Legal claims: Are you leaving money on the table?

Unlocking cash flow can be especially difficult for restaurant operators right now. Taken together, inflation, rising interest rates and escalating wages are just some of the conditions creating cash constraints. As a result, restaurants must precisely manage their expenses – as well as scrutinize potential opportunities to release cash flow – so they can afford to invest in the ongoing development of their business.
​There may be such opportunities hiding in your legal spending. If you’re involved in, or are considering, a legal dispute that has merit, your legal claims may be an invisible asset you can access through an affirmative recovery program that accelerates your pending claims, judgments and awards and improves your liquidity. According to independent research commissioned by Burford Capital this year, two out of three general counsels said their companies had an affirmative recovery program – and agreed that their pending claims are financial assets that represent future cash flow. Yet at the companies where the programs exist, 25 percent of general counsels and half of CFOs say the programs need improvement.
In a QSR Magazine article, David Perla, co-COO at Burford Capital, said CFOs may be unnecessarily risking their own budget by overlooking the length of time it takes to file, settle, litigate, appeal and get paid. As a result, they could be incurring millions of dollars of spend and experiencing months or even years of delayed payment of damages suffered by them. “Even companies with robust recovery programs that can afford litigation may find that capital could generate a better return if invested elsewhere in the business,” he said.
Your affirmative recovery program should lay out a clear structure for pursuing recoveries and rely on data and input from finance and business units. Reassessing your program may make sense if your business is due a legal award – of if you have a history of avoiding litigation that has merit simply because of the potential legal costs involved. It may help you claim assets that you could put to work in your restaurant.​

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