An LFJ Conversation with Michael Kelley, Partner, Parker Poe
Parker Poe traces its roots to 1884, when it was founded by a future North Carolina Supreme Court justice. In the early 1950s, World War II veterans Francis Parker and Bill Poe became partners. Their names and commitment to public service have been part of the fabric of the firm ever since. ‘LFJ Conversations’ is an original content series produced by the editorial team at Litigation Finance Journal and featuring the leading thought leaders from throughout the global litigation finance community.’ For more than a century, Parker Poe has represented many of the Southeast’s largest companies and local governments in transactions, regulatory issues, and complex litigation. The business law firm has more than 250 attorneys serving clients from eight offices in Charlotte and Raleigh, North Carolina; Charleston, Columbia, Greenville, and Spartanburg, South Carolina; Atlanta, Georgia; and Washington DC. Parker Poe uses a cross-disciplinary, collaborative approach to provide comprehensive solutions to their clients. What led you to make the move to Litigation Finance? My move to Litigation Finance was coincidental. In 2012, a litigation funder retained me to assist with the structuring and formation of its second international fund. Shortly after, they offered me the opportunity to work on all their litigation funding transactional work. In the past ten years, my litigation funding practice has grown exponentially, representing over 90% of my professional time. Litigation funding allows me to practice and use both areas of my background in finance and law. Moreover, the bespoke nature of litigation finance transactions requires creativity to achieve the right mix of aligned incentives for all parties involved in the transaction. I appreciate this remarkable opportunity to foster the growth of and to help define this maturing asset class. And I love working with all my clients, whether they are litigation funders, law firms, or claimants. How does your experience in non-profits and social impact investments inform your work in Litigation Finance? People frequently ask me about the corporate-related work I rely on for structuring litigation finance transactions. More than M&A, I rely on my investment funds formation background for finding creative solutions to unique structuring challenges. I have especially drawn on my work with social impact investment funds and transactions. For example, I have created mini-funds of pooled capital that play a first-loss capital tranche role, providing those investors an opportunity for out-size return while paving the way for raising traditional litigation finance. Traditional litigation funders have appreciated having that first-loss cushion to mitigate the risk of loss on their investment (a form of insurance). For the funded party, the first-loss pooled capital tranche unlocked the door to receive an aggregate of $60 million for financing a portfolio of claims. I have also drawn on my fund formation work for structuring innovative waterfall structures to balance incentives among participants in the litigation funding transaction. Can you talk about the interplay between Litigation Funding and social justice? It is often cliche that litigation funding provides access to justice. However, every day I see highly meritorious claims that would otherwise not be able to be advanced but for litigation finance. I have seen this in individual claims and portfolios of claims across a wide range of cases, including intellectual property, international arbitration, corporate disputes, and, of course, in the personal injury and mass tort space. Money alone should not be the sole barrier to pursuing meritorious claims. Litigation Finance helps level the financial playing field for claims prosecution/monetization. How do you think GCs can be convinced to utilize Litigation Funding? I was a GC for over 17 years and wish I had access to litigation finance during that time. The value proposition for GCs and in-house legal departments is clear: legal claims are assets that can and should play a vital role in a company’s financial health and growth. Litigation finance permits GCs to turn dormant claims or claims they cannot otherwise pursue due to financial budgets into sources of revenue. Instead of in-house legal teams being viewed solely as cost centers, those departments can become revenue and profit centers for the companies without adding any additional legal risk to the company. In addition, the GCs can become heroes inside their companies! I would even go so far as to say that GCs not taking advantage of litigation funding to pursue their company’s claims are not acting responsibly. I would further argue the same for law firms who need to understand litigation funding and what it can do for law firm clients and build contacts in the industry to properly service law firm clients. Michael P. Kelley, Partner, Parker Poe Kelley is a thought leader in the industry with more than ten years of experience assisting US and International litigation funders, law firms, and claimants. He is one of Lawdragon’s “Top 10 Global Advisors in Litigation Finance” and a frequent speaker on key industry issues. Kelly has over 25 years of experience in the legal finance industry. He is the former general counsel of EMP Global, overseeing $8 billion in assets across different investment funds in emerging markets. He has a JD from Antonin Scalia School of Law, George Mason University, and a Ph.D. from the London School of Economics and Political Sciences.
