Financing Justice and Building High-Performing Financial Teams

Welcome back to CFO Weekly, where we're talking with financial leaders about how to build efficiency in their teams, create time for strategy and ultimately get results with your host, Megan Weise. Let's jump right in.

Megan Weis: Today, my guest is Ken Brause. Mr. Brause is chief financial officer Burford Capital with responsibility for managing and overseeing Burford's global finances and financial strategy. In that capacity, he oversees Burford funding, capital management, financial reporting, and investor relations, and is a member of Burford's management committee and an ex officio member of the commitments committee. Prior to joining Burford, Mr. Brause was Chief Financial Officer at New York Stock Exchange-listed OnDeck Capital.

He previously served as Executive Vice President and Treasurer of CIT Group and CIT Bank with responsibility for all areas of CIT's treasury function, including funding and liquidity investments, balance sheet management, and capital management. After beginning his career at Booz, Allen & Hamilton, he spent over 30 years in the financial services industry with leadership positions and senior finance roles at Bank of New York, now BNY Mellon, Horizon Blue Cross Blue Shield, American General, now AIG, and Bankers Trust, now Deutsche Bank.

Throughout his career, he worked with managements and boards in providing advice on strategy, mergers and restructurings, and in raising debt and equity capital often working with companies during periods of transition or transformation. Mr. Brause received his MBA in Finance and Accounting from the University of Chicago Graduate School of Business, now known as The Booth School of Business, and his BS of Economics and Finance and Management from the Wharton School of the University of Pennsylvania. Ken, thank you so much for joining me on this episode.

Ken Brause: Well, thanks, Megan. I appreciate the invitation, and it's great to be here.

Megan: Today, we're going to be discussing your career journey and some of the lessons you've learned along the way. As always, I'm looking forward to hearing your story and learning from you, so let's get started.

Ken: Fantastic.

Megan: First, let's start with you. If you could tell us about your career journey to date, and how it is that you landed your current role at Burford Capital?

Ken: Sure. It's at the stage now where it's a lot of years, so I'll do my best to make it as succinct as possible. Out of college, I started out in management consulting but then shortly after that joined the financial services industry at a company called Bankers Trust, which is actually now part of Deutsche Bank, and I've really been focused on the financial services industry ever since. Over the course of my career, I've worked for banks, specialty finance companies, insurance companies, and just prior to Burford, I worked for a Fintech. Along the way, I've held a variety of roles. Some were frontline revenue generating roles and many support roles that included strategic planning, financial planning, and analysis.

I spent a lot of time in investor relations and also in the treasury function. Also, I got to do a lot of special projects along the way which included a financial restructuring and a large acquisition integration. How I got to Burford, I'd say was in a very traditional manner both formal and informal roots. I had left my prior company after it was sold. I happened to be actively exploring new opportunities and as part of that networking process, was speaking to an executive search firm about another opportunity when they mentioned that they were starting to work on a situation that could be of interest to me, but it was going to be several months till it actually was going to come to fruition.

Frankly, that was just fine by me after a lot of hard work in executing the sale of that prior company, and it was per preferred. As I got to know the company, I realized that I actually had some connections to the Burford that I hadn't appreciated at the get-go. One was Jim Kilman, who was the incumbent CFO who was there on an interim basis looking for his replacement. I also to know the head of US investor relations that had recently been hired, who came from CIT, where I had previously worked as well. I will tell you, I knew nothing about legal finance as I started to get into the process, but I was very intrigued as it was a sector of financial services that was emerging and one that I had really no experience.

Obviously, I said I didn't know anything about it, so I had no experience. It's one where there was a lot of similarities and analogies to other parts of financial services in which I have worked. The idea of providing non-recourse financing that facilitates commercial litigation was something that was new and particularly interesting to me.

Megan: You've been at Burford now for how long?

Ken: It's been just over a year.

Megan: Okay, so you started in the midst of the pandemic.

Ken: I'd say maybe in the midst, but what I felt like was maybe the beginning of the end if we can think about it that way. My first day on the job was actually in this very office where I'm sitting today. Even though my experience of getting to know the company and sign on with the company was virtual, my experience working for Burford has been a completely hybrid in person environment since I joined.

Megan: What have been your priorities since starting at Burford Capital?

Ken: At first, I've split my priorities perhaps into two buckets. One is mine as a professional and is the incoming CFO, I had priorities around learning the business which as I said was a new facet for me getting to understand how we did things so learning our processes and our tools. Obviously, getting to know the team, which was a little bit hard to do during the interview process since that was all virtual, but getting here in person and slowly getting to meet everybody in person. As well as getting to know all of our stakeholders, both internally and externally.

I think from a business point of view and priority has been, if I had to headline it, to streamline and simplify our financial function in a way that supports the growth and scalability of the business. Obviously, all that is to help also create value for shareholders because I'd be remiss to say that I think that's every CFO's primary responsibility. Within that, I've had a big focus on financial reporting. We've had a lot of changes that were in progress when I joined here so we converted our accounting from IFRS to US GAAP. We became subject to all the control requirements under surveys, obviously, 404. We've had a lot going on the investor relations front.

We had it our first in-person investor day back in November, so obviously we hadn't been able to do that during the pandemic. Then also some focus on outreach and messaging. We've done a lot of the priority around the balance sheet and liquidity management so that we have sufficient liquidity to support our growth. We actually did a debt issue earlier this year after doing a tender offer last year. Helping to implement change for the group, both in terms of how we're organized and making sure we've got clear accountability and people have clear roles and responsibilities, and also the technology that we are using.

We actually get an implementation that had been started before I got here, but we completed, and we went live with that new technology in the beginning of this year. Last thing I'd say is, also part of-- one of my priorities has been to help promote the awareness of legal finance among the CFO community because I don't think I was alone. We know from some of our marketing statistics, that it is not a very well-known and well-understood part of the financial toolkit. I've done some webinars and some other speaking engagements to try to promote the awareness of legal finance among some of my peers.

Megan: Yes, so talk to us about legal finance. What is it?

Ken: At its core, it is providing liquidity and financial resources against then-- basically a situation where somebody has been wronged and they want to bring a legal action to recover their damages. We had preferred focus on commercial litigation, so we're just dealing with companies. We don't do anything in the personal in a consumer space, but the most basic product is what we would call fees and expenses where somebody is considering bringing a lawsuit. If they think that they were a contract was breached by another party, and a lot of times the general counsel will go to the CFO and say, "Well, we think we were wrong and we want to bring this suit, but here's what it's going to cost."

I've been in that seat and will often say, "Okay, so what's our certainty of getting a recovery on that, of winning?" There, of course, there's always risk. It's very frequent that it's not in budget for general counsel to bring that action. That's where Burford can step in and say, "We are willing to do the financing. We'll pay the fees and expenses in exchange for some return on our finance," and that's often in the form of a percentage of what the ultimate proceeds might be in that case. On the other hand, if they don't win, we don't get our money back so it's a win-win for the company to use our services.

Megan: Yes, absolutely. You mentioned this was a new business even to you. When you started, how did you learn the business?

Ken: A combination of factors in the way I think you learn any new business is you read a lot, you talk to a lot of people, and you ask a lot of questions. Again, I think that's the benefit of joining as things are in flight because you just jump right in and you get updates on what's going in the portfolio of cases, and you start sitting through meetings. You hear the case updates and I sat through-- I joined shortly before interim reporting in 2021. Obviously, looking at how we did our accounting and our valuation for the period. I got deeply immersed and it's just the benefit of time in learning more and more about the business.

As the world opened up and I was able to travel to other offices and spend time with people in different offices, which are primarily in [unintelligible 00:11:59], Chicago, and London getting that deeper understanding as I met with more and more people.

Megan: You may have touched on this, but what are you most currently focused on in your work now?

Ken: I think it's some of the priorities I mentioned before, but more specifically at this very moment, and that's why I was running in the doors, we got started, is we are very focused right now on our interim report for the first half of 2022. Again, as a foreign private issuer, we report twice a year so we're coming up on our first half report, and there as much to be done as we're getting near the end of the period to prepare and get ready for that reporting. The other part is related to some of the priorities, which is just continuing to look at our operational discipline. Some process improvement work we're doing to try to streamline and accelerate some of our timelines.

I use our new technology in the most efficient manner and as all of that, and as other CFOs are looking today, I'm sure at how we're making sure we're disciplined around our spend and that we are getting the right return on our spend not incurring costs and entering into long term cost arrangements that will regret down the road.

Megan: As you look back on your career, what, to you, have been the most transformative turning points throughout it?

Ken: Wow. It's a great question. I think there were a couple of key opportunities that I look at as pivot points. Perhaps the first would've been when I was given the opportunity to head investor relations for Bankers Trust, and that when I was relatively young in my career when that came about, and that was my first real management role. I was essentially a public spokesperson for a money center multinational bank. It was a tremendous amount of pressure but a tremendous amount of opportunity and a chance to learn, and also start to build relationships that have been lasting for my career since. That clearly was one.

I think another one that I think about is-- I was at a company called CIT Commercial Finance company, that went through a financial restructuring during the global financial crisis in 2008-2009. I would be remiss to say that wasn't an incredibly painful time in my career in terms of effort and what was going on around. I was given an opportunity to work on something that was very much outside my job description, but it was an incredible learning experience, both from just professional grit as well as the financial learnings of dealing in a restructuring of a large financial institution. Again, I think that gave me a chance to learn a lot and opened up several doors for me at CIT as we progressed from that period.

I'd say maybe the last one was also at CIT, but I had been working after that in the investor relations role there. My boss at the time, the CFO, knew that I had aspirations to do more than that in my career. He actually gave me the opportunity to run a business line. That's when I got the opportunity to run our SBA lending, our small business lending group which had had some challenges based on coming out of the financial crisis. It was a great learning experience in terms of running a business and dealing with a PNL and dealing with some strategic questions, so again, gave me a very different perspective and a great learning experience.

Megan: Yes. Those painful experiences are often the ones that build the most character.

Ken: In fact they are. Yes.

Megan: When you think of a successful CFO, what qualities do you believe are vital?

Ken: I think there's the table stake one, so you've got to have financial acumen. I think that that's a given, obviously. There's a skill set that goes along with that, but I think on top of that, you need to have a certain level of business acumen. I think to your earlier question, learning the business. I think it's so important that in the CFO role that you're a partner to the business and you really understand what the business drivers are and what the core competencies are of the company and how the company is going to grow and create value. Thinking back on my career and some of the things we just talked about, that level of grit and discipline.

Being able to handle and manage through the unexpected and deal with situations whether they be positive or negative as they come, but always be able to stay focused and see ahead and plan ahead. Even though if the outcome may not be clear, have a road map towards a solution. Also as we talked about curiosity, I think the willingness to ask questions, willingness to challenge the status quo are really important qualities and related to that, being willing to lead to a vision and bring others along with you. Everything's related to that is building relationships and having strong relationships both internally with your teams and your management and your peers, as well as externally with your stakeholders.

Megan: You've mentioned previously that as a CFO, it's important to create high-performance teams. What qualities do you believe embody a strong team when you think of your direct reports?

Ken: I think it's the same qualities you'd look for in most teams. I think about maybe it's the three A's. It's accountability, it's awareness, and anticipation. As I mentioned before, I believe very strongly in creating roles where people have very clearly defined roles and they know what they're responsible for and can be held accountable for. At the same time, you want a team that has awareness beyond just their narrow lane and knows that they have stakeholders, that their decisions, their actions may impact and being aware of how those actions can impact others and conversely being aware of what's going on around them and how that may impact them.

That they need to be prepared and react to that. That gets to the anticipation. It's not just doing what needs to be done today, but it's looking ahead and saying, "Okay, 6 months, 12 months, next year these things may be becoming and what should we be doing today to anticipate and prepare for what could be occurring in the future?" I'll tell you, I had a very wise mentor at one point who coined a phrase that I've adopted as well, which is "As you're making decisions asking yourself a year from now, what are we going to look back and say, 'I wish I had done then?'"

Therefore, sometimes that leads to not doing what's easy today, but doing what-- if you think about what's being done today and what may need to be done a year from now or more, what's actually going to be the least effort in totality, not just at the moment.

Megan: These days, high-performing individuals are sought after. How are you finding these people and then retaining them on your own team?

Ken: I was very fortunate to have walked into a very strong team. I didn't have to find many people so that's always a good thing.

Megan: That is.

Ken: I'm very pleased to say that we've had very low attrition, sorry, very high retention, low attrition [laughs] on the team. We've met a couple of hires, and I've got one that I'm hoping who will come to fruition that I'm working on right now. I think from a retention point of view it's what we talked about. It's making people feel valued, making people feel as if they have an impact. They have a voice. They're part of the decision-making, and they're part of the vision. Some of this is not motherhood and apple pie, but it's treating people with respect. Realizing everybody is an individual and a person outside the office and not just a role in the office.

Taking an interest in people and making sure they take an interest in each other and functioning as a team which I will tell you, as I'm sure others would say, has been difficult over the past two years when so much time has been spent remote and on screens. In my mind, there's nothing that replaces that in-person interaction, particularly the informal interaction that takes place. Sometimes you either in the office at a lunch or after the office in a celebration. Again, I'm a big believer in celebrate all wins and all good things. I think from a hiring point of view, we think we've got something special here at Burford.

I'll tell you I try to leverage my network as I look for people. I think that sometimes the best way is word of mouth or at least creating that compelling value proposition for somebody to come and join a smaller company and a smaller team where it may be more work, but I'd also think a lot greater reward in terms of professional learning and satisfaction.

Megan: Prior to your role at Burford Capital, you successfully managed the liquidity challenges related to COVID-19. How is it that you did that?

Ken: [laughs] Working with a lot of hard work and a lot of strong teammates around me. Again, it was a company called OnDeck. It was Fintech that made loans to small businesses. You can imagine that in the start of the pandemic in March and April of 2020 when so many communities were going into lockdown and small businesses were forced to close. That created some challenges for us in terms of complying with the terms and our debt facilities. I say we got through it because on the one hand we were prepared. We luckily had spent a good amount of time prior to that working on our liquidity management policies and practices.

We had documented all the key criteria of our agreements. We had early warning indicators, we had a contingent funding plan. All those rainy day planning that we did, we actually got to pull out and use. I think some of it was being proactive, transparent, and communicating very frequently with our lenders. I think you always win if you're transparent. You always win if you are proactive. Making sure people understood the breadth of the experience, not just the narrowest part that related to them, but what was going on in the business broadly, what we were seeing, what we were doing in other parts of the business.

I think probably the last part and perhaps most important is being decisive and being able to make some hard decisions but make them quickly and stick with them.

Megan: I'm hopeful that COVID is over, but it seems that the challenging economic times are not. Can you discuss other ways that companies can increase liquidity when times get tough?

Ken: I think it's always important, as I mentioned, to have that game plan. Whether it is having some undrawn credit facilities that you can draw upon, whether it is having plans in place to stem outflows if needed. Also, knowing if you needed to raise liquidity, what assets are saleable and available if needed. I think the most important thing is awareness so that you can see that there might be a liquidity challenge coming. Then acting early to start to be very judicious in how you let cash out the door. Make sure that to the extent you are receiving cash and collecting cash take every step possible to get cash in as quickly as possible.

Megan: Again, I'm going to ask you to look back on your career, but what mistakes that you've made have taught you the most?

Ken: Wow. [laughs] You think back over your career, and I think anybody would be lying if they said they didn't make a bunch of mistakes along the way. I think making mistakes is how you learn. I think something that I share, it's probably not unique to me, but has been something that's resonated with me is not always acting fast enough when it relates to people and people changes. It's never easy telling somebody he or she is not the right person for a role. I think often human nature is you want to give people a chance change or in sometimes I've experienced pressure to give somebody more time and give them another chance.

I'd say in hindsight I've realized that it's really important to go with your gut instinct when something becomes apparent and much better to make that change sooner than later. Frankly, I think it ends up being best for you, for the company, and for the individual who may not be in the right role. I've seen several situations where when you finally do give that feedback and you do make that change, the other person is very perhaps relieved or often finds themselves in a new and better situation in which they thrive and will look back, and I've had some situation where people have thanked me for forcing that change to take place.

Megan: Sometimes what we need is that kick out the door.

[laughter]

Ken: May not be out the door maybe to a different floor [laughs] or different room. Often, if you don't think it's working, they don't think it's working either. There's always that hesitancy and reluctance to want to be that direct and that open and honest with the feedback. Something I've learned is often feedback honest is always the best policy.

Megan: You've mentioned this but developing strong relationships both inside and outside the company is essential. Why do you think this is important, and how has this helped you as a CFO?

Ken: My business is all about relationships. It's all about people. To some of your earlier questions, it's all about learning and constantly improving. When you build strong relationships and you build trust, you build the ability to learn to get feedback. I have really valued those relationships. I've built where people give me that direct feedback of here's what you're doing right, but here's what you can be doing better. You need to be self-aware of this if you're not already. Those relationships are a chance to also learn. Having peers you can talk to.

When you're dealing with a situation being able to call up and talk about a situation, find out have they experienced something similar that they can give you their experience and what's worked and what didn't work. It's just so valuable. I think just from a resource perspective, the more you build these relationships and you maintain them overtime, you develop that network of people that when you need expertise, when back to the question of recruiting, when you need to hire somebody. Having those relationships becomes your source of resource that enables you to be more successful in achieving your objectives.

Megan: What, if anything, is a commonly held belief in finance that you don't agree with?

Ken: It's difficult to say what are some of the held beliefs these days. I think there's always a lot of diversity of thought that exist out there. Perhaps as we see time go on, I'm encouraged to see more and more diversity of thought in the marketplace. It's something I'd say maybe that pertains is [unintelligible 00:30:55] encountered many finance people in my career that I think that to do the job right, especially in the CFO role, and thinking about oversight and control, that part of your job is often to say no. That is one that I don't agree with.

I actually like to think of my job as not necessarily saying no, but figuring out how to get to yes by understanding what the business objective is, knowing what the financial constraints are, and instead of no, it's, well, maybe not that way, or maybe not now, or maybe not exactly what you propose, but what if? Could we do it this way? Trying to be a little bit more exploratory, or at least take more time to understand and try to find the solutions that achieve everyone's objectives without putting the company at risk and trying to avoid saying no.

Megan: That's a great answer. I've heard it sometimes referred to as the CFNO.

[laughter]

Megan: Nobody wants to be that.

Ken: I've worked with some people who were very good at the CFNO. It's a phrase I had not heard, but we're known as the obstacle. We all shape our professional personas based on our observations of what we think works and what we think doesn't work, who we want to be and how we want to be remembered. I've taken that away where I've seen people be the CFNO. Instead, I don't want to be that person.

Megan: Lastly, what advice would you give to young CFOs, or maybe someone just stepping into the CFO role who wants a successful career like yours has been?

Ken: I feel like we talked about a lot of it, so I'd say to be curious. I'd say always looking for opportunities to do more and get involved in things that may not be right down the fairway and what seem like naturals. Again, I think in my career, there were a couple of things that I was asked to do, which I think this might-- Immediate reaction may have been, "Well, does that make sense?" The answer would be, "It doesn't matter if it make sense. I'm giving you the opportunity," and so you have to step and say, "Okay. I hear you." You take the risk and you give it a chance. To that point, always saying yes when somebody ask you to take on something.

Maybe it's a stretch assignment, maybe it's a new project, but being that person that's always willing to try, willing to go that extra mile. I think also we talked about people in relationships. I think remembering you have one and leveraging it and realize that it's not about going alone. It's about going forward with your team and with your extended network to get the best outcome.

Megan: That's a great advice. Ken, thank you so much for being my guest today.

Ken: Megan, it was absolutely my pleasure, and thank you for inviting me to join you.

Megan: Yes, I really enjoyed speaking with you and hearing about your experiences and all of the resulting insights, and I appreciate you taking the time to be here with us today.

Ken: Thank you again.

Megan: To all of our listeners, please tune in next week. Until then, take care.

[music]

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