1 00:00:01,535 --> 00:00:03,772 David Perla, how are you this afternoon? 2 00:00:03,978 --> 00:00:05,739 Great, how are you Ted? 3 00:00:05,739 --> 00:00:07,450 Doing good, doing good. 4 00:00:07,450 --> 00:00:09,983 I'm excited about this conversation, man. 5 00:00:09,983 --> 00:00:20,772 I've been, ever since that Financial Times article came out and I learned about this whole MSO model, I've been really excited to talk to you guys. 6 00:00:20,772 --> 00:00:23,114 And I think the audience is going to be really interested as well. 7 00:00:23,114 --> 00:00:25,105 So uh I'm excited. 8 00:00:25,856 --> 00:00:26,446 Well, thank you. 9 00:00:26,446 --> 00:00:27,966 We're excited also. 10 00:00:27,966 --> 00:00:36,534 The article really just explained what we've known for a long time and we've been focused on for a long time in terms of our strategy. 11 00:00:36,534 --> 00:00:46,142 So we're thrilled that people are so engaged by it and so interested in it throughout the tech world and in the legal world. 12 00:00:46,142 --> 00:00:48,184 So it's sometimes hard to unite those two. 13 00:00:48,184 --> 00:00:50,386 This seems to have gotten everyone's attention. 14 00:00:50,386 --> 00:00:51,279 So we're excited. 15 00:00:51,279 --> 00:00:51,979 for sure. 16 00:00:51,979 --> 00:00:52,519 For sure. 17 00:00:52,519 --> 00:00:55,859 And there's lots of reasons for that, that we're going to get into. 18 00:00:55,859 --> 00:00:57,579 But before we do, let's get you introduced. 19 00:00:57,579 --> 00:01:04,219 So I met you via Rob Soconi, who I've known for many, many years. 20 00:01:04,219 --> 00:01:20,679 He was, um, I think he was still possibly at TR when we met and, uh, I've been in the legal internet game and extranet game for a long time and a, uh, a CEO. 21 00:01:20,935 --> 00:01:31,420 In Charlotte, a CIO at a law firm in Charlotte put me in touch with Rob and Robin Bob, his partner, Bob Beach and said, you got to talk to this guy. 22 00:01:31,420 --> 00:01:36,283 um anyway, he, Rob put us in touch, which, which I appreciate. 23 00:01:36,283 --> 00:01:45,771 And, uh, I saw your article, in the financial times about Burford capital and some of the interesting things you guys are doing there that we're going to talk about, but. 24 00:01:45,771 --> 00:01:46,811 Your background. 25 00:01:46,811 --> 00:01:50,091 you formally founded and led an ALSP. 26 00:01:50,091 --> 00:01:52,511 You're a former M and a lawyer, like fill in the gaps. 27 00:01:52,511 --> 00:01:56,099 Tell us a little bit more about your background and what you're doing today. 28 00:01:56,246 --> 00:01:57,967 Sure, happy to. 29 00:01:57,967 --> 00:02:04,316 So I was a former &A lawyer in New York City, corporate lawyer in the 90s, and then went in-house. 30 00:02:04,316 --> 00:02:14,492 So the first 10 years of my career were spent private practice and then as an in-house lawyer at a, at the time, very fast growing internet company called Monster.com. 31 00:02:14,492 --> 00:02:22,694 So I really lived the uh technology internet world in the 1.0 days of the internet. 32 00:02:22,806 --> 00:02:28,806 And in 04, I founded a company called Pangaea 3 with my best friend from law school. 33 00:02:28,806 --> 00:02:33,066 We raised the time, three rounds of capital. 34 00:02:33,066 --> 00:02:41,646 Ultimately, our final round was with Sequoia and built that business from two of us in a room to 650 people around the world. 35 00:02:41,646 --> 00:02:46,446 And then we were acquired by Thomson Reuters in 2010. 36 00:02:46,786 --> 00:02:50,506 Stayed for two years, had actually a very, very happy time. 37 00:02:50,506 --> 00:02:52,326 We come from the legal world. 38 00:02:52,326 --> 00:02:52,758 So 39 00:02:52,758 --> 00:02:57,138 We actually enjoyed our time at Thomson Reuters, made a lot of friends, a lot of contacts. 40 00:02:57,238 --> 00:03:03,158 And then I did a fairly short stint for two and a half years as president of Bloomberg Law. 41 00:03:03,158 --> 00:03:11,178 Really wanted to see what the information business was about, having led a services and technology enabled business. 42 00:03:11,178 --> 00:03:13,698 I wanted to get into the information business. 43 00:03:13,698 --> 00:03:20,118 Did that until the end of 2016 and then was approached by Chris Bogart, our CEO. 44 00:03:20,446 --> 00:03:23,991 about coming on board to Burford in early 2018. 45 00:03:23,991 --> 00:03:36,108 And I've been here ever since, really in a variety of roles, all of which have been uh market facing leadership roles at the company, culminating last summer and becoming vice 46 00:03:36,108 --> 00:03:37,690 chair at Burford. 47 00:03:37,909 --> 00:03:39,179 Very interesting. 48 00:03:39,179 --> 00:03:42,130 And I thought the article was extremely interesting. 49 00:03:42,130 --> 00:03:48,482 I have a, we talk about a lot about business models here on the show. 50 00:03:48,622 --> 00:04:00,525 And you know, the reason being, I think there are some natural friction points, we'll call them in the current iteration of the law firm partnership model. 51 00:04:00,525 --> 00:04:08,177 You know, it's cash basis accounting and consensus driven decision-making and you know, management. 52 00:04:08,299 --> 00:04:13,459 professional management, not always being properly or sufficiently empowered. 53 00:04:13,459 --> 00:04:26,779 Um, you know, the lack of R and D, all of these things that create friction towards capital projects and just the mindset necessary to really kind of think about R and D. 54 00:04:26,779 --> 00:04:30,399 I don't feel like the law firm partnership model is really optimized for that. 55 00:04:30,399 --> 00:04:32,239 It's optimized for profit taking. 56 00:04:32,341 --> 00:04:34,633 So we, we, we talk a lot about it here. 57 00:04:34,633 --> 00:04:46,723 So I was particularly interested because I've been keeping a close eye on all the activity that's happening around ABS in uh Utah and Arizona and Puerto Rico. 58 00:04:46,723 --> 00:04:52,188 And I recently learned also DC, um, which I thought was super interesting. 59 00:04:52,188 --> 00:04:58,051 So I think there's a really a lot, you know, that this isn't the whole ABS structure isn't new. 60 00:04:58,051 --> 00:05:01,259 It just knew in, in the, in this country in 61 00:05:01,259 --> 00:05:06,202 You know, the UK, they've had the Legal Services Act for God, it's been, think, 15 years. 62 00:05:06,623 --> 00:05:07,103 Yeah. 63 00:05:07,103 --> 00:05:10,726 And not much has really changed over there as a result of that. 64 00:05:10,726 --> 00:05:12,687 But that was prior to Gen. 65 00:05:12,687 --> 00:05:20,172 AI and before the means of legal production really became, I guess, challenged. 66 00:05:20,172 --> 00:05:27,618 uh There are now new ways to tech enable legal service delivery. 67 00:05:27,618 --> 00:05:29,899 So I think there's a ton of interest in 68 00:05:30,003 --> 00:05:32,485 in the market around um this. 69 00:05:32,485 --> 00:05:45,442 So why don't we start off with, so when I read the article, it mentioned MSO and coming from the tech world, immediately, that's a uh slightly different acronym, stands for 70 00:05:45,442 --> 00:05:46,873 managed service offering. 71 00:05:46,873 --> 00:05:54,218 um And what you guys are doing is it's a managed service organization. 72 00:05:54,218 --> 00:05:56,619 Why don't you tell us what that means? 73 00:05:57,184 --> 00:06:02,818 Sure, and it's not materially different than a managed service offering, right? 74 00:06:02,818 --> 00:06:08,902 The idea being that an organization is taking over a function for another organization. 75 00:06:08,902 --> 00:06:17,969 uh And as we look at law, Ted, we probably wanna just acknowledge at the law firm level, there are all types of law firms. 76 00:06:17,969 --> 00:06:25,598 So while the capital structure is the same in the US in that they cannot take equity ownership or equity interests from... 77 00:06:25,598 --> 00:06:28,100 non-lawyers, non-partners of the firm. 78 00:06:28,100 --> 00:06:39,590 uh There are firms that range from your am-law 20s that are hyper profitable and they're large-er, right? 79 00:06:39,590 --> 00:06:42,872 uh The top 20 all have the worth of a billion dollars in revenue. 80 00:06:42,872 --> 00:06:46,496 They're all very, very profitable, all the way down to your one-person firm. 81 00:06:46,496 --> 00:06:54,324 So we tend to generalize a little bit, but as we talk, I'll probably highlight some of the differences and why they're starting to matter. 82 00:06:54,324 --> 00:07:01,638 I do agree with you that technology, AI, and particularly generative AI are gonna change the conversation. 83 00:07:01,638 --> 00:07:10,063 uh But as we think about it, the challenge in law is really twofold. 84 00:07:10,063 --> 00:07:18,307 Number one, law firms, to quote our Chief Investment Officer John Maloe, their capital structure is like an ice cream truck. 85 00:07:18,307 --> 00:07:24,010 That's the analogy he uses, which is they have to be owned by 86 00:07:24,074 --> 00:07:34,663 the people who work in the business and they uh rely on their cash as their balance sheet, as their means of capital, and they distribute out their cash to the end of the year. 87 00:07:34,663 --> 00:07:36,344 That's how the owners get paid. 88 00:07:36,344 --> 00:07:45,071 They can have revolvers, they can have debt facilities, but it's a fairly unsophisticated capital structure. 89 00:07:45,071 --> 00:07:49,615 So that is definitely uh issue one. 90 00:07:49,615 --> 00:07:53,578 The second dynamic, and we can spend some time talking about this is, 91 00:07:53,712 --> 00:07:58,328 as a business goes, as an industry goes, it's incredibly fragmented. 92 00:07:58,328 --> 00:08:03,293 So I mentioned, your top 20 firms in the US all have a billion in revenue. 93 00:08:03,534 --> 00:08:09,961 If you add them all up together, it's still only a relatively modest size public company. 94 00:08:09,961 --> 00:08:10,984 uh 95 00:08:10,984 --> 00:08:13,302 billion for the AMLO 100. 96 00:08:13,302 --> 00:08:14,502 for the MLO 100, right? 97 00:08:14,502 --> 00:08:19,762 So how many companies in America have over 160 billion in revenue? 98 00:08:19,762 --> 00:08:20,682 And that's 100. 99 00:08:20,682 --> 00:08:21,542 That's not your top 20. 100 00:08:21,542 --> 00:08:23,102 That's your top 100. 101 00:08:23,102 --> 00:08:27,362 So it gives you a sense this is not a scaled industry. 102 00:08:27,362 --> 00:08:35,862 This is a very fragmented, unconsolidated industry, which makes it challenging to address capital needs. 103 00:08:35,862 --> 00:08:43,220 And it makes it challenging for any firm on its own to drive industry change or adoptage. 104 00:08:43,220 --> 00:08:43,690 change. 105 00:08:43,690 --> 00:08:51,232 uh The MSO structure, to bring us back to where we started, the MSO structure uh is a workaround. 106 00:08:52,293 --> 00:09:01,715 What you have today is in the vast majority of states, the only way a law firm can raise money is from its partners. 107 00:09:01,715 --> 00:09:07,437 Let's put the ABS structure aside for a second, the structure we have in Arizona and a variation in Utah. 108 00:09:07,437 --> 00:09:12,438 uh And those are somewhat limited because of ethics rules. 109 00:09:12,438 --> 00:09:20,084 to extent we want, can come back to that, but they don't really allow the firms to practice nationally using an ABS structure. 110 00:09:20,084 --> 00:09:22,566 So the firm structure has to say the same. 111 00:09:22,566 --> 00:09:34,456 What the MSO structure really lets the firm do is it lets them take certain functions, either what we think of as back office functions, or what I think of as the old middle 112 00:09:34,456 --> 00:09:37,258 office or ALSP functions. 113 00:09:39,264 --> 00:09:49,497 put those into a separate entity, enter into a contract with that entity, and then that entity can raise capital anywhere it wants. 114 00:09:49,497 --> 00:09:51,378 So can raise capital from private equity. 115 00:09:51,378 --> 00:09:56,860 can, in theory, not yet in practice, but in theory, can raise capital from the public markets. 116 00:09:56,860 --> 00:09:58,140 It can do debt. 117 00:09:58,140 --> 00:09:59,011 It can issue bonds. 118 00:09:59,011 --> 00:10:03,028 It can really do whatever it wants, subject to whatever the... 119 00:10:03,028 --> 00:10:10,125 the capital markets are gonna demand in terms of the instrument or in terms of the return on that investment. 120 00:10:10,366 --> 00:10:24,982 So it is really a vehicle to let law firms disintermediate the work that they do and take the non-practice of law elements of law firms. 121 00:10:26,032 --> 00:10:33,686 send those to a managed service organization and let that organization raise money in ways that the law firm itself couldn't raise money. 122 00:10:33,686 --> 00:10:35,547 And that's all it's really doing. 123 00:10:35,547 --> 00:10:48,835 It's been done in healthcare before, it's been done in other industries, and it is a, in my mind, a natural evolution from what law has been going through anyway with ALSPs and 124 00:10:48,835 --> 00:10:50,956 with outsourced technology providers. 125 00:10:50,956 --> 00:10:54,778 So the idea of law being disintermediated or 126 00:10:54,836 --> 00:10:58,200 or being broken up into its constituent parts is not new. 127 00:10:58,200 --> 00:11:00,313 It's been going on for decades. 128 00:11:00,313 --> 00:11:08,121 This is the first time that people are saying, why don't we use this to raise money and scale the business? 129 00:11:08,222 --> 00:11:11,716 And there's any number of reasons why a firm will want to do that. 130 00:11:12,267 --> 00:11:23,147 And I assume this essentially bypasses the restrictions around model rule 5.4, non-legal ownership. 131 00:11:23,887 --> 00:11:27,247 So is that accurate? 132 00:11:27,626 --> 00:11:28,506 That's accurate. 133 00:11:28,506 --> 00:11:42,894 So 5.4 for people who aren't versed in the ethics rules, and I hope most people aren't, uh rule 5.4 basically says that a lawyer cannot share fees with a non-lawyer. 134 00:11:43,375 --> 00:11:56,192 And what this structure allows is it allows the lawyer to uh move functions that were previously done by the lawyer or by the firm to a different entity, entering into an 135 00:11:56,192 --> 00:11:57,362 arrangement. 136 00:11:57,696 --> 00:12:01,027 could be a fixed price arrangement, could be a cost plus arrangement. 137 00:12:01,027 --> 00:12:05,348 It could be an arrangement that is based on the revenue of the firm. 138 00:12:05,348 --> 00:12:11,520 What it can't be is directly based on the profits or profitability of the law firm. 139 00:12:11,520 --> 00:12:25,424 But there's a lot of creativity around how you can structure the pricing that an MSO gets from a law firm, enters into that relationship, and the MSO can then raise capital. 140 00:12:25,718 --> 00:12:37,556 And the law firm itself, by the way, the money can flow up into the partners of the law firm because the law firm can start out as the owner of the MSO or a part owner in the 141 00:12:37,556 --> 00:12:37,906 MSO. 142 00:12:37,906 --> 00:12:39,558 Really, it can do anything it wants. 143 00:12:39,558 --> 00:12:43,130 The MSO is a non-law firm entity. 144 00:12:43,130 --> 00:12:49,494 And so any restrictions that apply to law firms don't apply to the MSO with a big exception. 145 00:12:49,494 --> 00:12:55,318 The law firm's relationship with the MSO is, of course, still governed by ethical rules. 146 00:12:55,412 --> 00:12:59,628 rules around confidentiality, rules around privilege, rules around fee sharing. 147 00:12:59,628 --> 00:13:06,128 So those apply, but the MSO itself is unconstrained by rules around capital ownership. 148 00:13:06,667 --> 00:13:08,388 Okay, interesting. 149 00:13:08,469 --> 00:13:18,276 one thing that came to mind when I was reading the article is the similarities or differences with ALSPs. 150 00:13:18,276 --> 00:13:22,249 So can you kind of help differentiate those two? 151 00:13:23,166 --> 00:13:38,450 Of the easiest way to understand the difference is what most people mean when they say an MSO versus an ALSP is defined by the functions of the organization as opposed to the 152 00:13:38,450 --> 00:13:41,391 structure or as opposed to the relationship. 153 00:13:41,391 --> 00:13:50,013 So historically, when we talk about an MSO, we're talking about functions that we think of as back office. 154 00:13:50,013 --> 00:13:52,636 So that's technology. 155 00:13:52,636 --> 00:14:06,832 finance, uh HR, marketing, uh oftentimes compliance, risk management, and in some cases, like uh strategy and business management, sort of growth initiatives. 156 00:14:06,832 --> 00:14:13,364 Those are your typical kind of back office as opposed to the practice of law at a law firm, right? 157 00:14:13,364 --> 00:14:17,356 The things I did when I was at a big law firm, the things I did even when I was in-house. 158 00:14:17,556 --> 00:14:22,454 If we think about an ALSP, the functions we think about are more 159 00:14:22,454 --> 00:14:29,676 quasi-legal or high-volume legal in nature, as opposed to back office. 160 00:14:29,676 --> 00:14:34,757 So back office I might refer to in the old days as business process outsourcing. 161 00:14:34,757 --> 00:14:37,238 ALSPs are legal process outsourcing. 162 00:14:37,238 --> 00:14:51,072 So you can do what 30, 40 years ago we thought of as legal work is now being done at ALSPs under the umbrella supervision uh of a lawyer at either a law firm or an in-house 163 00:14:51,072 --> 00:14:51,972 department. 164 00:14:52,042 --> 00:15:04,309 document review, contract drafting, uh legal research, contract lifecycle management, ah the legal elements of compliance. 165 00:15:04,309 --> 00:15:18,516 And then as you work your way down the value chain, all sorts of other functions that are not back office in nature, they are more vertically integrated into the practice of law. 166 00:15:18,516 --> 00:15:21,830 The things that an associate might have done 30 years ago, 167 00:15:21,878 --> 00:15:30,038 that an ALSP started taking on 20 and 15 years ago, you could put those in an MSO easily. 168 00:15:30,078 --> 00:15:36,638 And as long as they're supervised by a lawyer, the MSO could do both back office work and that quasi legal work. 169 00:15:36,638 --> 00:15:41,550 We tend to use the acronyms to describe the difference in the work being done. 170 00:15:41,932 --> 00:15:42,412 I see. 171 00:15:42,412 --> 00:15:51,177 our first venture, so InfoDash has been around since January, 2022, so about three and a half years. 172 00:15:51,257 --> 00:16:03,483 For the 14 years prior to that, we were a company called Acrowire and we were consultants and I'm a former Microsoft guy and I had uh skills and expertise in that domain. 173 00:16:03,623 --> 00:16:10,539 And we decided to jump down the legal uh rabbit hole and our first client 174 00:16:10,539 --> 00:16:15,639 they no longer exist was a default services firm in 2008. 175 00:16:15,939 --> 00:16:23,779 So as you can imagine, 2008 default services was a very hot area of practice. 176 00:16:23,779 --> 00:16:40,419 There were lots of foreclosures in 2008, 2009, and they used a, they called it a BPO in India that did a lot of the administrative tasks related to 177 00:16:40,907 --> 00:16:46,527 which of which there are plenty in the default services practice. 178 00:16:47,087 --> 00:16:59,307 They outsource that to a much lower cost geography and maintained a ton of efficiencies and that firm grew fraud. 179 00:16:59,307 --> 00:17:06,747 You know, it wasn't a big firm to begin with, but they started off with about 50 employees and ended up with 400 in 18 months. 180 00:17:06,987 --> 00:17:09,507 So 8X growth in 18 months. 181 00:17:10,167 --> 00:17:10,677 Pretty 182 00:17:10,677 --> 00:17:11,608 pretty amazing. 183 00:17:11,608 --> 00:17:26,721 And we went in there and I'm also a lean Six Sigma black belt and we helped them, um, map out all of their processes within default services and structure it like an assembly line 184 00:17:26,721 --> 00:17:33,146 where we physically sat each group in close proximity. 185 00:17:33,146 --> 00:17:37,350 And they had, um, they literally ran this like a manufacturing facility. 186 00:17:37,350 --> 00:17:38,892 They had monitors 187 00:17:38,892 --> 00:17:39,712 installed. 188 00:17:39,712 --> 00:17:44,032 We had them install monitors with control charts and bottleneck. 189 00:17:44,032 --> 00:17:45,712 could see where bottlenecks were in the process. 190 00:17:45,712 --> 00:17:51,392 Yeah, it actually got wrote up by the ABA journal, maybe 2010, 2011 timeframe. 191 00:17:51,772 --> 00:17:54,892 So that was well ahead of its time. 192 00:17:54,892 --> 00:18:06,595 And I'll be honest with you, I have not seen that really happen since to that extent where a law firm was really built like that. 193 00:18:06,645 --> 00:18:19,209 Do you guys come and bring that level of rigor and expertise as well, or is it more ad hoc based on how the firm operates? 194 00:18:19,562 --> 00:18:22,344 Does an MSO, when you say you guys, mean an... 195 00:18:22,744 --> 00:18:32,931 Right, so Burford just took a minority interest in Kindleworth in the UK, which helps law firms spin out of larger law firms and helps them manage. 196 00:18:32,931 --> 00:18:37,074 So it's a part consultancy, part MSO. 197 00:18:37,695 --> 00:18:42,710 It remains to be seen, we're not planning on being active managers of Kindleworth. 198 00:18:42,710 --> 00:18:44,399 It is its own business. 199 00:18:44,399 --> 00:18:48,622 That said, uh an MSO... 200 00:18:49,408 --> 00:18:58,781 can be as process involved as the client needs or wants, or as non-process involved. 201 00:18:58,781 --> 00:19:05,423 It could take over an existing function and simply run that function on a contract basis, or it can transform the function. 202 00:19:05,423 --> 00:19:14,485 The way uh ALSPs historically grew, they started by nothing more than labor arbitrage. 203 00:19:14,485 --> 00:19:17,866 It was less expensive to do the work offshore or in 204 00:19:17,876 --> 00:19:20,608 less expensive domestic jurisdictions. 205 00:19:20,608 --> 00:19:25,572 What happened very quickly is clients came along and said, can you make our processes more efficient? 206 00:19:25,572 --> 00:19:38,971 So my old business, Pangia 3, while document review in India and then in Texas where we had a facility which cheaper, the magic of that business and the way we really scaled the 207 00:19:38,971 --> 00:19:45,085 business and the way clients gave us business was we actually adopted Lean Six Sigma principles. 208 00:19:45,085 --> 00:19:46,356 So we had 209 00:19:46,432 --> 00:19:52,822 We had our document review done in pods, which was stolen, literally stolen from manufacturing. 210 00:19:52,822 --> 00:19:58,668 Like pod document review was a lift from things we were reading because we were all training in Six Sigma. 211 00:19:58,668 --> 00:20:12,562 uh What we think will happen with MSOs is they will uh be used to raise capital and they'll also help law firms implement 212 00:20:12,562 --> 00:20:23,240 all of the technologies that law firms today are looking at and considering and in some respects, if not struggling with, they're unsure of what to do with all the new 213 00:20:23,240 --> 00:20:29,034 technology, not the least of which is artificial intelligence and agentic AI. 214 00:20:29,034 --> 00:20:32,277 ah So we think that value chain is coming. 215 00:20:32,277 --> 00:20:34,502 It's not quite there today. 216 00:20:34,502 --> 00:20:39,894 That is driven by the fact that MSOs today have not been widely adopted. 217 00:20:39,894 --> 00:20:45,654 yet we're in the very early days of what's happening in the US in particular. 218 00:20:46,634 --> 00:20:58,674 The UK is different because in the UK you have the ABS structure, so you don't necessarily need the MSO in order to raise capital for a law firm. 219 00:20:58,754 --> 00:21:09,226 What's interesting for us, if you look at our Kindleworth transaction, the firms that they've helped spin out and stand up and help them grow are actually firms that 220 00:21:09,226 --> 00:21:11,667 that aren't using outside capital. 221 00:21:11,667 --> 00:21:17,989 So they are in fact using them as an MSO in the way that we think about it in the United States. 222 00:21:17,989 --> 00:21:25,811 They're not using it because they wanna raise capital, they're using it to take a function and to have someone who's better suited to it manage it. 223 00:21:25,811 --> 00:21:37,110 And that's where we think the profession's heading with the benefit that law firms will be able to raise capital and importantly, 224 00:21:37,110 --> 00:21:46,810 Derisk financially so the law firm, you know, one of the challenges of the law firm It's not merely raising capital if you're a partner to law firm It's tricky enough that if you 225 00:21:46,810 --> 00:21:59,970 want to invest in R &D after you use only your own cash flow But if that project goes the wrong way Your capital is wholly at risk and you can't you can't diversify the risk in a 226 00:21:59,970 --> 00:22:05,650 way that an MSO or any other outsourced provider an info- 227 00:22:05,834 --> 00:22:11,278 right, or a Pangea 3, can diversify that risk in the same way, by the way. 228 00:22:11,359 --> 00:22:25,640 Burford, litigation finance provider, we diversify risk on behalf of clients and law firms who otherwise are taking uh unique idiosyncratic litigation risk. 229 00:22:25,640 --> 00:22:34,782 We're diversifying it by definition because we have a broad portfolio of litigation in which we invest, where by definition diverse 230 00:22:34,782 --> 00:22:43,707 in a way that uh even a plaintiff law firm can't be nearly as diversified because they only have their own clients or their own cases. 231 00:22:43,988 --> 00:22:48,170 So I think that's what's happening with MSOs, but we're in the very early days. 232 00:22:48,267 --> 00:22:55,607 So, if it sounds like it's fairly customized based on the situation, is that accurate? 233 00:22:57,002 --> 00:22:59,223 I think there are customizations. 234 00:22:59,223 --> 00:23:00,804 It really depends on the firm. 235 00:23:00,804 --> 00:23:07,558 uh Certain functions are going to be highly customized and certain functions I think will be less customized. 236 00:23:07,558 --> 00:23:09,589 So, you know, I'll give you an example. 237 00:23:09,789 --> 00:23:22,086 think as you, you know, firms today, their finance functions, they may run differently, but that doesn't need to be terribly customized. 238 00:23:22,086 --> 00:23:25,854 The way a firm does its accounting, you it's controller's office. 239 00:23:25,854 --> 00:23:27,615 its treasury function, right? 240 00:23:27,615 --> 00:23:30,996 It's subscale, but it's not terribly custom. 241 00:23:31,336 --> 00:23:35,478 How it undertakes contract drafting. 242 00:23:35,494 --> 00:23:36,558 Let's use that as an example. 243 00:23:36,558 --> 00:23:43,031 If we move up the value chain and firms decide they want to start moving contract drafting down to an MSO. 244 00:23:43,031 --> 00:23:49,964 So lots of ALSPs draft contracts on behalf of either law firms or in-house departments. 245 00:23:49,964 --> 00:23:51,725 It's totally ethical. 246 00:23:51,725 --> 00:23:53,946 Every one of those ALSPs has opinions on that. 247 00:23:53,946 --> 00:23:55,240 It's widely done. 248 00:23:55,240 --> 00:23:56,891 A law firm could do the same thing. 249 00:23:56,891 --> 00:24:06,415 Just as a law firm today can use a non-lawyer to draft a contract as long as it's supervised or can use a non-lawyer to write briefs, that is going to be much more 250 00:24:06,415 --> 00:24:09,496 customized if and when that work goes to an MSO. 251 00:24:09,496 --> 00:24:17,999 That's going to be more uh custom to a given law firm based on its partners, based on the type of clients it has. 252 00:24:18,159 --> 00:24:19,640 So I think it's going to depend. 253 00:24:19,640 --> 00:24:24,662 Are we talking about back office work or are we talking about this quasi-legal 254 00:24:24,948 --> 00:24:26,899 what used to be associate work. 255 00:24:26,899 --> 00:24:28,000 I give you another example. 256 00:24:28,000 --> 00:24:42,931 There are litigation firms today, big prestigious litigation firms that have huge staffs of non-lawyer professionals that are employees that are doing the same type of work that 257 00:24:42,931 --> 00:24:43,982 associates do. 258 00:24:43,982 --> 00:24:51,116 They're being billed out by the hour and they're being supervised by associates and partners of the law firm. 259 00:24:51,137 --> 00:24:53,374 And no one suggests that's unethical. 260 00:24:53,374 --> 00:24:59,477 as long as it is under the rubric of a lawyer is supervising it, that could be done in an MSO. 261 00:24:59,477 --> 00:25:05,690 So even law firms that don't today have an MSO can easily, the old days, we call that lift and shift. 262 00:25:05,690 --> 00:25:11,923 You can take those people, take their function as it's being done, move it to a different corporation. 263 00:25:11,923 --> 00:25:17,946 That corporation can then be capitalized with private capital in a way that the law firm cannot. 264 00:25:18,383 --> 00:25:31,249 then what's kind of the size and shape of the law firms that are best aligned to the model of MSO that you guys are bringing to the market? 265 00:25:31,350 --> 00:25:33,001 Yeah, it's a great question. 266 00:25:33,001 --> 00:25:36,884 And I think of it in three ways. 267 00:25:36,884 --> 00:25:42,418 I think there are three types of law firms as opposed to kind of there's one size and shape. 268 00:25:42,418 --> 00:25:47,541 I think there's three styles of law firm that are gonna be your adopters over the next three to five years. 269 00:25:47,541 --> 00:25:56,869 uh Number one, you do have large multi-practice or large single practice, particularly litigation firms that could easily go this route. 270 00:25:56,869 --> 00:25:58,190 uh 271 00:25:58,358 --> 00:25:59,898 What types of firms am talking about? 272 00:25:59,898 --> 00:26:06,378 Firms that today already have structures that don't look as traditional. 273 00:26:06,378 --> 00:26:13,118 They've either already built outsourced centers, there plenty of firms that have outsourced centers that have had them for decades. 274 00:26:13,118 --> 00:26:19,298 Firms that have, you know, staffs that are non-lawyer already doing quasi-legal work. 275 00:26:19,298 --> 00:26:21,616 Firms that work with ALSPs. 276 00:26:21,616 --> 00:26:32,312 And you have firms all the way into the the Amelaw 20 that look like that, that if they chose to do an MSO structure, they're well suited to do that, as opposed to firms that do 277 00:26:32,312 --> 00:26:36,434 everything with their partners and their associates. 278 00:26:38,275 --> 00:26:42,237 The second type of firm is sort of the easiest to understand. 279 00:26:42,398 --> 00:26:43,578 And there are a few of them. 280 00:26:43,578 --> 00:26:47,260 Those are your distributed law firms, your virtual law firms. 281 00:26:47,260 --> 00:26:50,614 And so we saw Ramon Law, which was 282 00:26:50,614 --> 00:27:03,434 kind of the most well-known of the virtual law firms spun out its MSO, Nova Law, and Nova Law was capitalized and purchased by Alpine, a private equity investor. 283 00:27:03,434 --> 00:27:05,894 So you have other law firms like that. 284 00:27:05,894 --> 00:27:08,814 You have Fisher-Broyles, you have Pearson-Ferdinand. 285 00:27:08,814 --> 00:27:13,274 These are firms that have no official headquarters, have no official offices. 286 00:27:13,754 --> 00:27:16,174 They're scaled and or scalable. 287 00:27:16,174 --> 00:27:18,414 I think you'll have a lot more of these firms. 288 00:27:18,414 --> 00:27:19,988 They're well-suited. 289 00:27:19,988 --> 00:27:27,161 because they're built with an MSO already in place as their back and middle office. 290 00:27:27,161 --> 00:27:29,062 That's how the whole firm is structured. 291 00:27:29,322 --> 00:27:46,379 The third type of firm are the law firms that practice in areas that already have large elements of the practice having been disintermediated or having functions that already are 292 00:27:46,379 --> 00:27:48,468 not being handled by lawyers. 293 00:27:48,468 --> 00:27:50,781 And so who falls in that category? 294 00:27:50,781 --> 00:27:56,018 uh Employment law, immigration law, family law. 295 00:27:56,018 --> 00:28:02,156 So not just divorce, things like adoption, you form heavy things. 296 00:28:02,156 --> 00:28:04,238 uh Things like... 297 00:28:05,391 --> 00:28:06,153 right? 298 00:28:06,153 --> 00:28:10,163 I said default services, oh intellectual property. 299 00:28:10,914 --> 00:28:18,300 IP, particularly high volume IP, as opposed to complex patent infringement litigation, patent prosecution. 300 00:28:18,300 --> 00:28:26,168 We were doing claims charts and application drafting in India as far back as 2005. 301 00:28:26,168 --> 00:28:29,929 So clearly, lots of firms outsourced that work already. 302 00:28:29,929 --> 00:28:31,810 uh And then, 303 00:28:31,926 --> 00:28:44,463 The type of work we don't tend to get involved in at Burford, but things like mass tort and things like personal injury, where uh the lawyers are seen if something goes to trial 304 00:28:44,463 --> 00:28:53,938 or when it goes to trial, but a vast amount of the work is done by non-lawyers or done by companies that aren't today part of the law firm. 305 00:28:53,938 --> 00:29:00,742 So if you look at a mass tort law firm, a mass tort law firm often has a staff 306 00:29:00,918 --> 00:29:06,098 of people that are not lawyers that vastly exceed the number of lawyers at the firm. 307 00:29:06,398 --> 00:29:14,818 And even then it's a pyramidal structure between the people who own the firm and the income or employee lawyers of those firms. 308 00:29:14,838 --> 00:29:16,478 They can also move to an MSO. 309 00:29:16,478 --> 00:29:17,838 So I think you'll see that. 310 00:29:17,838 --> 00:29:20,478 But if you look, I'll give you an example. 311 00:29:20,478 --> 00:29:26,418 Look at employment, traditional employment law, defense or plaintiff side. 312 00:29:26,418 --> 00:29:30,778 But let's talk about the defense, because everyone thinks that all this is only an app on the plaintiff side. 313 00:29:31,900 --> 00:29:39,114 Littler Mendelson was one of the most innovative firms when it came to technology 15 and 20 years ago. 314 00:29:39,114 --> 00:29:51,341 They have been disintermediating the non-contentious side of their practice for decades such that the partners are really expert in employment law. 315 00:29:51,341 --> 00:29:58,510 Anything you want to know about US employment law, they know how to do and they've represented us when I was at Pangea 3. 316 00:29:58,705 --> 00:30:00,286 But they have 317 00:30:00,416 --> 00:30:08,570 hire teams of people who do other things who aren't lawyers that can easily be stripped out of the law firm and capitalized differently. 318 00:30:08,570 --> 00:30:18,564 And lots of firms have that today that operate in these types of law where you don't have to the lawyer doing all of the work vertically. 319 00:30:18,677 --> 00:30:19,037 Yeah. 320 00:30:19,037 --> 00:30:28,935 So a good, so the, the average ratio in the AmLaw 100 lawyer to staff is right at two. 321 00:30:29,316 --> 00:30:38,413 And whenever that ratio is higher, I would imagine that's where, you know, like a fragman is a good example that does immigration work. 322 00:30:38,413 --> 00:30:41,446 think they're like seven X right. 323 00:30:41,446 --> 00:30:44,918 Seven employees to each, um, each lawyer, right. 324 00:30:44,918 --> 00:30:48,391 That, that, that seems like that would be a leading indicator for you. 325 00:30:48,564 --> 00:30:49,674 I think that's right. 326 00:30:49,674 --> 00:30:51,436 if you think, we didn't talk about this. 327 00:30:51,436 --> 00:30:59,463 Fragment is probably the number one management side immigration firm in the world, certainly in America. 328 00:30:59,523 --> 00:31:05,358 And that stands to reason that they don't need lawyers to be doing everything. 329 00:31:05,358 --> 00:31:11,693 So it's literally a half step to then say they can take all of that. 330 00:31:11,754 --> 00:31:17,498 You can probably take some of the lawyer work too and move that into an MSO and enter into 331 00:31:17,532 --> 00:31:22,443 some sort of a pricing arrangement that would let the MSO raise capital. 332 00:31:22,443 --> 00:31:36,027 The nice thing about that is not only does it you raise capital, it lets you think about succession planning in a way that is very difficult for a lot of these firms where you 333 00:31:36,027 --> 00:31:45,670 have a limited number of partners at the top of the equity and they're trying to figure out how do they transfer, I don't want to say that wealth, how do they transfer that 334 00:31:45,670 --> 00:31:47,558 future earnings power? 335 00:31:47,558 --> 00:31:50,099 over time to the next generation? 336 00:31:50,718 --> 00:31:52,003 How do you do that? 337 00:31:52,003 --> 00:31:59,691 And how do they make sure they keep earning and get benefit for having built all that? 338 00:31:59,691 --> 00:32:03,684 Very difficult to do if the only way to do it is through the law firm itself. 339 00:32:03,903 --> 00:32:04,343 Yeah. 340 00:32:04,343 --> 00:32:07,224 Well, I'm to give you a plug here for InfoDash. 341 00:32:07,224 --> 00:32:16,406 So we have a extra net offering that has recently launched and we are primarily primary competitor in that space is Haikyuu. 342 00:32:16,546 --> 00:32:31,170 That's also owned by Thomson Reuters and Haikyuu's strength in their early days was their ring fenced, isolated, very well controlled cloud infrastructure. 343 00:32:31,451 --> 00:32:33,431 And over time, 344 00:32:33,855 --> 00:32:41,078 that strength has become what I see as a potential friction point because getting data in and out is hard. 345 00:32:41,079 --> 00:32:45,381 It was kind of designed that way when firms were not comfortable with the cloud. 346 00:32:45,381 --> 00:32:47,962 Firms are comfortable with the cloud now. 347 00:32:47,962 --> 00:32:53,004 And so we designed our solution to get deployed in their environment. 348 00:32:53,024 --> 00:32:58,947 And that opens up all sorts of new doors for mass tort and multi- uh 349 00:32:59,637 --> 00:33:08,690 D L multi district litigation and the ability to expose all of this back office data to the clients. 350 00:33:08,690 --> 00:33:11,480 That's very hard to do with traditional extra nets. 351 00:33:11,480 --> 00:33:13,331 Very easy to do with us. 352 00:33:13,331 --> 00:33:20,853 So maybe offline we should chat about, about that because that's, that's an area of focus for us. 353 00:33:21,573 --> 00:33:22,453 Yeah. 354 00:33:22,493 --> 00:33:28,523 Well, um, let's talk a little bit about, uh, ABS is themselves and, uh you know, it, it made 355 00:33:28,523 --> 00:33:38,103 big news when KPMG got admitted or licensed by the Arizona Supreme Court in, I think it was February. 356 00:33:38,363 --> 00:33:53,703 And I thought it was a very interesting move, not very easy to anticipate, you know, they have 200 and KPMG is the smallest of the big four. 357 00:33:53,943 --> 00:33:56,470 have like 275,000 employees. 358 00:33:56,470 --> 00:33:58,241 They have 4,000 lawyers. 359 00:33:58,241 --> 00:34:01,693 have 45-ish billion in revenue. 360 00:34:01,693 --> 00:34:04,684 They're the smallest of the big four, by the way. 361 00:34:04,944 --> 00:34:12,888 They would be an Amlaw 20 firm, maybe even Amlaw 10, if you spun out just that group of lawyers. 362 00:34:13,149 --> 00:34:20,632 And I have seen a surprising, um I guess, lack of urgency. 363 00:34:20,632 --> 00:34:25,595 um maybe complacency is too strong of a word. 364 00:34:25,803 --> 00:34:34,003 It doesn't seem that this is really that law firms are too worried about this new model potentially competing with them. 365 00:34:34,003 --> 00:34:37,083 you know, this is just the first step in that process. 366 00:34:37,083 --> 00:34:47,943 So I think there's a ton of interest, but what are your thoughts of this new ABS model and what the implications are for the traditional law firm model? 367 00:34:48,852 --> 00:34:54,787 Yeah, so I think the the ABS model in my mind is interesting, but it's untested. 368 00:34:54,787 --> 00:35:02,033 And if it stays in Arizona, I don't think it's going to be transformative. 369 00:35:02,033 --> 00:35:08,218 And I think that's why the large firms, even some of the small firms are taking a wait and see approach. 370 00:35:08,218 --> 00:35:11,541 And in that respect, the large firms aren't wrong. 371 00:35:11,541 --> 00:35:18,472 think the midsize and small firms are wrong to wait and see because a KPMG or an EY for them. 372 00:35:18,472 --> 00:35:31,688 So my old company, which was bought by Thomson Reuters, was then sold to EY and is now EY Law, which I think give or take has 3,000 people doing just the, doing high volume law, 373 00:35:31,688 --> 00:35:31,988 right? 374 00:35:31,988 --> 00:35:32,888 ALSP. 375 00:35:32,888 --> 00:35:45,153 uh That type of work will displace your midsize and smaller firm kind of localized work, your lower value work, your lower cost work. 376 00:35:45,153 --> 00:35:47,638 uh But the EBS itself, 377 00:35:47,638 --> 00:36:01,063 Given that it's restricted to Arizona and given the ethical rules in the major commercial states in the United States, California, New York, Florida, Texas, Illinois, Delaware, it 378 00:36:01,063 --> 00:36:17,270 is unlikely that using an Arizona ABS could allow KPMG or anyone else, Burford, any other player in the industry, unlikely it would allow them to create a national level law firm 379 00:36:17,270 --> 00:36:24,490 of high caliber elite type lawyers to compete with the Amla 200s. 380 00:36:24,490 --> 00:36:37,230 So what I think can happen, and that's why I think you're seeing the interest in the MSOs, is an existing set of lawyers could scale quickly using an MSO structure. 381 00:36:37,230 --> 00:36:45,238 So in my mind, KPMG, it may be a canary in a coal mine, but it's not a canary in a coal mine for a... 382 00:36:45,238 --> 00:36:52,078 the big four suddenly having giant law firms and becoming an Amlaw 20 or an Amlaw 50. 383 00:36:52,078 --> 00:37:00,118 It's a canary in a coal mine for law is in a disrupted and disruptible stage. 384 00:37:00,358 --> 00:37:10,510 And the other canary in a coal mine is private equity starting to get very interested and finding ways to... 385 00:37:12,726 --> 00:37:16,666 buy economic interests in the success of law firms. 386 00:37:16,666 --> 00:37:18,266 And I've chosen that carefully. 387 00:37:18,266 --> 00:37:21,346 They're not buying into law firms, not buying into the equity, right? 388 00:37:21,346 --> 00:37:33,946 We own a minority interest in a firm in Britain via the ABS structure, but by buying a position in Kindleworth, not only do we get to help out law firms that are clients of 389 00:37:33,946 --> 00:37:38,226 ours, but we also get to expose... 390 00:37:38,314 --> 00:37:46,201 what we do to those clients and as we broaden what we offer, we get in front of those clients, those law firm clients of a Kindle worth. 391 00:37:46,201 --> 00:37:59,752 And so I think what we're gonna see, if I had to make a prediction, I think the MSO structure is going to be the structure that really takes off unless there's the unlikely 392 00:37:59,752 --> 00:38:07,038 event that one of the commercial states liberalizes its law firm ownership rules either with. 393 00:38:07,280 --> 00:38:10,955 a change to rule 5.4 or by adopting ABSs. 394 00:38:10,955 --> 00:38:13,518 But all evidence is that they're not going to do that. 395 00:38:14,059 --> 00:38:16,599 Well, you know, that's interesting. 396 00:38:17,619 --> 00:38:30,999 It is a protectionist mechanism that really does create a bit of a moat for competition and capital. 397 00:38:31,459 --> 00:38:34,199 there is a vested interest. 398 00:38:34,299 --> 00:38:43,829 I'm of the opinion that as this technology, as generative AI really starts to move its way up 399 00:38:43,829 --> 00:38:49,842 the complexity spectrum in its capabilities and the type of legal work that it can accommodate. 400 00:38:50,303 --> 00:39:04,660 I think that that is going to be a driving force in motivation where I think it's the actual lawyers themselves who are going to, not just the consumer or the regulators or 401 00:39:04,660 --> 00:39:09,333 whoever, um there are benefits. 402 00:39:09,333 --> 00:39:13,795 So as a software company, if we were to sell our business today, 403 00:39:13,931 --> 00:39:18,351 we'd get anywhere from 6 to 10x revenue. 404 00:39:18,971 --> 00:39:23,531 A traditional business sells for 3 to 5 times EBITDA. 405 00:39:23,851 --> 00:39:42,403 So very different math and economics that ultimately, if a law firm built a tech-enabled captive entity or sister organization that had a 406 00:39:42,508 --> 00:39:51,068 a legal, a tech enabled legal, uh legal services delivery machine um that over time will be more viable. 407 00:39:51,068 --> 00:39:57,615 I think that that's going to be, create a natural tension on those rules. 408 00:39:57,615 --> 00:39:58,075 I don't know. 409 00:39:58,075 --> 00:40:00,316 you, what are your thoughts on that? 410 00:40:00,346 --> 00:40:02,147 I totally agree with that. 411 00:40:02,327 --> 00:40:05,988 Although I don't think the tension with the rules is going to be the challenge. 412 00:40:05,988 --> 00:40:10,309 I think the challenge is going to be managing the disruption at the law firm. 413 00:40:10,309 --> 00:40:14,970 The rules as they exist today, it's not optimal, but it's fine. 414 00:40:14,970 --> 00:40:19,512 It's the same way it was fine when I started my business 21 years ago. 415 00:40:19,512 --> 00:40:26,834 uh We knew what we were doing was ethical and we heard all the, you know, this is the unauthorized practice of law. 416 00:40:27,134 --> 00:40:27,894 None of it held up. 417 00:40:27,894 --> 00:40:31,134 We have, everyone had opinions from the best ethical scholars. 418 00:40:31,134 --> 00:40:35,054 were no bar association ever brought a claim. 419 00:40:35,054 --> 00:40:38,494 No one ever actually suggested what we doing was the unauthorized practice. 420 00:40:38,494 --> 00:40:40,494 I think the rules won't get in the way. 421 00:40:40,494 --> 00:40:46,454 I think to your point, there's going to be a groundswell of demand from the client side. 422 00:40:46,454 --> 00:40:51,094 Clients saying, forget, I don't want to pay by the hour. 423 00:40:51,094 --> 00:40:53,594 They're going to say, here's what I calculate this costs me. 424 00:40:53,594 --> 00:40:57,454 So Burford, we have budgets for everything we finance. 425 00:40:58,132 --> 00:41:03,385 Whether the law firm is charging by the hour or the law firm is doing on contingency, it's budgeted. 426 00:41:03,826 --> 00:41:10,170 So clients already are demanding budget, irrespective of the fact that the budget is based on an hour. 427 00:41:10,310 --> 00:41:20,417 Over time, they're going to demand that the cost of the services comes down because they're going to say, you can do that using some form of technology that didn't exist five 428 00:41:20,417 --> 00:41:21,338 years ago. 429 00:41:21,338 --> 00:41:27,540 Now, will it impact the &A practice at Cravath? 430 00:41:27,540 --> 00:41:32,910 you know, or the litigation practice at Wachtell or Simpson Thatcher, I doubt it. 431 00:41:32,910 --> 00:41:43,699 uh That's at a different level where you are paying for the judgment and the elite skills of the litigators or the lawyers on the transactions. 432 00:41:43,699 --> 00:41:55,525 But just about everywhere else, you're gonna see pieces of what today are done by associates or partners that can be done by technology and can probably be done by 433 00:41:55,525 --> 00:41:57,110 technology at 434 00:41:57,110 --> 00:42:00,850 a non-law firm and the clients are going to demand that. 435 00:42:01,090 --> 00:42:11,870 When, you know, somewhere from right now to the next three to five years and we're seeing it, the reality is if you talk to the companies in the legal world, the legal AI world, 436 00:42:11,870 --> 00:42:14,710 the legal technology world, they're all growing. 437 00:42:14,710 --> 00:42:16,190 They all have clients. 438 00:42:16,330 --> 00:42:24,110 They have clients at in-house that are going directly to them and they have law firms coming to them saying, my clients are pushing me. 439 00:42:24,394 --> 00:42:27,575 help me deliver my services in a different way. 440 00:42:27,575 --> 00:42:33,297 And then those firms are turning to their business leaders and saying, help us reprice. 441 00:42:33,297 --> 00:42:34,837 So that's happening. 442 00:42:34,837 --> 00:42:37,048 I don't think the ethics rules are going to stand in the way. 443 00:42:37,048 --> 00:42:52,662 think if anything, uh if you spend time with the ethics experts, the scholars, and I spent a lot of time talking to them, their view is at the end of the day, even where someone is 444 00:42:52,662 --> 00:42:58,022 pushing on the edge of the ethics rules, disruption happens in law. 445 00:42:58,022 --> 00:43:12,222 And that is my experience as someone who built, ran, and sold an ALSP to a more traditional technology provider, that what sounded like it was pushing up against the 446 00:43:12,222 --> 00:43:20,630 ethics rules when we formed the company in 2004, today seems almost plain vanilla. 447 00:43:20,630 --> 00:43:31,050 It's not controversial in the least that you would undertake the services offshore or outside of a law firm or a legal department that an ALSP undertakes. 448 00:43:31,050 --> 00:43:33,450 So I think the ethics rules won't hold back. 449 00:43:33,450 --> 00:43:35,890 There'll be demand at the client side. 450 00:43:35,970 --> 00:43:43,650 you know, ultimately, I think you'll see some convergence when law students come into firms with these skills. 451 00:43:44,410 --> 00:43:50,830 And that'll be really interesting, Ted, when you have law students who show up and say, wait a second. 452 00:43:50,890 --> 00:43:54,341 This doesn't make sense to ask me to draft like this. 453 00:43:54,341 --> 00:44:06,296 The way I'd learned how to draft a contract, I can learn just as easily by doing it with technology and it will take 10 % of the time. 454 00:44:06,777 --> 00:44:10,778 So now the firm has to say, well, how do we reprice that? 455 00:44:11,619 --> 00:44:13,399 What's the value of that? 456 00:44:13,399 --> 00:44:16,901 Where does it fall within and how do we train the lawyer to do other things? 457 00:44:16,901 --> 00:44:18,482 That's happening now. 458 00:44:18,482 --> 00:44:20,142 Those conversations are happening. 459 00:44:21,001 --> 00:44:21,251 Yeah. 460 00:44:21,251 --> 00:44:29,513 And you know, I've, I've, I've heard some interesting arguments around the ethics and technology. 461 00:44:29,513 --> 00:44:34,415 Like, you know, is chat GPT engaged in UPL, right? 462 00:44:34,415 --> 00:44:38,646 If, if I, I use it all the time for legal tasks. 463 00:44:38,646 --> 00:44:47,578 In fact, the last six months I've been running that's got close to nine months now, since the beginning of the year, I started running all of my, all of my legal tasks at my little 464 00:44:47,578 --> 00:44:51,145 small business, in parallel. 465 00:44:51,145 --> 00:44:55,298 with my lawyers and I've been really impressed. 466 00:44:55,298 --> 00:45:02,402 But you know, when I run my operating agreement and ask for a risk analysis, um, is that UPL? 467 00:45:02,603 --> 00:45:11,249 And then a good follow on question is there are many, well, I don't know about many, there are some AI companies out there. 468 00:45:11,249 --> 00:45:20,435 I don't know if you've ever heard of builder.ai, but they had people, they presented themselves as an AI company and they had people in India. 469 00:45:20,566 --> 00:45:21,019 Yeah. 470 00:45:21,019 --> 00:45:36,705 what happens with that if you have a legal application platform that presents itself as if technology is delivering the output, but it's actually people behind the scenes, is that 471 00:45:36,705 --> 00:45:37,285 UPL? 472 00:45:37,285 --> 00:45:41,422 And that picture gets real messy real fast, don't you think? 473 00:45:41,422 --> 00:45:44,283 It gets real messy, real fast. 474 00:45:44,283 --> 00:45:51,605 this is world legal zoom has been operating in for 20 years, know, and pushing back and kudos to them. 475 00:45:52,265 --> 00:46:03,968 I admire what they've done because they've really, uh in many ways, democratized law in a way that, why would you pay a lawyer, why should someone pay a lawyer hundreds or 476 00:46:03,968 --> 00:46:10,750 thousands of dollars for what is basically filling out forms with a little bit of expertise, right? 477 00:46:11,182 --> 00:46:25,230 I guess my real reaction is in the same way that, you know, sort of, um, turbo tax is no more engaged in the unauthorized practice of tax law. 478 00:46:25,230 --> 00:46:35,376 I feel like I can understand this argument intellectually, but to me, and I, and I do understand it and I, I like it for the philosophical elements of the debate. 479 00:46:35,436 --> 00:46:38,474 But when someone actually says to me this, you know, 480 00:46:38,474 --> 00:46:41,836 you know, well, I think the AI tools are engaged in UPI. 481 00:46:41,836 --> 00:46:45,598 It's the last vestige of people who want to keep the world the way it is. 482 00:46:45,598 --> 00:46:49,640 The AI genie is way out of the bottle. 483 00:46:50,101 --> 00:46:53,953 you know, uh we have it enterprise-wide. 484 00:46:53,953 --> 00:46:57,885 It's all in a container at Burford, so everything is confidential and everything is safe. 485 00:46:57,885 --> 00:47:02,197 But we expect our people to look to GPT. 486 00:47:02,197 --> 00:47:03,428 We expect them to be on it every day. 487 00:47:03,428 --> 00:47:04,308 I'm on it every day. 488 00:47:04,308 --> 00:47:05,566 uh 489 00:47:05,566 --> 00:47:09,428 you know, our heads of every unit are on it every day. 490 00:47:09,428 --> 00:47:13,270 So I don't think we're putting the genie back in the bottle. 491 00:47:13,270 --> 00:47:24,306 And while I love the discussion uh from an intellectual standpoint, when someone comes along and says, well, this is a real problem, we have to study it, usually they just are 492 00:47:24,306 --> 00:47:29,028 looking for a way to slow down change that everyone knows is coming. 493 00:47:29,419 --> 00:47:30,159 100%. 494 00:47:30,159 --> 00:47:31,390 I completely agree with you. 495 00:47:31,390 --> 00:47:35,521 it's not only is it coming, it's, it's inevitable. 496 00:47:35,521 --> 00:47:43,773 Like the market is going to demand these efficiencies and um we're going there, whether we like it or not. 497 00:47:43,773 --> 00:47:49,364 So you can go kicking and screaming or you can, you can lead the pack. 498 00:47:50,165 --> 00:47:52,436 one final question for you, cause we're almost out of time. 499 00:47:52,436 --> 00:47:57,007 You, you've had a nice kind of cross-sectional view as I have. 500 00:47:57,007 --> 00:47:57,987 in my, 501 00:47:58,028 --> 00:48:00,249 17 years and working with law firms. 502 00:48:00,249 --> 00:48:02,991 We've worked with over 110 AM law firms. 503 00:48:02,991 --> 00:48:06,313 That's when I stopped counting because counting gets tricky. 504 00:48:06,313 --> 00:48:11,237 Like when you have two firms that merge, is that three or is that one now? 505 00:48:11,237 --> 00:48:13,498 So anyway, I quit counting. 506 00:48:13,498 --> 00:48:16,700 It's more than half, I'll say. 507 00:48:17,300 --> 00:48:28,147 What are you seeing as leading indicators for the firms that are going to come out the other side of this transformation? 508 00:48:28,171 --> 00:48:29,391 successful. 509 00:48:29,391 --> 00:48:42,711 Are there any things like types of activities like you know we saw Cleary by Springbok and you know you've got um you know Wilson Sincini built Neuron and Cooley and Go and you know 510 00:48:42,711 --> 00:48:53,011 there's um Cypharth has Cypharth Lean and you know there's lots of little interesting moves here and there but just kind of in broad brushstrokes without getting specific firm 511 00:48:53,011 --> 00:48:54,751 specific like are there any 512 00:48:54,751 --> 00:49:00,383 moves that you see certain firms making that you say, wow, you know what, I think that's a leading indicator to success. 513 00:49:00,478 --> 00:49:02,098 think there are a few. 514 00:49:04,074 --> 00:49:05,754 Maybe I'll talk about three real quickly. 515 00:49:05,754 --> 00:49:06,825 One is our own business. 516 00:49:06,825 --> 00:49:15,507 So firms that approach us and want to discuss how legal finance can help them because they're trying to build new practice groups. 517 00:49:15,507 --> 00:49:28,601 So the best example is historically defense side, large national firms that have strong litigation practice, but want to be able to offer creative solutions and creative pricing, 518 00:49:28,601 --> 00:49:32,822 particularly contingency in a way that they never have and come to us. 519 00:49:32,822 --> 00:49:39,562 in ways that 10 years ago they wouldn't That is usually a leading indicator that change is afoot. 520 00:49:39,562 --> 00:49:41,162 I think there are two other things. 521 00:49:41,162 --> 00:49:45,742 One, what are the activities those firms are undertaking? 522 00:49:45,742 --> 00:49:47,662 What technologies are they buying? 523 00:49:47,662 --> 00:49:51,962 You mentioned Cleary, and I'm gonna come back to Cleary in second. 524 00:49:53,442 --> 00:49:59,142 Oreck, 20 years ago, Oreck had built a facility in Wheeling, West Virginia. 525 00:49:59,882 --> 00:50:02,634 I think it was White and Case had a facility in the Philippines. 526 00:50:02,634 --> 00:50:03,455 to do their back. 527 00:50:03,455 --> 00:50:15,071 These are indicators of a firm that's thinking differently, that's sort of nimble, they're asking questions that are institutionally trying to find different ways of running their 528 00:50:15,071 --> 00:50:16,842 business, right? 529 00:50:16,842 --> 00:50:18,983 To generate more profit, right? 530 00:50:18,983 --> 00:50:23,926 That's not the worst motivator in the world to do that, but they're trying to find new solutions. 531 00:50:23,926 --> 00:50:25,207 The other is people. 532 00:50:25,207 --> 00:50:26,458 And I said I mentioned clear. 533 00:50:26,458 --> 00:50:30,592 If you look at who Clear is hired, I'm friends with a lot of those people, right? 534 00:50:30,592 --> 00:50:37,726 Cleary has, you know, for an old line Wall Street firm, Cleary has gone out and said, we want to hire really innovative people. 535 00:50:37,726 --> 00:50:40,347 Look at who Brad Carp at Paul Weiss has hired. 536 00:50:40,347 --> 00:50:42,348 uh Simpson Thatcher. 537 00:50:42,348 --> 00:50:44,209 They've gone out and hired people. 538 00:50:44,209 --> 00:50:47,060 This is not window dressing, the people they're hiring. 539 00:50:47,060 --> 00:50:54,793 They're paying a lot of money to hire people to pull them out of usually technology firms or... 540 00:50:54,793 --> 00:50:57,109 We're seeing people move from McKinsey to law. 541 00:50:57,109 --> 00:50:58,834 It's mind blowing. 542 00:50:58,834 --> 00:51:00,476 Right. 543 00:51:00,476 --> 00:51:02,177 It's mind blowing, yet it's not. 544 00:51:02,177 --> 00:51:12,954 The firms are putting their money where their mouth is to bring in really talented people to then help them figure out what should they be doing? 545 00:51:12,954 --> 00:51:15,646 What tools should they be procuring? 546 00:51:15,646 --> 00:51:17,618 Should they be looking at the MSO structure? 547 00:51:17,618 --> 00:51:22,211 So I think if I put Burford in the first category, it's what activities are they taking? 548 00:51:22,211 --> 00:51:23,442 They're looking at legal finance. 549 00:51:23,442 --> 00:51:24,783 They're looking at MSOs. 550 00:51:24,783 --> 00:51:25,973 They're looking at... 551 00:51:26,546 --> 00:51:36,875 distributed law firms, know, firms that are spinning out, people that are leaving firms to set up their own law firms and setting them up in ways that don't resemble their legacy 552 00:51:36,875 --> 00:51:37,296 firm. 553 00:51:37,296 --> 00:51:39,938 And then the third is who are they bringing on? 554 00:51:40,038 --> 00:51:41,499 That to me is always telling. 555 00:51:41,499 --> 00:51:44,202 Who are they hiring to help them with it? 556 00:51:44,202 --> 00:51:46,204 That's going to be a leading indicator. 557 00:51:46,204 --> 00:51:53,430 As opposed to repurposing someone who isn't an agent of change, I think you can kind of look out and say, 558 00:51:53,430 --> 00:52:00,770 Okay, these firms are serious when they bring on certain types of people, particularly when they bring them on and then you see them out in the market, what they're doing. 559 00:52:00,770 --> 00:52:02,379 think that's a good leading indicator. 560 00:52:02,379 --> 00:52:03,770 Yeah, I completely agree. 561 00:52:03,770 --> 00:52:04,801 Yeah. 562 00:52:04,801 --> 00:52:12,845 The hiring is really the most visible leading indicator, but uh you named some good ones there as well. 563 00:52:12,845 --> 00:52:16,497 Um, well, I really appreciate you taking some time. 564 00:52:16,497 --> 00:52:17,808 This has been a great conversation. 565 00:52:17,808 --> 00:52:20,170 Our last conversation was awesome as well. 566 00:52:20,170 --> 00:52:24,212 How do people find out more about the work that you're doing? 567 00:52:24,339 --> 00:52:29,435 Um, you know, as David Perla and also at Burford capital. 568 00:52:30,154 --> 00:52:33,457 Well, at Burford Capital and David Pearl are the same. 569 00:52:33,457 --> 00:52:38,481 You can go to our website, which is burfordcapital.com. 570 00:52:38,481 --> 00:52:50,271 And we have an extensive amount of material about who we are, what we do in our core litigation finance business, an extensive amount of material about the topic we discussed 571 00:52:50,271 --> 00:52:55,645 today, law firm equity, MSOs, capital structures, innovation. 572 00:52:55,645 --> 00:52:59,350 And we have plenty on technology, things that are. 573 00:52:59,350 --> 00:53:04,333 uh adjacent to our core business, but that we believe are going to transform the business. 574 00:53:04,333 --> 00:53:11,977 And in that vein, Ted, should say congratulations on the Forbes 100, uh which was really cool. 575 00:53:11,977 --> 00:53:21,129 I be reading yesterday and to see InfoDash pop up uh as a rising star, knowing I was coming on here was really a treat for me. 576 00:53:21,129 --> 00:53:21,890 Yeah, awesome. 577 00:53:21,890 --> 00:53:22,840 I really appreciate that. 578 00:53:22,840 --> 00:53:23,981 We were blown away. 579 00:53:23,981 --> 00:53:30,666 ah The amount of investor attention we have gotten has been uh mind blowing. 580 00:53:30,666 --> 00:53:33,888 And it's not because we're selling intranets and extranets. 581 00:53:33,889 --> 00:53:47,359 It's because we have this integration layer that sits within the law firm that has tentacles into all those back office systems that lights up AI capabilities like 582 00:53:47,359 --> 00:53:53,081 that Microsoft exposes like Azure AI search, Azure open AI, power automate power apps. 583 00:53:53,081 --> 00:54:05,964 I think investors are looking at that because that that's a joint list with fortune and Bessemer venture partners who you know well, you know, very um prestigious uh venture fund 584 00:54:05,964 --> 00:54:06,964 in the Valley. 585 00:54:06,964 --> 00:54:07,274 Yeah. 586 00:54:07,274 --> 00:54:11,276 And I'm going to, uh I'm going to Menlo Park to the award ceremony. 587 00:54:11,276 --> 00:54:13,046 Get to see Jensen Wang, man. 588 00:54:13,046 --> 00:54:16,967 And some of these CEOs, I'm, I'm so humbled by that. 589 00:54:17,759 --> 00:54:19,321 It really is inspiring. 590 00:54:19,321 --> 00:54:23,004 um I'm jealous, um really jealous. 591 00:54:23,004 --> 00:54:25,677 So look forward to reading about it after. 592 00:54:25,677 --> 00:54:28,556 Great, thanks so much. 593 00:54:28,556 --> 00:54:34,146 Yeah, thanks for coming on and I'm sure we'll bump into each other in person real soon. 594 00:54:35,210 --> 00:54:35,640 All right. 595 00:54:35,640 --> 00:54:36,791 Thanks, David. 00:00:03,772 David Perla, how are you this afternoon? 2 00:00:03,978 --> 00:00:05,739 Great, how are you Ted? 3 00:00:05,739 --> 00:00:07,450 Doing good, doing good. 4 00:00:07,450 --> 00:00:09,983 I'm excited about this conversation, man. 5 00:00:09,983 --> 00:00:20,772 I've been, ever since that Financial Times article came out and I learned about this whole MSO model, I've been really excited to talk to you guys. 6 00:00:20,772 --> 00:00:23,114 And I think the audience is going to be really interested as well. 7 00:00:23,114 --> 00:00:25,105 So uh I'm excited. 8 00:00:25,856 --> 00:00:26,446 Well, thank you. 9 00:00:26,446 --> 00:00:27,966 We're excited also. 10 00:00:27,966 --> 00:00:36,534 The article really just explained what we've known for a long time and we've been focused on for a long time in terms of our strategy. 11 00:00:36,534 --> 00:00:46,142 So we're thrilled that people are so engaged by it and so interested in it throughout the tech world and in the legal world. 12 00:00:46,142 --> 00:00:48,184 So it's sometimes hard to unite those two. 13 00:00:48,184 --> 00:00:50,386 This seems to have gotten everyone's attention. 14 00:00:50,386 --> 00:00:51,279 So we're excited. 15 00:00:51,279 --> 00:00:51,979 for sure. 16 00:00:51,979 --> 00:00:52,519 For sure. 17 00:00:52,519 --> 00:00:55,859 And there's lots of reasons for that, that we're going to get into. 18 00:00:55,859 --> 00:00:57,579 But before we do, let's get you introduced. 19 00:00:57,579 --> 00:01:04,219 So I met you via Rob Soconi, who I've known for many, many years. 20 00:01:04,219 --> 00:01:20,679 He was, um, I think he was still possibly at TR when we met and, uh, I've been in the legal internet game and extranet game for a long time and a, uh, a CEO. 21 00:01:20,935 --> 00:01:31,420 In Charlotte, a CIO at a law firm in Charlotte put me in touch with Rob and Robin Bob, his partner, Bob Beach and said, you got to talk to this guy. 22 00:01:31,420 --> 00:01:36,283 um anyway, he, Rob put us in touch, which, which I appreciate. 23 00:01:36,283 --> 00:01:45,771 And, uh, I saw your article, in the financial times about Burford capital and some of the interesting things you guys are doing there that we're going to talk about, but. 24 00:01:45,771 --> 00:01:46,811 Your background. 25 00:01:46,811 --> 00:01:50,091 you formally founded and led an ALSP. 26 00:01:50,091 --> 00:01:52,511 You're a former M and a lawyer, like fill in the gaps. 27 00:01:52,511 --> 00:01:56,099 Tell us a little bit more about your background and what you're doing today. 28 00:01:56,246 --> 00:01:57,967 Sure, happy to. 29 00:01:57,967 --> 00:02:04,316 So I was a former &A lawyer in New York City, corporate lawyer in the 90s, and then went in-house. 30 00:02:04,316 --> 00:02:14,492 So the first 10 years of my career were spent private practice and then as an in-house lawyer at a, at the time, very fast growing internet company called Monster.com. 31 00:02:14,492 --> 00:02:22,694 So I really lived the uh technology internet world in the 1.0 days of the internet. 32 00:02:22,806 --> 00:02:28,806 And in 04, I founded a company called Pangaea 3 with my best friend from law school. 33 00:02:28,806 --> 00:02:33,066 We raised the time, three rounds of capital. 34 00:02:33,066 --> 00:02:41,646 Ultimately, our final round was with Sequoia and built that business from two of us in a room to 650 people around the world. 35 00:02:41,646 --> 00:02:46,446 And then we were acquired by Thomson Reuters in 2010. 36 00:02:46,786 --> 00:02:50,506 Stayed for two years, had actually a very, very happy time. 37 00:02:50,506 --> 00:02:52,326 We come from the legal world. 38 00:02:52,326 --> 00:02:52,758 So 39 00:02:52,758 --> 00:02:57,138 We actually enjoyed our time at Thomson Reuters, made a lot of friends, a lot of contacts. 40 00:02:57,238 --> 00:03:03,158 And then I did a fairly short stint for two and a half years as president of Bloomberg Law. 41 00:03:03,158 --> 00:03:11,178 Really wanted to see what the information business was about, having led a services and technology enabled business. 42 00:03:11,178 --> 00:03:13,698 I wanted to get into the information business. 43 00:03:13,698 --> 00:03:20,118 Did that until the end of 2016 and then was approached by Chris Bogart, our CEO. 44 00:03:20,446 --> 00:03:23,991 about coming on board to Burford in early 2018. 45 00:03:23,991 --> 00:03:36,108 And I've been here ever since, really in a variety of roles, all of which have been uh market facing leadership roles at the company, culminating last summer and becoming vice 46 00:03:36,108 --> 00:03:37,690 chair at Burford. 47 00:03:37,909 --> 00:03:39,179 Very interesting. 48 00:03:39,179 --> 00:03:42,130 And I thought the article was extremely interesting. 49 00:03:42,130 --> 00:03:48,482 I have a, we talk about a lot about business models here on the show. 50 00:03:48,622 --> 00:04:00,525 And you know, the reason being, I think there are some natural friction points, we'll call them in the current iteration of the law firm partnership model. 51 00:04:00,525 --> 00:04:08,177 You know, it's cash basis accounting and consensus driven decision-making and you know, management. 52 00:04:08,299 --> 00:04:13,459 professional management, not always being properly or sufficiently empowered. 53 00:04:13,459 --> 00:04:26,779 Um, you know, the lack of R and D, all of these things that create friction towards capital projects and just the mindset necessary to really kind of think about R and D. 54 00:04:26,779 --> 00:04:30,399 I don't feel like the law firm partnership model is really optimized for that. 55 00:04:30,399 --> 00:04:32,239 It's optimized for profit taking. 56 00:04:32,341 --> 00:04:34,633 So we, we, we talk a lot about it here. 57 00:04:34,633 --> 00:04:46,723 So I was particularly interested because I've been keeping a close eye on all the activity that's happening around ABS in uh Utah and Arizona and Puerto Rico. 58 00:04:46,723 --> 00:04:52,188 And I recently learned also DC, um, which I thought was super interesting. 59 00:04:52,188 --> 00:04:58,051 So I think there's a really a lot, you know, that this isn't the whole ABS structure isn't new. 60 00:04:58,051 --> 00:05:01,259 It just knew in, in the, in this country in 61 00:05:01,259 --> 00:05:06,202 You know, the UK, they've had the Legal Services Act for God, it's been, think, 15 years. 62 00:05:06,623 --> 00:05:07,103 Yeah. 63 00:05:07,103 --> 00:05:10,726 And not much has really changed over there as a result of that. 64 00:05:10,726 --> 00:05:12,687 But that was prior to Gen. 65 00:05:12,687 --> 00:05:20,172 AI and before the means of legal production really became, I guess, challenged. 66 00:05:20,172 --> 00:05:27,618 uh There are now new ways to tech enable legal service delivery. 67 00:05:27,618 --> 00:05:29,899 So I think there's a ton of interest in 68 00:05:30,003 --> 00:05:32,485 in the market around um this. 69 00:05:32,485 --> 00:05:45,442 So why don't we start off with, so when I read the article, it mentioned MSO and coming from the tech world, immediately, that's a uh slightly different acronym, stands for 70 00:05:45,442 --> 00:05:46,873 managed service offering. 71 00:05:46,873 --> 00:05:54,218 um And what you guys are doing is it's a managed service organization. 72 00:05:54,218 --> 00:05:56,619 Why don't you tell us what that means? 73 00:05:57,184 --> 00:06:02,818 Sure, and it's not materially different than a managed service offering, right? 74 00:06:02,818 --> 00:06:08,902 The idea being that an organization is taking over a function for another organization. 75 00:06:08,902 --> 00:06:17,969 uh And as we look at law, Ted, we probably wanna just acknowledge at the law firm level, there are all types of law firms. 76 00:06:17,969 --> 00:06:25,598 So while the capital structure is the same in the US in that they cannot take equity ownership or equity interests from... 77 00:06:25,598 --> 00:06:28,100 non-lawyers, non-partners of the firm. 78 00:06:28,100 --> 00:06:39,590 uh There are firms that range from your am-law 20s that are hyper profitable and they're large-er, right? 79 00:06:39,590 --> 00:06:42,872 uh The top 20 all have the worth of a billion dollars in revenue. 80 00:06:42,872 --> 00:06:46,496 They're all very, very profitable, all the way down to your one-person firm. 81 00:06:46,496 --> 00:06:54,324 So we tend to generalize a little bit, but as we talk, I'll probably highlight some of the differences and why they're starting to matter. 82 00:06:54,324 --> 00:07:01,638 I do agree with you that technology, AI, and particularly generative AI are gonna change the conversation. 83 00:07:01,638 --> 00:07:10,063 uh But as we think about it, the challenge in law is really twofold. 84 00:07:10,063 --> 00:07:18,307 Number one, law firms, to quote our Chief Investment Officer John Maloe, their capital structure is like an ice cream truck. 85 00:07:18,307 --> 00:07:24,010 That's the analogy he uses, which is they have to be owned by 86 00:07:24,074 --> 00:07:34,663 the people who work in the business and they uh rely on their cash as their balance sheet, as their means of capital, and they distribute out their cash to the end of the year. 87 00:07:34,663 --> 00:07:36,344 That's how the owners get paid. 88 00:07:36,344 --> 00:07:45,071 They can have revolvers, they can have debt facilities, but it's a fairly unsophisticated capital structure. 89 00:07:45,071 --> 00:07:49,615 So that is definitely uh issue one. 90 00:07:49,615 --> 00:07:53,578 The second dynamic, and we can spend some time talking about this is, 91 00:07:53,712 --> 00:07:58,328 as a business goes, as an industry goes, it's incredibly fragmented. 92 00:07:58,328 --> 00:08:03,293 So I mentioned, your top 20 firms in the US all have a billion in revenue. 93 00:08:03,534 --> 00:08:09,961 If you add them all up together, it's still only a relatively modest size public company. 94 00:08:09,961 --> 00:08:10,984 uh 95 00:08:10,984 --> 00:08:13,302 billion for the AMLO 100. 96 00:08:13,302 --> 00:08:14,502 for the MLO 100, right? 97 00:08:14,502 --> 00:08:19,762 So how many companies in America have over 160 billion in revenue? 98 00:08:19,762 --> 00:08:20,682 And that's 100. 99 00:08:20,682 --> 00:08:21,542 That's not your top 20. 100 00:08:21,542 --> 00:08:23,102 That's your top 100. 101 00:08:23,102 --> 00:08:27,362 So it gives you a sense this is not a scaled industry. 102 00:08:27,362 --> 00:08:35,862 This is a very fragmented, unconsolidated industry, which makes it challenging to address capital needs. 103 00:08:35,862 --> 00:08:43,220 And it makes it challenging for any firm on its own to drive industry change or adoptage. 104 00:08:43,220 --> 00:08:43,690 change. 105 00:08:43,690 --> 00:08:51,232 uh The MSO structure, to bring us back to where we started, the MSO structure uh is a workaround. 106 00:08:52,293 --> 00:09:01,715 What you have today is in the vast majority of states, the only way a law firm can raise money is from its partners. 107 00:09:01,715 --> 00:09:07,437 Let's put the ABS structure aside for a second, the structure we have in Arizona and a variation in Utah. 108 00:09:07,437 --> 00:09:12,438 uh And those are somewhat limited because of ethics rules. 109 00:09:12,438 --> 00:09:20,084 to extent we want, can come back to that, but they don't really allow the firms to practice nationally using an ABS structure. 110 00:09:20,084 --> 00:09:22,566 So the firm structure has to say the same. 111 00:09:22,566 --> 00:09:34,456 What the MSO structure really lets the firm do is it lets them take certain functions, either what we think of as back office functions, or what I think of as the old middle 112 00:09:34,456 --> 00:09:37,258 office or ALSP functions. 113 00:09:39,264 --> 00:09:49,497 put those into a separate entity, enter into a contract with that entity, and then that entity can raise capital anywhere it wants. 114 00:09:49,497 --> 00:09:51,378 So can raise capital from private equity. 115 00:09:51,378 --> 00:09:56,860 can, in theory, not yet in practice, but in theory, can raise capital from the public markets. 116 00:09:56,860 --> 00:09:58,140 It can do debt. 117 00:09:58,140 --> 00:09:59,011 It can issue bonds. 118 00:09:59,011 --> 00:10:03,028 It can really do whatever it wants, subject to whatever the... 119 00:10:03,028 --> 00:10:10,125 the capital markets are gonna demand in terms of the instrument or in terms of the return on that investment. 120 00:10:10,366 --> 00:10:24,982 So it is really a vehicle to let law firms disintermediate the work that they do and take the non-practice of law elements of law firms. 121 00:10:26,032 --> 00:10:33,686 send those to a managed service organization and let that organization raise money in ways that the law firm itself couldn't raise money. 122 00:10:33,686 --> 00:10:35,547 And that's all it's really doing. 123 00:10:35,547 --> 00:10:48,835 It's been done in healthcare before, it's been done in other industries, and it is a, in my mind, a natural evolution from what law has been going through anyway with ALSPs and 124 00:10:48,835 --> 00:10:50,956 with outsourced technology providers. 125 00:10:50,956 --> 00:10:54,778 So the idea of law being disintermediated or 126 00:10:54,836 --> 00:10:58,200 or being broken up into its constituent parts is not new. 127 00:10:58,200 --> 00:11:00,313 It's been going on for decades. 128 00:11:00,313 --> 00:11:08,121 This is the first time that people are saying, why don't we use this to raise money and scale the business? 129 00:11:08,222 --> 00:11:11,716 And there's any number of reasons why a firm will want to do that. 130 00:11:12,267 --> 00:11:23,147 And I assume this essentially bypasses the restrictions around model rule 5.4, non-legal ownership. 131 00:11:23,887 --> 00:11:27,247 So is that accurate? 132 00:11:27,626 --> 00:11:28,506 That's accurate. 133 00:11:28,506 --> 00:11:42,894 So 5.4 for people who aren't versed in the ethics rules, and I hope most people aren't, uh rule 5.4 basically says that a lawyer cannot share fees with a non-lawyer. 134 00:11:43,375 --> 00:11:56,192 And what this structure allows is it allows the lawyer to uh move functions that were previously done by the lawyer or by the firm to a different entity, entering into an 135 00:11:56,192 --> 00:11:57,362 arrangement. 136 00:11:57,696 --> 00:12:01,027 could be a fixed price arrangement, could be a cost plus arrangement. 137 00:12:01,027 --> 00:12:05,348 It could be an arrangement that is based on the revenue of the firm. 138 00:12:05,348 --> 00:12:11,520 What it can't be is directly based on the profits or profitability of the law firm. 139 00:12:11,520 --> 00:12:25,424 But there's a lot of creativity around how you can structure the pricing that an MSO gets from a law firm, enters into that relationship, and the MSO can then raise capital. 140 00:12:25,718 --> 00:12:37,556 And the law firm itself, by the way, the money can flow up into the partners of the law firm because the law firm can start out as the owner of the MSO or a part owner in the 141 00:12:37,556 --> 00:12:37,906 MSO. 142 00:12:37,906 --> 00:12:39,558 Really, it can do anything it wants. 143 00:12:39,558 --> 00:12:43,130 The MSO is a non-law firm entity. 144 00:12:43,130 --> 00:12:49,494 And so any restrictions that apply to law firms don't apply to the MSO with a big exception. 145 00:12:49,494 --> 00:12:55,318 The law firm's relationship with the MSO is, of course, still governed by ethical rules. 146 00:12:55,412 --> 00:12:59,628 rules around confidentiality, rules around privilege, rules around fee sharing. 147 00:12:59,628 --> 00:13:06,128 So those apply, but the MSO itself is unconstrained by rules around capital ownership. 148 00:13:06,667 --> 00:13:08,388 Okay, interesting. 149 00:13:08,469 --> 00:13:18,276 one thing that came to mind when I was reading the article is the similarities or differences with ALSPs. 150 00:13:18,276 --> 00:13:22,249 So can you kind of help differentiate those two? 151 00:13:23,166 --> 00:13:38,450 Of the easiest way to understand the difference is what most people mean when they say an MSO versus an ALSP is defined by the functions of the organization as opposed to the 152 00:13:38,450 --> 00:13:41,391 structure or as opposed to the relationship. 153 00:13:41,391 --> 00:13:50,013 So historically, when we talk about an MSO, we're talking about functions that we think of as back office. 154 00:13:50,013 --> 00:13:52,636 So that's technology. 155 00:13:52,636 --> 00:14:06,832 finance, uh HR, marketing, uh oftentimes compliance, risk management, and in some cases, like uh strategy and business management, sort of growth initiatives. 156 00:14:06,832 --> 00:14:13,364 Those are your typical kind of back office as opposed to the practice of law at a law firm, right? 157 00:14:13,364 --> 00:14:17,356 The things I did when I was at a big law firm, the things I did even when I was in-house. 158 00:14:17,556 --> 00:14:22,454 If we think about an ALSP, the functions we think about are more 159 00:14:22,454 --> 00:14:29,676 quasi-legal or high-volume legal in nature, as opposed to back office. 160 00:14:29,676 --> 00:14:34,757 So back office I might refer to in the old days as business process outsourcing. 161 00:14:34,757 --> 00:14:37,238 ALSPs are legal process outsourcing. 162 00:14:37,238 --> 00:14:51,072 So you can do what 30, 40 years ago we thought of as legal work is now being done at ALSPs under the umbrella supervision uh of a lawyer at either a law firm or an in-house 163 00:14:51,072 --> 00:14:51,972 department. 164 00:14:52,042 --> 00:15:04,309 document review, contract drafting, uh legal research, contract lifecycle management, ah the legal elements of compliance. 165 00:15:04,309 --> 00:15:18,516 And then as you work your way down the value chain, all sorts of other functions that are not back office in nature, they are more vertically integrated into the practice of law. 166 00:15:18,516 --> 00:15:21,830 The things that an associate might have done 30 years ago, 167 00:15:21,878 --> 00:15:30,038 that an ALSP started taking on 20 and 15 years ago, you could put those in an MSO easily. 168 00:15:30,078 --> 00:15:36,638 And as long as they're supervised by a lawyer, the MSO could do both back office work and that quasi legal work. 169 00:15:36,638 --> 00:15:41,550 We tend to use the acronyms to describe the difference in the work being done. 170 00:15:41,932 --> 00:15:42,412 I see. 171 00:15:42,412 --> 00:15:51,177 our first venture, so InfoDash has been around since January, 2022, so about three and a half years. 172 00:15:51,257 --> 00:16:03,483 For the 14 years prior to that, we were a company called Acrowire and we were consultants and I'm a former Microsoft guy and I had uh skills and expertise in that domain. 173 00:16:03,623 --> 00:16:10,539 And we decided to jump down the legal uh rabbit hole and our first client 174 00:16:10,539 --> 00:16:15,639 they no longer exist was a default services firm in 2008. 175 00:16:15,939 --> 00:16:23,779 So as you can imagine, 2008 default services was a very hot area of practice. 176 00:16:23,779 --> 00:16:40,419 There were lots of foreclosures in 2008, 2009, and they used a, they called it a BPO in India that did a lot of the administrative tasks related to 177 00:16:40,907 --> 00:16:46,527 which of which there are plenty in the default services practice. 178 00:16:47,087 --> 00:16:59,307 They outsource that to a much lower cost geography and maintained a ton of efficiencies and that firm grew fraud. 179 00:16:59,307 --> 00:17:06,747 You know, it wasn't a big firm to begin with, but they started off with about 50 employees and ended up with 400 in 18 months. 180 00:17:06,987 --> 00:17:09,507 So 8X growth in 18 months. 181 00:17:10,167 --> 00:17:10,677 Pretty 182 00:17:10,677 --> 00:17:11,608 pretty amazing. 183 00:17:11,608 --> 00:17:26,721 And we went in there and I'm also a lean Six Sigma black belt and we helped them, um, map out all of their processes within default services and structure it like an assembly line 184 00:17:26,721 --> 00:17:33,146 where we physically sat each group in close proximity. 185 00:17:33,146 --> 00:17:37,350 And they had, um, they literally ran this like a manufacturing facility. 186 00:17:37,350 --> 00:17:38,892 They had monitors 187 00:17:38,892 --> 00:17:39,712 installed. 188 00:17:39,712 --> 00:17:44,032 We had them install monitors with control charts and bottleneck. 189 00:17:44,032 --> 00:17:45,712 could see where bottlenecks were in the process. 190 00:17:45,712 --> 00:17:51,392 Yeah, it actually got wrote up by the ABA journal, maybe 2010, 2011 timeframe. 191 00:17:51,772 --> 00:17:54,892 So that was well ahead of its time. 192 00:17:54,892 --> 00:18:06,595 And I'll be honest with you, I have not seen that really happen since to that extent where a law firm was really built like that. 193 00:18:06,645 --> 00:18:19,209 Do you guys come and bring that level of rigor and expertise as well, or is it more ad hoc based on how the firm operates? 194 00:18:19,562 --> 00:18:22,344 Does an MSO, when you say you guys, mean an... 195 00:18:22,744 --> 00:18:32,931 Right, so Burford just took a minority interest in Kindleworth in the UK, which helps law firms spin out of larger law firms and helps them manage. 196 00:18:32,931 --> 00:18:37,074 So it's a part consultancy, part MSO. 197 00:18:37,695 --> 00:18:42,710 It remains to be seen, we're not planning on being active managers of Kindleworth. 198 00:18:42,710 --> 00:18:44,399 It is its own business. 199 00:18:44,399 --> 00:18:48,622 That said, uh an MSO... 200 00:18:49,408 --> 00:18:58,781 can be as process involved as the client needs or wants, or as non-process involved. 201 00:18:58,781 --> 00:19:05,423 It could take over an existing function and simply run that function on a contract basis, or it can transform the function. 202 00:19:05,423 --> 00:19:14,485 The way uh ALSPs historically grew, they started by nothing more than labor arbitrage. 203 00:19:14,485 --> 00:19:17,866 It was less expensive to do the work offshore or in 204 00:19:17,876 --> 00:19:20,608 less expensive domestic jurisdictions. 205 00:19:20,608 --> 00:19:25,572 What happened very quickly is clients came along and said, can you make our processes more efficient? 206 00:19:25,572 --> 00:19:38,971 So my old business, Pangia 3, while document review in India and then in Texas where we had a facility which cheaper, the magic of that business and the way we really scaled the 207 00:19:38,971 --> 00:19:45,085 business and the way clients gave us business was we actually adopted Lean Six Sigma principles. 208 00:19:45,085 --> 00:19:46,356 So we had 209 00:19:46,432 --> 00:19:52,822 We had our document review done in pods, which was stolen, literally stolen from manufacturing. 210 00:19:52,822 --> 00:19:58,668 Like pod document review was a lift from things we were reading because we were all training in Six Sigma. 211 00:19:58,668 --> 00:20:12,562 uh What we think will happen with MSOs is they will uh be used to raise capital and they'll also help law firms implement 212 00:20:12,562 --> 00:20:23,240 all of the technologies that law firms today are looking at and considering and in some respects, if not struggling with, they're unsure of what to do with all the new 213 00:20:23,240 --> 00:20:29,034 technology, not the least of which is artificial intelligence and agentic AI. 214 00:20:29,034 --> 00:20:32,277 ah So we think that value chain is coming. 215 00:20:32,277 --> 00:20:34,502 It's not quite there today. 216 00:20:34,502 --> 00:20:39,894 That is driven by the fact that MSOs today have not been widely adopted. 217 00:20:39,894 --> 00:20:45,654 yet we're in the very early days of what's happening in the US in particular. 218 00:20:46,634 --> 00:20:58,674 The UK is different because in the UK you have the ABS structure, so you don't necessarily need the MSO in order to raise capital for a law firm. 219 00:20:58,754 --> 00:21:09,226 What's interesting for us, if you look at our Kindleworth transaction, the firms that they've helped spin out and stand up and help them grow are actually firms that 220 00:21:09,226 --> 00:21:11,667 that aren't using outside capital. 221 00:21:11,667 --> 00:21:17,989 So they are in fact using them as an MSO in the way that we think about it in the United States. 222 00:21:17,989 --> 00:21:25,811 They're not using it because they wanna raise capital, they're using it to take a function and to have someone who's better suited to it manage it. 223 00:21:25,811 --> 00:21:37,110 And that's where we think the profession's heading with the benefit that law firms will be able to raise capital and importantly, 224 00:21:37,110 --> 00:21:46,810 Derisk financially so the law firm, you know, one of the challenges of the law firm It's not merely raising capital if you're a partner to law firm It's tricky enough that if you 225 00:21:46,810 --> 00:21:59,970 want to invest in R &D after you use only your own cash flow But if that project goes the wrong way Your capital is wholly at risk and you can't you can't diversify the risk in a 226 00:21:59,970 --> 00:22:05,650 way that an MSO or any other outsourced provider an info- 227 00:22:05,834 --> 00:22:11,278 right, or a Pangea 3, can diversify that risk in the same way, by the way. 228 00:22:11,359 --> 00:22:25,640 Burford, litigation finance provider, we diversify risk on behalf of clients and law firms who otherwise are taking uh unique idiosyncratic litigation risk. 229 00:22:25,640 --> 00:22:34,782 We're diversifying it by definition because we have a broad portfolio of litigation in which we invest, where by definition diverse 230 00:22:34,782 --> 00:22:43,707 in a way that uh even a plaintiff law firm can't be nearly as diversified because they only have their own clients or their own cases. 231 00:22:43,988 --> 00:22:48,170 So I think that's what's happening with MSOs, but we're in the very early days. 232 00:22:48,267 --> 00:22:55,607 So, if it sounds like it's fairly customized based on the situation, is that accurate? 233 00:22:57,002 --> 00:22:59,223 I think there are customizations. 234 00:22:59,223 --> 00:23:00,804 It really depends on the firm. 235 00:23:00,804 --> 00:23:07,558 uh Certain functions are going to be highly customized and certain functions I think will be less customized. 236 00:23:07,558 --> 00:23:09,589 So, you know, I'll give you an example. 237 00:23:09,789 --> 00:23:22,086 think as you, you know, firms today, their finance functions, they may run differently, but that doesn't need to be terribly customized. 238 00:23:22,086 --> 00:23:25,854 The way a firm does its accounting, you it's controller's office. 239 00:23:25,854 --> 00:23:27,615 its treasury function, right? 240 00:23:27,615 --> 00:23:30,996 It's subscale, but it's not terribly custom. 241 00:23:31,336 --> 00:23:35,478 How it undertakes contract drafting. 242 00:23:35,494 --> 00:23:36,558 Let's use that as an example. 243 00:23:36,558 --> 00:23:43,031 If we move up the value chain and firms decide they want to start moving contract drafting down to an MSO. 244 00:23:43,031 --> 00:23:49,964 So lots of ALSPs draft contracts on behalf of either law firms or in-house departments. 245 00:23:49,964 --> 00:23:51,725 It's totally ethical. 246 00:23:51,725 --> 00:23:53,946 Every one of those ALSPs has opinions on that. 247 00:23:53,946 --> 00:23:55,240 It's widely done. 248 00:23:55,240 --> 00:23:56,891 A law firm could do the same thing. 249 00:23:56,891 --> 00:24:06,415 Just as a law firm today can use a non-lawyer to draft a contract as long as it's supervised or can use a non-lawyer to write briefs, that is going to be much more 250 00:24:06,415 --> 00:24:09,496 customized if and when that work goes to an MSO. 251 00:24:09,496 --> 00:24:17,999 That's going to be more uh custom to a given law firm based on its partners, based on the type of clients it has. 252 00:24:18,159 --> 00:24:19,640 So I think it's going to depend. 253 00:24:19,640 --> 00:24:24,662 Are we talking about back office work or are we talking about this quasi-legal 254 00:24:24,948 --> 00:24:26,899 what used to be associate work. 255 00:24:26,899 --> 00:24:28,000 I give you another example. 256 00:24:28,000 --> 00:24:42,931 There are litigation firms today, big prestigious litigation firms that have huge staffs of non-lawyer professionals that are employees that are doing the same type of work that 257 00:24:42,931 --> 00:24:43,982 associates do. 258 00:24:43,982 --> 00:24:51,116 They're being billed out by the hour and they're being supervised by associates and partners of the law firm. 259 00:24:51,137 --> 00:24:53,374 And no one suggests that's unethical. 260 00:24:53,374 --> 00:24:59,477 as long as it is under the rubric of a lawyer is supervising it, that could be done in an MSO. 261 00:24:59,477 --> 00:25:05,690 So even law firms that don't today have an MSO can easily, the old days, we call that lift and shift. 262 00:25:05,690 --> 00:25:11,923 You can take those people, take their function as it's being done, move it to a different corporation. 263 00:25:11,923 --> 00:25:17,946 That corporation can then be capitalized with private capital in a way that the law firm cannot. 264 00:25:18,383 --> 00:25:31,249 then what's kind of the size and shape of the law firms that are best aligned to the model of MSO that you guys are bringing to the market? 265 00:25:31,350 --> 00:25:33,001 Yeah, it's a great question. 266 00:25:33,001 --> 00:25:36,884 And I think of it in three ways. 267 00:25:36,884 --> 00:25:42,418 I think there are three types of law firms as opposed to kind of there's one size and shape. 268 00:25:42,418 --> 00:25:47,541 I think there's three styles of law firm that are gonna be your adopters over the next three to five years. 269 00:25:47,541 --> 00:25:56,869 uh Number one, you do have large multi-practice or large single practice, particularly litigation firms that could easily go this route. 270 00:25:56,869 --> 00:25:58,190 uh 271 00:25:58,358 --> 00:25:59,898 What types of firms am talking about? 272 00:25:59,898 --> 00:26:06,378 Firms that today already have structures that don't look as traditional. 273 00:26:06,378 --> 00:26:13,118 They've either already built outsourced centers, there plenty of firms that have outsourced centers that have had them for decades. 274 00:26:13,118 --> 00:26:19,298 Firms that have, you know, staffs that are non-lawyer already doing quasi-legal work. 275 00:26:19,298 --> 00:26:21,616 Firms that work with ALSPs. 276 00:26:21,616 --> 00:26:32,312 And you have firms all the way into the the Amelaw 20 that look like that, that if they chose to do an MSO structure, they're well suited to do that, as opposed to firms that do 277 00:26:32,312 --> 00:26:36,434 everything with their partners and their associates. 278 00:26:38,275 --> 00:26:42,237 The second type of firm is sort of the easiest to understand. 279 00:26:42,398 --> 00:26:43,578 And there are a few of them. 280 00:26:43,578 --> 00:26:47,260 Those are your distributed law firms, your virtual law firms. 281 00:26:47,260 --> 00:26:50,614 And so we saw Ramon Law, which was 282 00:26:50,614 --> 00:27:03,434 kind of the most well-known of the virtual law firms spun out its MSO, Nova Law, and Nova Law was capitalized and purchased by Alpine, a private equity investor. 283 00:27:03,434 --> 00:27:05,894 So you have other law firms like that. 284 00:27:05,894 --> 00:27:08,814 You have Fisher-Broyles, you have Pearson-Ferdinand. 285 00:27:08,814 --> 00:27:13,274 These are firms that have no official headquarters, have no official offices. 286 00:27:13,754 --> 00:27:16,174 They're scaled and or scalable. 287 00:27:16,174 --> 00:27:18,414 I think you'll have a lot more of these firms. 288 00:27:18,414 --> 00:27:19,988 They're well-suited. 289 00:27:19,988 --> 00:27:27,161 because they're built with an MSO already in place as their back and middle office. 290 00:27:27,161 --> 00:27:29,062 That's how the whole firm is structured. 291 00:27:29,322 --> 00:27:46,379 The third type of firm are the law firms that practice in areas that already have large elements of the practice having been disintermediated or having functions that already are 292 00:27:46,379 --> 00:27:48,468 not being handled by lawyers. 293 00:27:48,468 --> 00:27:50,781 And so who falls in that category? 294 00:27:50,781 --> 00:27:56,018 uh Employment law, immigration law, family law. 295 00:27:56,018 --> 00:28:02,156 So not just divorce, things like adoption, you form heavy things. 296 00:28:02,156 --> 00:28:04,238 uh Things like... 297 00:28:05,391 --> 00:28:06,153 right? 298 00:28:06,153 --> 00:28:10,163 I said default services, oh intellectual property. 299 00:28:10,914 --> 00:28:18,300 IP, particularly high volume IP, as opposed to complex patent infringement litigation, patent prosecution. 300 00:28:18,300 --> 00:28:26,168 We were doing claims charts and application drafting in India as far back as 2005. 301 00:28:26,168 --> 00:28:29,929 So clearly, lots of firms outsourced that work already. 302 00:28:29,929 --> 00:28:31,810 uh And then, 303 00:28:31,926 --> 00:28:44,463 The type of work we don't tend to get involved in at Burford, but things like mass tort and things like personal injury, where uh the lawyers are seen if something goes to trial 304 00:28:44,463 --> 00:28:53,938 or when it goes to trial, but a vast amount of the work is done by non-lawyers or done by companies that aren't today part of the law firm. 305 00:28:53,938 --> 00:29:00,742 So if you look at a mass tort law firm, a mass tort law firm often has a staff 306 00:29:00,918 --> 00:29:06,098 of people that are not lawyers that vastly exceed the number of lawyers at the firm. 307 00:29:06,398 --> 00:29:14,818 And even then it's a pyramidal structure between the people who own the firm and the income or employee lawyers of those firms. 308 00:29:14,838 --> 00:29:16,478 They can also move to an MSO. 309 00:29:16,478 --> 00:29:17,838 So I think you'll see that. 310 00:29:17,838 --> 00:29:20,478 But if you look, I'll give you an example. 311 00:29:20,478 --> 00:29:26,418 Look at employment, traditional employment law, defense or plaintiff side. 312 00:29:26,418 --> 00:29:30,778 But let's talk about the defense, because everyone thinks that all this is only an app on the plaintiff side. 313 00:29:31,900 --> 00:29:39,114 Littler Mendelson was one of the most innovative firms when it came to technology 15 and 20 years ago. 314 00:29:39,114 --> 00:29:51,341 They have been disintermediating the non-contentious side of their practice for decades such that the partners are really expert in employment law. 315 00:29:51,341 --> 00:29:58,510 Anything you want to know about US employment law, they know how to do and they've represented us when I was at Pangea 3. 316 00:29:58,705 --> 00:30:00,286 But they have 317 00:30:00,416 --> 00:30:08,570 hire teams of people who do other things who aren't lawyers that can easily be stripped out of the law firm and capitalized differently. 318 00:30:08,570 --> 00:30:18,564 And lots of firms have that today that operate in these types of law where you don't have to the lawyer doing all of the work vertically. 319 00:30:18,677 --> 00:30:19,037 Yeah. 320 00:30:19,037 --> 00:30:28,935 So a good, so the, the average ratio in the AmLaw 100 lawyer to staff is right at two. 321 00:30:29,316 --> 00:30:38,413 And whenever that ratio is higher, I would imagine that's where, you know, like a fragman is a good example that does immigration work. 322 00:30:38,413 --> 00:30:41,446 think they're like seven X right. 323 00:30:41,446 --> 00:30:44,918 Seven employees to each, um, each lawyer, right. 324 00:30:44,918 --> 00:30:48,391 That, that, that seems like that would be a leading indicator for you. 325 00:30:48,564 --> 00:30:49,674 I think that's right. 326 00:30:49,674 --> 00:30:51,436 if you think, we didn't talk about this. 327 00:30:51,436 --> 00:30:59,463 Fragment is probably the number one management side immigration firm in the world, certainly in America. 328 00:30:59,523 --> 00:31:05,358 And that stands to reason that they don't need lawyers to be doing everything. 329 00:31:05,358 --> 00:31:11,693 So it's literally a half step to then say they can take all of that. 330 00:31:11,754 --> 00:31:17,498 You can probably take some of the lawyer work too and move that into an MSO and enter into 331 00:31:17,532 --> 00:31:22,443 some sort of a pricing arrangement that would let the MSO raise capital. 332 00:31:22,443 --> 00:31:36,027 The nice thing about that is not only does it you raise capital, it lets you think about succession planning in a way that is very difficult for a lot of these firms where you 333 00:31:36,027 --> 00:31:45,670 have a limited number of partners at the top of the equity and they're trying to figure out how do they transfer, I don't want to say that wealth, how do they transfer that 334 00:31:45,670 --> 00:31:47,558 future earnings power? 335 00:31:47,558 --> 00:31:50,099 over time to the next generation? 336 00:31:50,718 --> 00:31:52,003 How do you do that? 337 00:31:52,003 --> 00:31:59,691 And how do they make sure they keep earning and get benefit for having built all that? 338 00:31:59,691 --> 00:32:03,684 Very difficult to do if the only way to do it is through the law firm itself. 339 00:32:03,903 --> 00:32:04,343 Yeah. 340 00:32:04,343 --> 00:32:07,224 Well, I'm to give you a plug here for InfoDash. 341 00:32:07,224 --> 00:32:16,406 So we have a extra net offering that has recently launched and we are primarily primary competitor in that space is Haikyuu. 342 00:32:16,546 --> 00:32:31,170 That's also owned by Thomson Reuters and Haikyuu's strength in their early days was their ring fenced, isolated, very well controlled cloud infrastructure. 343 00:32:31,451 --> 00:32:33,431 And over time, 344 00:32:33,855 --> 00:32:41,078 that strength has become what I see as a potential friction point because getting data in and out is hard. 345 00:32:41,079 --> 00:32:45,381 It was kind of designed that way when firms were not comfortable with the cloud. 346 00:32:45,381 --> 00:32:47,962 Firms are comfortable with the cloud now. 347 00:32:47,962 --> 00:32:53,004 And so we designed our solution to get deployed in their environment. 348 00:32:53,024 --> 00:32:58,947 And that opens up all sorts of new doors for mass tort and multi- uh 349 00:32:59,637 --> 00:33:08,690 D L multi district litigation and the ability to expose all of this back office data to the clients. 350 00:33:08,690 --> 00:33:11,480 That's very hard to do with traditional extra nets. 351 00:33:11,480 --> 00:33:13,331 Very easy to do with us. 352 00:33:13,331 --> 00:33:20,853 So maybe offline we should chat about, about that because that's, that's an area of focus for us. 353 00:33:21,573 --> 00:33:22,453 Yeah. 354 00:33:22,493 --> 00:33:28,523 Well, um, let's talk a little bit about, uh, ABS is themselves and, uh you know, it, it made 355 00:33:28,523 --> 00:33:38,103 big news when KPMG got admitted or licensed by the Arizona Supreme Court in, I think it was February. 356 00:33:38,363 --> 00:33:53,703 And I thought it was a very interesting move, not very easy to anticipate, you know, they have 200 and KPMG is the smallest of the big four. 357 00:33:53,943 --> 00:33:56,470 have like 275,000 employees. 358 00:33:56,470 --> 00:33:58,241 They have 4,000 lawyers. 359 00:33:58,241 --> 00:34:01,693 have 45-ish billion in revenue. 360 00:34:01,693 --> 00:34:04,684 They're the smallest of the big four, by the way. 361 00:34:04,944 --> 00:34:12,888 They would be an Amlaw 20 firm, maybe even Amlaw 10, if you spun out just that group of lawyers. 362 00:34:13,149 --> 00:34:20,632 And I have seen a surprising, um I guess, lack of urgency. 363 00:34:20,632 --> 00:34:25,595 um maybe complacency is too strong of a word. 364 00:34:25,803 --> 00:34:34,003 It doesn't seem that this is really that law firms are too worried about this new model potentially competing with them. 365 00:34:34,003 --> 00:34:37,083 you know, this is just the first step in that process. 366 00:34:37,083 --> 00:34:47,943 So I think there's a ton of interest, but what are your thoughts of this new ABS model and what the implications are for the traditional law firm model? 367 00:34:48,852 --> 00:34:54,787 Yeah, so I think the the ABS model in my mind is interesting, but it's untested. 368 00:34:54,787 --> 00:35:02,033 And if it stays in Arizona, I don't think it's going to be transformative. 369 00:35:02,033 --> 00:35:08,218 And I think that's why the large firms, even some of the small firms are taking a wait and see approach. 370 00:35:08,218 --> 00:35:11,541 And in that respect, the large firms aren't wrong. 371 00:35:11,541 --> 00:35:18,472 think the midsize and small firms are wrong to wait and see because a KPMG or an EY for them. 372 00:35:18,472 --> 00:35:31,688 So my old company, which was bought by Thomson Reuters, was then sold to EY and is now EY Law, which I think give or take has 3,000 people doing just the, doing high volume law, 373 00:35:31,688 --> 00:35:31,988 right? 374 00:35:31,988 --> 00:35:32,888 ALSP. 375 00:35:32,888 --> 00:35:45,153 uh That type of work will displace your midsize and smaller firm kind of localized work, your lower value work, your lower cost work. 376 00:35:45,153 --> 00:35:47,638 uh But the EBS itself, 377 00:35:47,638 --> 00:36:01,063 Given that it's restricted to Arizona and given the ethical rules in the major commercial states in the United States, California, New York, Florida, Texas, Illinois, Delaware, it 378 00:36:01,063 --> 00:36:17,270 is unlikely that using an Arizona ABS could allow KPMG or anyone else, Burford, any other player in the industry, unlikely it would allow them to create a national level law firm 379 00:36:17,270 --> 00:36:24,490 of high caliber elite type lawyers to compete with the Amla 200s. 380 00:36:24,490 --> 00:36:37,230 So what I think can happen, and that's why I think you're seeing the interest in the MSOs, is an existing set of lawyers could scale quickly using an MSO structure. 381 00:36:37,230 --> 00:36:45,238 So in my mind, KPMG, it may be a canary in a coal mine, but it's not a canary in a coal mine for a... 382 00:36:45,238 --> 00:36:52,078 the big four suddenly having giant law firms and becoming an Amlaw 20 or an Amlaw 50. 383 00:36:52,078 --> 00:37:00,118 It's a canary in a coal mine for law is in a disrupted and disruptible stage. 384 00:37:00,358 --> 00:37:10,510 And the other canary in a coal mine is private equity starting to get very interested and finding ways to... 385 00:37:12,726 --> 00:37:16,666 buy economic interests in the success of law firms. 386 00:37:16,666 --> 00:37:18,266 And I've chosen that carefully. 387 00:37:18,266 --> 00:37:21,346 They're not buying into law firms, not buying into the equity, right? 388 00:37:21,346 --> 00:37:33,946 We own a minority interest in a firm in Britain via the ABS structure, but by buying a position in Kindleworth, not only do we get to help out law firms that are clients of 389 00:37:33,946 --> 00:37:38,226 ours, but we also get to expose... 390 00:37:38,314 --> 00:37:46,201 what we do to those clients and as we broaden what we offer, we get in front of those clients, those law firm clients of a Kindle worth. 391 00:37:46,201 --> 00:37:59,752 And so I think what we're gonna see, if I had to make a prediction, I think the MSO structure is going to be the structure that really takes off unless there's the unlikely 392 00:37:59,752 --> 00:38:07,038 event that one of the commercial states liberalizes its law firm ownership rules either with. 393 00:38:07,280 --> 00:38:10,955 a change to rule 5.4 or by adopting ABSs. 394 00:38:10,955 --> 00:38:13,518 But all evidence is that they're not going to do that. 395 00:38:14,059 --> 00:38:16,599 Well, you know, that's interesting. 396 00:38:17,619 --> 00:38:30,999 It is a protectionist mechanism that really does create a bit of a moat for competition and capital. 397 00:38:31,459 --> 00:38:34,199 there is a vested interest. 398 00:38:34,299 --> 00:38:43,829 I'm of the opinion that as this technology, as generative AI really starts to move its way up 399 00:38:43,829 --> 00:38:49,842 the complexity spectrum in its capabilities and the type of legal work that it can accommodate. 400 00:38:50,303 --> 00:39:04,660 I think that that is going to be a driving force in motivation where I think it's the actual lawyers themselves who are going to, not just the consumer or the regulators or 401 00:39:04,660 --> 00:39:09,333 whoever, um there are benefits. 402 00:39:09,333 --> 00:39:13,795 So as a software company, if we were to sell our business today, 403 00:39:13,931 --> 00:39:18,351 we'd get anywhere from 6 to 10x revenue. 404 00:39:18,971 --> 00:39:23,531 A traditional business sells for 3 to 5 times EBITDA. 405 00:39:23,851 --> 00:39:42,403 So very different math and economics that ultimately, if a law firm built a tech-enabled captive entity or sister organization that had a 406 00:39:42,508 --> 00:39:51,068 a legal, a tech enabled legal, uh legal services delivery machine um that over time will be more viable. 407 00:39:51,068 --> 00:39:57,615 I think that that's going to be, create a natural tension on those rules. 408 00:39:57,615 --> 00:39:58,075 I don't know. 409 00:39:58,075 --> 00:40:00,316 you, what are your thoughts on that? 410 00:40:00,346 --> 00:40:02,147 I totally agree with that. 411 00:40:02,327 --> 00:40:05,988 Although I don't think the tension with the rules is going to be the challenge. 412 00:40:05,988 --> 00:40:10,309 I think the challenge is going to be managing the disruption at the law firm. 413 00:40:10,309 --> 00:40:14,970 The rules as they exist today, it's not optimal, but it's fine. 414 00:40:14,970 --> 00:40:19,512 It's the same way it was fine when I started my business 21 years ago. 415 00:40:19,512 --> 00:40:26,834 uh We knew what we were doing was ethical and we heard all the, you know, this is the unauthorized practice of law. 416 00:40:27,134 --> 00:40:27,894 None of it held up. 417 00:40:27,894 --> 00:40:31,134 We have, everyone had opinions from the best ethical scholars. 418 00:40:31,134 --> 00:40:35,054 were no bar association ever brought a claim. 419 00:40:35,054 --> 00:40:38,494 No one ever actually suggested what we doing was the unauthorized practice. 420 00:40:38,494 --> 00:40:40,494 I think the rules won't get in the way. 421 00:40:40,494 --> 00:40:46,454 I think to your point, there's going to be a groundswell of demand from the client side. 422 00:40:46,454 --> 00:40:51,094 Clients saying, forget, I don't want to pay by the hour. 423 00:40:51,094 --> 00:40:53,594 They're going to say, here's what I calculate this costs me. 424 00:40:53,594 --> 00:40:57,454 So Burford, we have budgets for everything we finance. 425 00:40:58,132 --> 00:41:03,385 Whether the law firm is charging by the hour or the law firm is doing on contingency, it's budgeted. 426 00:41:03,826 --> 00:41:10,170 So clients already are demanding budget, irrespective of the fact that the budget is based on an hour. 427 00:41:10,310 --> 00:41:20,417 Over time, they're going to demand that the cost of the services comes down because they're going to say, you can do that using some form of technology that didn't exist five 428 00:41:20,417 --> 00:41:21,338 years ago. 429 00:41:21,338 --> 00:41:27,540 Now, will it impact the &A practice at Cravath? 430 00:41:27,540 --> 00:41:32,910 you know, or the litigation practice at Wachtell or Simpson Thatcher, I doubt it. 431 00:41:32,910 --> 00:41:43,699 uh That's at a different level where you are paying for the judgment and the elite skills of the litigators or the lawyers on the transactions. 432 00:41:43,699 --> 00:41:55,525 But just about everywhere else, you're gonna see pieces of what today are done by associates or partners that can be done by technology and can probably be done by 433 00:41:55,525 --> 00:41:57,110 technology at 434 00:41:57,110 --> 00:42:00,850 a non-law firm and the clients are going to demand that. 435 00:42:01,090 --> 00:42:11,870 When, you know, somewhere from right now to the next three to five years and we're seeing it, the reality is if you talk to the companies in the legal world, the legal AI world, 436 00:42:11,870 --> 00:42:14,710 the legal technology world, they're all growing. 437 00:42:14,710 --> 00:42:16,190 They all have clients. 438 00:42:16,330 --> 00:42:24,110 They have clients at in-house that are going directly to them and they have law firms coming to them saying, my clients are pushing me. 439 00:42:24,394 --> 00:42:27,575 help me deliver my services in a different way. 440 00:42:27,575 --> 00:42:33,297 And then those firms are turning to their business leaders and saying, help us reprice. 441 00:42:33,297 --> 00:42:34,837 So that's happening. 442 00:42:34,837 --> 00:42:37,048 I don't think the ethics rules are going to stand in the way. 443 00:42:37,048 --> 00:42:52,662 think if anything, uh if you spend time with the ethics experts, the scholars, and I spent a lot of time talking to them, their view is at the end of the day, even where someone is 444 00:42:52,662 --> 00:42:58,022 pushing on the edge of the ethics rules, disruption happens in law. 445 00:42:58,022 --> 00:43:12,222 And that is my experience as someone who built, ran, and sold an ALSP to a more traditional technology provider, that what sounded like it was pushing up against the 446 00:43:12,222 --> 00:43:20,630 ethics rules when we formed the company in 2004, today seems almost plain vanilla. 447 00:43:20,630 --> 00:43:31,050 It's not controversial in the least that you would undertake the services offshore or outside of a law firm or a legal department that an ALSP undertakes. 448 00:43:31,050 --> 00:43:33,450 So I think the ethics rules won't hold back. 449 00:43:33,450 --> 00:43:35,890 There'll be demand at the client side. 450 00:43:35,970 --> 00:43:43,650 you know, ultimately, I think you'll see some convergence when law students come into firms with these skills. 451 00:43:44,410 --> 00:43:50,830 And that'll be really interesting, Ted, when you have law students who show up and say, wait a second. 452 00:43:50,890 --> 00:43:54,341 This doesn't make sense to ask me to draft like this. 453 00:43:54,341 --> 00:44:06,296 The way I'd learned how to draft a contract, I can learn just as easily by doing it with technology and it will take 10 % of the time. 454 00:44:06,777 --> 00:44:10,778 So now the firm has to say, well, how do we reprice that? 455 00:44:11,619 --> 00:44:13,399 What's the value of that? 456 00:44:13,399 --> 00:44:16,901 Where does it fall within and how do we train the lawyer to do other things? 457 00:44:16,901 --> 00:44:18,482 That's happening now. 458 00:44:18,482 --> 00:44:20,142 Those conversations are happening. 459 00:44:21,001 --> 00:44:21,251 Yeah. 460 00:44:21,251 --> 00:44:29,513 And you know, I've, I've, I've heard some interesting arguments around the ethics and technology. 461 00:44:29,513 --> 00:44:34,415 Like, you know, is chat GPT engaged in UPL, right? 462 00:44:34,415 --> 00:44:38,646 If, if I, I use it all the time for legal tasks. 463 00:44:38,646 --> 00:44:47,578 In fact, the last six months I've been running that's got close to nine months now, since the beginning of the year, I started running all of my, all of my legal tasks at my little 464 00:44:47,578 --> 00:44:51,145 small business, in parallel. 465 00:44:51,145 --> 00:44:55,298 with my lawyers and I've been really impressed. 466 00:44:55,298 --> 00:45:02,402 But you know, when I run my operating agreement and ask for a risk analysis, um, is that UPL? 467 00:45:02,603 --> 00:45:11,249 And then a good follow on question is there are many, well, I don't know about many, there are some AI companies out there. 468 00:45:11,249 --> 00:45:20,435 I don't know if you've ever heard of builder.ai, but they had people, they presented themselves as an AI company and they had people in India. 469 00:45:20,566 --> 00:45:21,019 Yeah. 470 00:45:21,019 --> 00:45:36,705 what happens with that if you have a legal application platform that presents itself as if technology is delivering the output, but it's actually people behind the scenes, is that 471 00:45:36,705 --> 00:45:37,285 UPL? 472 00:45:37,285 --> 00:45:41,422 And that picture gets real messy real fast, don't you think? 473 00:45:41,422 --> 00:45:44,283 It gets real messy, real fast. 474 00:45:44,283 --> 00:45:51,605 this is world legal zoom has been operating in for 20 years, know, and pushing back and kudos to them. 475 00:45:52,265 --> 00:46:03,968 I admire what they've done because they've really, uh in many ways, democratized law in a way that, why would you pay a lawyer, why should someone pay a lawyer hundreds or 476 00:46:03,968 --> 00:46:10,750 thousands of dollars for what is basically filling out forms with a little bit of expertise, right? 477 00:46:11,182 --> 00:46:25,230 I guess my real reaction is in the same way that, you know, sort of, um, turbo tax is no more engaged in the unauthorized practice of tax law. 478 00:46:25,230 --> 00:46:35,376 I feel like I can understand this argument intellectually, but to me, and I, and I do understand it and I, I like it for the philosophical elements of the debate. 479 00:46:35,436 --> 00:46:38,474 But when someone actually says to me this, you know, 480 00:46:38,474 --> 00:46:41,836 you know, well, I think the AI tools are engaged in UPI. 481 00:46:41,836 --> 00:46:45,598 It's the last vestige of people who want to keep the world the way it is. 482 00:46:45,598 --> 00:46:49,640 The AI genie is way out of the bottle. 483 00:46:50,101 --> 00:46:53,953 you know, uh we have it enterprise-wide. 484 00:46:53,953 --> 00:46:57,885 It's all in a container at Burford, so everything is confidential and everything is safe. 485 00:46:57,885 --> 00:47:02,197 But we expect our people to look to GPT. 486 00:47:02,197 --> 00:47:03,428 We expect them to be on it every day. 487 00:47:03,428 --> 00:47:04,308 I'm on it every day. 488 00:47:04,308 --> 00:47:05,566 uh 489 00:47:05,566 --> 00:47:09,428 you know, our heads of every unit are on it every day. 490 00:47:09,428 --> 00:47:13,270 So I don't think we're putting the genie back in the bottle. 491 00:47:13,270 --> 00:47:24,306 And while I love the discussion uh from an intellectual standpoint, when someone comes along and says, well, this is a real problem, we have to study it, usually they just are 492 00:47:24,306 --> 00:47:29,028 looking for a way to slow down change that everyone knows is coming. 493 00:47:29,419 --> 00:47:30,159 100%. 494 00:47:30,159 --> 00:47:31,390 I completely agree with you. 495 00:47:31,390 --> 00:47:35,521 it's not only is it coming, it's, it's inevitable. 496 00:47:35,521 --> 00:47:43,773 Like the market is going to demand these efficiencies and um we're going there, whether we like it or not. 497 00:47:43,773 --> 00:47:49,364 So you can go kicking and screaming or you can, you can lead the pack. 498 00:47:50,165 --> 00:47:52,436 one final question for you, cause we're almost out of time. 499 00:47:52,436 --> 00:47:57,007 You, you've had a nice kind of cross-sectional view as I have. 500 00:47:57,007 --> 00:47:57,987 in my, 501 00:47:58,028 --> 00:48:00,249 17 years and working with law firms. 502 00:48:00,249 --> 00:48:02,991 We've worked with over 110 AM law firms. 503 00:48:02,991 --> 00:48:06,313 That's when I stopped counting because counting gets tricky. 504 00:48:06,313 --> 00:48:11,237 Like when you have two firms that merge, is that three or is that one now? 505 00:48:11,237 --> 00:48:13,498 So anyway, I quit counting. 506 00:48:13,498 --> 00:48:16,700 It's more than half, I'll say. 507 00:48:17,300 --> 00:48:28,147 What are you seeing as leading indicators for the firms that are going to come out the other side of this transformation? 508 00:48:28,171 --> 00:48:29,391 successful. 509 00:48:29,391 --> 00:48:42,711 Are there any things like types of activities like you know we saw Cleary by Springbok and you know you've got um you know Wilson Sincini built Neuron and Cooley and Go and you know 510 00:48:42,711 --> 00:48:53,011 there's um Cypharth has Cypharth Lean and you know there's lots of little interesting moves here and there but just kind of in broad brushstrokes without getting specific firm 511 00:48:53,011 --> 00:48:54,751 specific like are there any 512 00:48:54,751 --> 00:49:00,383 moves that you see certain firms making that you say, wow, you know what, I think that's a leading indicator to success. 513 00:49:00,478 --> 00:49:02,098 think there are a few. 514 00:49:04,074 --> 00:49:05,754 Maybe I'll talk about three real quickly. 515 00:49:05,754 --> 00:49:06,825 One is our own business. 516 00:49:06,825 --> 00:49:15,507 So firms that approach us and want to discuss how legal finance can help them because they're trying to build new practice groups. 517 00:49:15,507 --> 00:49:28,601 So the best example is historically defense side, large national firms that have strong litigation practice, but want to be able to offer creative solutions and creative pricing, 518 00:49:28,601 --> 00:49:32,822 particularly contingency in a way that they never have and come to us. 519 00:49:32,822 --> 00:49:39,562 in ways that 10 years ago they wouldn't That is usually a leading indicator that change is afoot. 520 00:49:39,562 --> 00:49:41,162 I think there are two other things. 521 00:49:41,162 --> 00:49:45,742 One, what are the activities those firms are undertaking? 522 00:49:45,742 --> 00:49:47,662 What technologies are they buying? 523 00:49:47,662 --> 00:49:51,962 You mentioned Cleary, and I'm gonna come back to Cleary in second. 524 00:49:53,442 --> 00:49:59,142 Oreck, 20 years ago, Oreck had built a facility in Wheeling, West Virginia. 525 00:49:59,882 --> 00:50:02,634 I think it was White and Case had a facility in the Philippines. 526 00:50:02,634 --> 00:50:03,455 to do their back. 527 00:50:03,455 --> 00:50:15,071 These are indicators of a firm that's thinking differently, that's sort of nimble, they're asking questions that are institutionally trying to find different ways of running their 528 00:50:15,071 --> 00:50:16,842 business, right? 529 00:50:16,842 --> 00:50:18,983 To generate more profit, right? 530 00:50:18,983 --> 00:50:23,926 That's not the worst motivator in the world to do that, but they're trying to find new solutions. 531 00:50:23,926 --> 00:50:25,207 The other is people. 532 00:50:25,207 --> 00:50:26,458 And I said I mentioned clear. 533 00:50:26,458 --> 00:50:30,592 If you look at who Clear is hired, I'm friends with a lot of those people, right? 534 00:50:30,592 --> 00:50:37,726 Cleary has, you know, for an old line Wall Street firm, Cleary has gone out and said, we want to hire really innovative people. 535 00:50:37,726 --> 00:50:40,347 Look at who Brad Carp at Paul Weiss has hired. 536 00:50:40,347 --> 00:50:42,348 uh Simpson Thatcher. 537 00:50:42,348 --> 00:50:44,209 They've gone out and hired people. 538 00:50:44,209 --> 00:50:47,060 This is not window dressing, the people they're hiring. 539 00:50:47,060 --> 00:50:54,793 They're paying a lot of money to hire people to pull them out of usually technology firms or... 540 00:50:54,793 --> 00:50:57,109 We're seeing people move from McKinsey to law. 541 00:50:57,109 --> 00:50:58,834 It's mind blowing. 542 00:50:58,834 --> 00:51:00,476 Right. 543 00:51:00,476 --> 00:51:02,177 It's mind blowing, yet it's not. 544 00:51:02,177 --> 00:51:12,954 The firms are putting their money where their mouth is to bring in really talented people to then help them figure out what should they be doing? 545 00:51:12,954 --> 00:51:15,646 What tools should they be procuring? 546 00:51:15,646 --> 00:51:17,618 Should they be looking at the MSO structure? 547 00:51:17,618 --> 00:51:22,211 So I think if I put Burford in the first category, it's what activities are they taking? 548 00:51:22,211 --> 00:51:23,442 They're looking at legal finance. 549 00:51:23,442 --> 00:51:24,783 They're looking at MSOs. 550 00:51:24,783 --> 00:51:25,973 They're looking at... 551 00:51:26,546 --> 00:51:36,875 distributed law firms, know, firms that are spinning out, people that are leaving firms to set up their own law firms and setting them up in ways that don't resemble their legacy 552 00:51:36,875 --> 00:51:37,296 firm. 553 00:51:37,296 --> 00:51:39,938 And then the third is who are they bringing on? 554 00:51:40,038 --> 00:51:41,499 That to me is always telling. 555 00:51:41,499 --> 00:51:44,202 Who are they hiring to help them with it? 556 00:51:44,202 --> 00:51:46,204 That's going to be a leading indicator. 557 00:51:46,204 --> 00:51:53,430 As opposed to repurposing someone who isn't an agent of change, I think you can kind of look out and say, 558 00:51:53,430 --> 00:52:00,770 Okay, these firms are serious when they bring on certain types of people, particularly when they bring them on and then you see them out in the market, what they're doing. 559 00:52:00,770 --> 00:52:02,379 think that's a good leading indicator. 560 00:52:02,379 --> 00:52:03,770 Yeah, I completely agree. 561 00:52:03,770 --> 00:52:04,801 Yeah. 562 00:52:04,801 --> 00:52:12,845 The hiring is really the most visible leading indicator, but uh you named some good ones there as well. 563 00:52:12,845 --> 00:52:16,497 Um, well, I really appreciate you taking some time. 564 00:52:16,497 --> 00:52:17,808 This has been a great conversation. 565 00:52:17,808 --> 00:52:20,170 Our last conversation was awesome as well. 566 00:52:20,170 --> 00:52:24,212 How do people find out more about the work that you're doing? 567 00:52:24,339 --> 00:52:29,435 Um, you know, as David Perla and also at Burford capital. 568 00:52:30,154 --> 00:52:33,457 Well, at Burford Capital and David Pearl are the same. 569 00:52:33,457 --> 00:52:38,481 You can go to our website, which is burfordcapital.com. 570 00:52:38,481 --> 00:52:50,271 And we have an extensive amount of material about who we are, what we do in our core litigation finance business, an extensive amount of material about the topic we discussed 571 00:52:50,271 --> 00:52:55,645 today, law firm equity, MSOs, capital structures, innovation. 572 00:52:55,645 --> 00:52:59,350 And we have plenty on technology, things that are. 573 00:52:59,350 --> 00:53:04,333 uh adjacent to our core business, but that we believe are going to transform the business. 574 00:53:04,333 --> 00:53:11,977 And in that vein, Ted, should say congratulations on the Forbes 100, uh which was really cool. 575 00:53:11,977 --> 00:53:21,129 I be reading yesterday and to see InfoDash pop up uh as a rising star, knowing I was coming on here was really a treat for me. 576 00:53:21,129 --> 00:53:21,890 Yeah, awesome. 577 00:53:21,890 --> 00:53:22,840 I really appreciate that. 578 00:53:22,840 --> 00:53:23,981 We were blown away. 579 00:53:23,981 --> 00:53:30,666 ah The amount of investor attention we have gotten has been uh mind blowing. 580 00:53:30,666 --> 00:53:33,888 And it's not because we're selling intranets and extranets. 581 00:53:33,889 --> 00:53:47,359 It's because we have this integration layer that sits within the law firm that has tentacles into all those back office systems that lights up AI capabilities like 582 00:53:47,359 --> 00:53:53,081 that Microsoft exposes like Azure AI search, Azure open AI, power automate power apps. 583 00:53:53,081 --> 00:54:05,964 I think investors are looking at that because that that's a joint list with fortune and Bessemer venture partners who you know well, you know, very um prestigious uh venture fund 584 00:54:05,964 --> 00:54:06,964 in the Valley. 585 00:54:06,964 --> 00:54:07,274 Yeah. 586 00:54:07,274 --> 00:54:11,276 And I'm going to, uh I'm going to Menlo Park to the award ceremony. 587 00:54:11,276 --> 00:54:13,046 Get to see Jensen Wang, man. 588 00:54:13,046 --> 00:54:16,967 And some of these CEOs, I'm, I'm so humbled by that. 589 00:54:17,759 --> 00:54:19,321 It really is inspiring. 590 00:54:19,321 --> 00:54:23,004 um I'm jealous, um really jealous. 591 00:54:23,004 --> 00:54:25,677 So look forward to reading about it after. 592 00:54:25,677 --> 00:54:28,556 Great, thanks so much. 593 00:54:28,556 --> 00:54:34,146 Yeah, thanks for coming on and I'm sure we'll bump into each other in person real soon. 594 00:54:35,210 --> 00:54:35,640 All right. 595 00:54:35,640 --> 00:54:36,791 Thanks, David. -->