Litigation Risk Modeling for Finance Professionals with David Perla

In this episode of Financial Modeler’s Corner, host Paul Barnhurst (aka The FP&A Guy) welcomes David Perla, Vice Chair of Burford Capital and a pioneering voice in the legal finance industry. David discusses how financial modeling plays a central role in evaluating and funding high-stakes litigation, offering a behind-the-scenes look at how his team monetizes legal risk with structured financial strategies. From managing long litigation timelines to leveraging Monte Carlo simulations and AI tools, David shares how Burford builds sophisticated models to guide investment decisions and mitigate risk.

David Perla has an extraordinary background at the intersection of law, entrepreneurship, and finance. He’s a former president of Bloomberg Law, co-founder of legal outsourcing pioneer Pangea3 (acquired by Thomson Reuters), and was named a top 50 innovator by The American Lawyer. At Burford Capital, David is helping reshape how the legal world accesses and deploys capital.

Expect to Learn:

 What legal finance actually is and how it works

How Burford structures deals and evaluates legal risk

The modeling techniques used to forecast legal outcomes

Why Monte Carlo simulations are central to their underwriting process

How AI is used (and misused) in legal finance

Here are a few quotes from the episode:

 “Behavior that’s irrational but predictable? We can model that. Idiosyncratic behavior? We avoid it.” - David Perla

Modeling helps us decide not only how to price a deal, but how to structure incentives.” - David Perla

Everything we do depends on modeling.” - David Perla

David Perla gave us a fascinating look into the world of legal finance and how modeling plays a critical role in managing complex litigation risk. His knowledge revealed how finance principles, AI tools, and human judgment all intersect in this unique investment space. From non-recourse funding to Monte Carlo simulations, this episode showcased the depth of modeling required in high-stakes legal decision-making.

In today’s episode: 

 [01:12] - Welcome to the episode

 [03:37] - Defining Legal Finance

 [04:53] - Typical Legal Finance Timeline

 [07:56] - Structuring Deals with Non-Recourse Funding

 [11:17] - Modeling Risk with Monte Carlo Simulations

 [16:32] - High-Stakes Legal Deal Sizes

 [21:34] - Predictable vs. Rational Behavior in Modeling

 [26:02] - Data Transparency in Insurance vs. Legal Finance

 [32:31] - Tools of the Trade: Excel, Python & More

 [39:44] - Future of Excel, AI, and Model Confidence

 [41:32] - Strategic Decision-Making and Wrap-Up