base. If you look overall and you look at the compounding that, that asset can do, the relationships that we've built over time, we think the greatest value for shareholders is to continue to deploy capital into the asset base and to continue to grow the book. And so we haven't been and we don't expect to be a user of leverage to then go and buy back shares.

[indiscernible] from [ Focus Capital Management ]. Thank you for the very educational Investor Day. Your modeling says that you mentioned that you have 200-plus -- 100 million plus investments have concluded. How confident are you that you're modeling which is mostly based on smaller investments transfers over to these larger investments, especially considering that there's no case that doesn't have any risk. So if you have a $300 million monetization that somehow goes sour and you lose that, that could be a large hole in the model.

Well, that would be unhappy to be sure. And Jon can probably talk to this at some length, if you'd like. I would say though that in many instances, size is not necessarily the relevant criteria in litigation. So size is a function of the ultimate damages that a matter produces, but it doesn't really affect -- if you think back to the analysis that Evan Meyerson described, it doesn't affect the other buckets of that analysis.