Legal Rebels

The Disrupter: David Perla, Pangea3

Posted Sep 12, 2011 1:37 PM CDT
By Rachel M. Zahorsky

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Photograph by Callie Lipkin

India, with its booming economy and wealth of young, educated lawyers eager for work, was at the forefront of David Perla’s mind the day he met with his good friend Sanjay Kamlani to hatch a plan that would turn the traditional law firm model inside out.

“We wanted to effect major change and become a disruptive force for law departments,” says Perla, 42, co-founder and co-chief executive officer of the Indian legal process outsourcing company Pangea3. “We knew the next professional change would come out of India. And we were the perfect guys in the 10th year of our careers to accelerate that change.”

Perla, a corporate lawyer at Katten Muchin Zavis Rosenman in Manhattan before serving as the vice president of business and legal affairs for the online career service Monster, says he knew three things well: human resources and recruitment, Internet and technology, and law.

“I also knew that if I had the right group in India, I would outsource my entire legal department at Monster,” he says.

From its inception, Perla and Kamlani wanted P3 to be big, and they eschewed notions of slow, steady growth.

“The piece that made all the difference in the world and separated us from other people that tried is we immediately recognized that we had to have money in the bank,” Perla says. “We could not rely on cash flow from receivables and [personal contributions] alone.”

The first round of fundraising brought $1.5 million—led by Sunil Wadhwani, co-founder of the technology firm iGate, and Allen Adler, a former senior executive at Columbia Pictures. In 2006 Larry Graev, founder and CEO of the GlenRock Group merchant banking firm and founder of the former elite New York City firm O’Sullivan Graev & Karabell, closed the Series B financing round with a $4 million investment, validating the significance of a fast-growing industry capable of providing legal services without the presence of traditional law firms.

“The quality of work coming out of [legal process outsourcers] in electronic discovery and due diligence is better than what’s coming out of traditional associates because LPOs are enabling lawyers to become experts in those functions,” Perla says.

The company was purchased by Thomson Reuters, owner of the West legal publishing business, in November in a deal valued between $35 million and $40 million, according to media estimates.

Pangea recently opened an office in suburban Dallas that can house 400 employees and has begun staffing a document review facility in Ann Arbor, Mich. The U.S. expansion, which prompted the Thomson acquisition, is the next step in building a multishore, 24/7 operation. The company’s flagship facility in Mumbai and a remote office in Delhi employ more than 700 Indian lawyers.

The eight months that followed the dinner between two friends from Penn Law were “organized chaos,” Perla says. “We were worried whether what we thought was a brilliant idea would stick as a business.” The duo experimented with a variety of practice areas, including immigration (later abandoned) and intellectual property, the main profit center within the first two years.

“At the time we would take anything and everything,” Perla says, “but the real challenge was finding people with the right skills set in India,” particularly when Perla himself wasn’t sure what those skills needed to be. In the end, the set didn’t include substantial U.S. litigation experience.

“The best people were relatively junior who were trainable and had good core fundamentals,” Perla says. “They didn’t have to unlearn big-ticket U.S. practices. We hired huge volumes of very talented, bright lawyers willing to try things a new way and not wedded to the ‘This is the way I’ve always done things’ mindset.”

“We threw everything against the wall to determine what would stick,” he recalls. “I don’t think U.S. lawyers would have put up with that.”

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