At Burford Capital, Co-Chief Operating Officer David Perla C’91, L’94 is working to make the legal industry more equitable using what some may consider an unexpected tool: finance. Large corporations and law firms use commercial legal finance to gain better control over legal budgets and risk without ceding control of litigation strategy or settlement. Publicly listed on both the NYSE and LSE, Burford is the leading finance firm focused on law and helps Fortune 500 companies and AmLaw 100 firms leverage capital to solve a range of business problems.
“Capital is almost infinitely scalable. It’s actually an almost unlimited resource, and it multiplies,” Perla said. “Most finance companies are quite good at the pricing of their capital, but it’s not something that people in the innovation side of law are used to thinking about, so innovation initiatives are normally focused on things like technology and process improvement. They’re not usually focused on finance.”
Perla is also serves on the Advisory Board of the University of Pennsylvania Carey Law School’s Future of the Profession Initiative (FPI), which brings together an unmatched network of experts, students, lawyers, and professionals from other fields to lead essential interdisciplinary conversations about the fundamental changes transforming the legal profession today.
The Equity Project
Burford’s innovative contributions to the business of law include a groundbreaking initiative to improve diversity, equity, and inclusion in the profession. Put simply, Burford’s Equity Project, first launched in 2018 and now in its second iteration, incentivizes diversifying litigation leadership by earmarking capital for cases led by women and racially diverse lawyers.
The idea for the Equity Project first emerged through a series of conversations among Burford’s top executives – many of whom are women. As a major financier of litigation worldwide, Burford executives were concerned by the troubling diversity statistics of the industry. According to the 2020 Vault/MCCA Law Firm Diversity Survey, only 2.20% U.S. law firm partners are Black, 24.68% are women, and 3.88% are women of color.
At the Equity Project’s initial launch, Burford earmarked $50 million toward funding cases in which women led the litigation teams. The first phase of the Equity Project focused on women-led litigation precisely because so many Burford executives were, and are, female lawyers with litigation expertise. Ultimately, the firm ended up exceeding the goal and committed over that amount.
“The idea was that we would earmark $50 million and track over time what happened with those cases,” Perla said. “We are in the process of tracking the results now. Most of them have not resolved yet, but we are tracking if they resolve faster — for example, if they come out with a result that is more satisfactory to the client. Having succeeded in our first endeavor by end of 2020, we decided to undertake a launch of a second phase.”
The Equity Project 2.0
In 2021, Burford announced that it would earmark an additional $100 million to The Equity Project and expand the qualifications to also include litigation teams led by lawyers from other historically underrepresented groups. Moreover, the second iteration of The Equity Project also included a commitment from Burford to donate a portion of the profits from Equity Project cases toward non-profit organizations working to help diversify the legal field.
“The decision to donate a portion of the proceeds was a reaction to feedback that pointed out that we were calling attention to the issue but not funding cases we wouldn’t otherwise fund,” Perla said. “So, in order to really try to move the needle, we added an economic incentive: when an Equity Project 2.0 matter resolves, we will donate a portion of our balance sheet profits from that matter to a charity or charities that help advance women or racially diverse lawyers in law.”
While selecting a diverse leadership team does not automatically qualify a case for financing, the discussion of a team’s diversity is folded into early stages of analysis when Burford is determining if it will finance a matter. According to Perla, initiating conversations with clients and law firms about whether they are planning to select teams with diverse leadership can influence their decision-making.
“Asking questions will drive the behavior at the earliest stages,” Perla said. “The analysis of whether or not we’re going to fund a matter is usually separate. That is a multifaceted question of the case’s merits and details, including many factors such as the expected duration, collection and enforceability, and the pricing of our capital; it is a much more traditional underwriting analysis. But very early on, we’re pushing corporations and law firms to answer the question of whether the matter would be led by a lawyer or lawyers from an underrepresented group, because it changes the conversation.”
Creating lasting change
To Perla, finance is an enormously influential aspect of the legal field – and yet, it remains a largely overlooked resource in conversations about diversity, equity, and inclusion in the legal profession.
“At Burford, the outcome of what we do with capital is changing the profession,” Perla said. “While I can certainly contribute to FPI with input on technology, information, and services, the other lens that I try to bring to FPI is how money ought to be used to effect change in the business.”
To Perla, the Law School is uniquely positioned to effect change, as its strong focus on interdisciplinary learning, proximity to Wharton, and high-achieving alumni networks converge into a powerful platform.
“Penn Law has a lot of muscle. As a top law school, we should be able to make strong statements, undertake bold initiatives, and do more than another school might do because Penn is such a well-branded school and one of the top feeders to top law firms. We shouldn’t hide from that,” said Perla. “The problem is really acute at large law firms, so why not go straight at it? Let’s get in front of that conversation and talk about the change we want to effect, knowing that the majority of our graduates are going to Big Law. Let’s have them go in thinking about and being fluent in these issues.”