By Katrina Dewey | November 4, 2018 | Legal Consultant Limelights, Litigation Funders
The journey from working on the stealth bomber to financing litigation isn’t one that Katharine Wolanyk planned.
In hindsight, the Burford Capital Managing Director can see how one step led to the next: She always had a knack for being on the cutting edge of innovative solutions. Wolanyk now finds herself in a role that spans the worlds of business, law and engineering. As the leader of Burford’s Chicago office and IP business, she helps law firms and their clients finance complex commercial and IP litigation.
“Legal finance is a critical tool for law firms and patent holders,” Wolanyk says. “For organizations with significant patent portfolios, legal finance allows for value to be extracted from what are often unused assets. For law firms, the process allows them to take on risk in a managed way – regardless of the firm’s billing structure. It’s a tool that has begun to bridge a large gap between law firms and their clients, and it has empowered lawyers to become better business partners and grow their books of business.”
Burford sees the business-building benefits of legal finance as a novel solution to another persistent problem, one that is even wider than the gap between law firms and their clients: the gender gap in law. To help in closing that gap, Burford has recently introduced a groundbreaking effort called The Equity Project. The initiative earmarks $50 million of capital for financing commercial litigation and arbitration cases led by women. The impact of that commitment is magnified by Burford’s status as the world’s leading litigation finance company.
“There are so many incredibly talented women litigators who might not have thought of pitching business as the lead counsel,” Wolanyk says. “Now, they can go in and do that with our help.”
Lawdragon: Tell us more about how you reached this point in your career. You bring a fascinating background to your work overseeing intellectual property matters worldwide at Burford.
Katharine Wolanyk: I often refer to my career path as non-linear. If you had asked when I was starting out where I would be now, I don't think I could have predicted legal finance. My first job was working as a systems engineer in the defense industry with Hughes Aircraft Co. in Los Angeles. I spent several years there, working on the radar system for the stealth bomber, which was still in development. I’m sure it seems odd that I ended up practicing law, but my work as an engineer was essential to becoming intrigued by patents.
LD: That’s a fascinating background to prepare you for law school. After graduating from the University of Chicago Law School, you joined Latham & Watkins. What kind of work did you do there in the early years?
KW: I graduated in the mid ’90s, when tech was exploding. At Latham, I worked primarily as a corporate attorney, and I touched anything that involved technology companies, whether via initial public offerings, mergers and acquisitions or high-yield finance. Eventually, I took advantage of an opportunity to jump into the technology world by taking a job in-house, where I worked for a venture capital firm that was focused on the tech industry.
With the acquisition of that business experience, I rode the wave of the dot-com bubble. Namely, I took an opportunity – with some financial backing – to become the CEO of Soverain Software, an e-commerce enterprise software company that had a large, pioneering patent portfolio. We saw the opportunity as twofold: to reinvigorate the software business and to license the patent portfolio. Later, as we were winding down that company, I had the opportunity to join Gerchen Keller Capital, which was later acquired by Burford.
LD: How did the opportunity to work in legal finance arise? Did you have any awareness of litigation finance before being introduced to Gerchen Keller?
KW: Gerchen Keller was based in Chicago, as was I. Ashley Keller and I had gone to the University of Chicago Law School, so we knew each other from our time jointly serving on the Visiting Committee. As I was contemplating my next career move, not really knowing for certain what it would be, Ashley and I started talking and, well, the rest is history.
LD: So, even from the onset, your domain there was intellectual property – was that a carryover?
KW: Correct. I had spent the last 10 years pursuing expensive, high-stakes patent litigation in which I had used a variety of self-financing and contingency arrangements with counsel. I joined Gerchen Keller with a client's view of the challenges of those models – legal finance felt like an elegant solution to those problems. The background I brought was something that Ashley thought would resonate with law firms and clients, and fortunately it did.
LD: What are some typical challenges faced by clients and law firms? How does Burford solve them?
KW: Litigation is full of risk, and someone has to shoulder it. In the IP space, where matters take especially long to resolve and can be extremely expensive to litigate, clients often ask their law firms to take on that risk – not only via contingency, but also by seeking coverage of costs. That’s a huge request, particularly because most firms still rely on the hourly billing model. But, even when the firm does offer contingencies and AFAs, coming to a financing arrangement can strain the client-law firm relationship, and relationships, ultimately, are essential to law firms’ businesses. At Burford, we can absorb risk by providing non-recourse capital, which means the law firm or client owes nothing if the matter is unsuccessful. The tool is powerful because it allows both the client and firm to feel that they can properly pursue or litigate their meritorious claims, knowing that they’ll have capital for the long haul. It improves business outcomes and helps law firms maintain relationships.
LD: As a tool, legal finance sounds like a huge competitive advantage for law firms, but it must also be a huge advantage for individual lawyers. Was that part of the impetus for The Equity Project? How did the team at Burford come up with this initiative?
KW: Women make up a significant portion of our executive leadership here at Burford. At the start of 2018, one of my colleagues, Aviva Will, had been looking at the number of matters brought to Burford by women. When she realized it was below 10% of all matters brought to us, that’s when the lightbulb went off, so to speak. When we actually sat down as a team and thought about what we could do to make a difference, we realized we’d need to leverage economics and business incentives to make a real impact. Ultimately, that’s what the pool of capital is intended to do – it will help make women lawyers more competitive, and it will incentivize law firms to put women lawyers on funded cases.
LD: How exactly does one qualify for Equity Project funding?
KW: In addition to passing our diligence process, Equity Project matters will need to meet one of five criteria: a woman litigator is first chair; a woman serves as plaintiffs’ lead counsel or chairs the plaintiffs’ steering committee; a women-owned law firm is representing the client; a woman litigator earns origination credit; or a woman partner is the client relationship manager.
LD: If the cases still need to pass Burford’s diligence process, are there any other factors you and your team are considering that would make it easier for women to receive funding?
KW: Absolutely – and this is a question many people have asked about the project. It should go without saying, but we simply can’t invest in matters that aren’t meritorious. The matters still need to be strong, but we’re absolutely going to be giving women a leg up in the process. We’re open to considering smaller cases. To back the project and amplify its reach so that women know about and can tap into the capital, we’ve added Equity Project Champions, a group of leading women lawyers at top firms and corporations. We’re going to make the project highly visible and use our relationships to drive better access for women. And most importantly, we’re going to hold ourselves publicly accountable, reporting back on our results and sharing insights to ensure that we’re moving the ball forward and that women are receiving this funding.
LD: That’s a brilliant idea – so many initiatives are percentage-based: “Let’s make sure 10 percent of business goes to women, or let’s aim for 20 percent female partners.” Those sorts of initiatives have led to incremental gains, but they also lead to the realization that if you want more significant progress, you have to hold yourself accountable and you need to use financial incentives.
KW: I agree. There’s a lot of appetite and motivation in corporate America to have legal counsel be more gender diverse. But in the end, when push comes to shove and it's the big-dollar litigation, companies and law firms often look to the senior-most male lawyer at the firm to represent them. With the Equity Project, we're empowering women litigators, and we’re doing it by giving them a competitive financial edge in addition to lending our expert team and leveraging our relationships. And, regardless of whether a matter receives funding, our diligence process is hugely beneficial for the lawyers with whom we work. We brainstorm and strategize with counsel as they're thinking about how they should pitch business, what types of matters would be interesting and a good fit for legal finance, and what types of analysis and material are needed not only to satisfy their firms but also to gain capital from Burford. That’s one of Burford’s greatest value adds, and we’re going to ensure that more women than ever before have access to it.
LD: Large law firms have made progress, but there are so many talented women for whom institutional barriers haven't let up. Once you empower women, as Burford is in the process of doing, we might find that a whole new model for women lawyers remains – a paradigm shift for how we can help women lawyers become equally represented amongst law firm leadership.
KW: That would certainly be a dream for us. But before that can become a reality, we hope simply to leverage an incredible tool in legal finance to help women lawyers achieve better outcomes. We’ve put a lot of work into this project, and we’re going to be spreading the word over the weeks and months to come. Even if we just plant a seed and spur a rising female lawyer to say, "Why not me? Why not this matter” We feel that that could have an enormous impact.