An Interview with Kory Parkhurst of Harbour Litigation Funding

Transcript:

Welcome to this Litigation Funding interview, hosted by Lawdragon. Today's guest is Kory Parkhurst from Harbour Litigation Funding, a leading international litigation funding firm. Kory is being interviewed by David Weinstein, a former prosecutor and partner at Jones Walker.

David Weinstein: Kory, glad to have you join us today. Why don't you tell us a little bit about yourself and a little bit about Harbour Litigation Funding?

Kory Parkhurst: Well, David, it's great to be here. Thank you so much for the invitation. I grew up in a very small town in Iowa, went to law school, to University of Iowa, clerked for a Appellate Court judge in South Florida, and then went into private practice doing litigation, trial work, arbitration, did a lot of construction litigation on the plaintiff's side. Then I took a job with Koch Industries in Wichita, Kansas. It's a large privately held company and spent about 23 years with Koch and I was the Associate General Counsel in charge of litigation for the last 12 years of my practice there. And after that I joined Harbour Litigation Funding based in London, and I am their US representative. I'm still based in Wichita, Kansas. Harbour is a $1.5 billion litigation funder based in London, but we fund litigation all over the world and it's the largest privately held funder in this space. We provide non-recourse funding to law firms and claimants, again, all around the world, and we provide it for many different types of cases, antitrust cases, class actions, business disputes, all types of litigation across the globe.

DW: We've got a lot of lawyers and other legal professionals listening to us, and certainly in our field, if you are taking on a case, and you're doing it from the plaintiff's side, there's often a lot of uncertainty with where the funding is going to come from for your client's case. A lot of people have very meritorious claims and they need representation and there are plenty of lawyers who can represent these people and there are many firms who do a good job with it, but there are also a lot of firms who simply need a little bit of help with the funding side of things. Can you explain a little bit about why Harbour would be a great choice for a firm, whether they're a small firm or a large firm? And how it is that you can give them the leg up on the people who are defending the case that they're about to bring?

KP: David, great question. So first of all, Harbour, again, is a $1.5 billion litigation fund. So we have the money to deploy. There's a number of funders in the market who do a good job of identifying cases that might not have the funds. So once they find the case, they go to other funders like Harbour, for example, who actually fund those cases. We fund our own cases and we've got plenty of capital to do that.

Second, we're all professionals. We have a large number lawyers within Harbour who do the due diligence to work up the case, to analyze the case, to understand the risks. When you're getting sort of a third party review of your case, that can actually be very helpful to the lawyer who's representing the client, just getting a second pair of eyes, reviewing different types of cases and raising different types of questions.

We focus on patent prosecutions that are being pursued by companies that are actually manufacturing a product, as opposed to someone who just ended up purchasing a patent that is not actually an ongoing concern.

Another thing too, David, when you're dealing with a defendant who may view the plaintiff and the plaintiff's counsel as folks who might not have the funds to be able to withstand hard fought defense over the course of a number of years, they may have a view that settlement is going to be relatively easy. But once the defendant finds out they've got a litigation funder, substantial one like Harbor, standing behind the claim, that's significantly helpful in the negotiations trying to reach a valuable settlement.

DW: Kory, do people reach out to Harbour when they're seeking litigation funding? How is it that someone would have heard about Harbour and put them in a position to find them?

KP: We're fairly well known in legal circles, so most people who recognize that funding is available know about Harbour and we get contacted all the time either through our website or through our relationships with law firms and quite frankly other funders as well.

DW: And then while it's always a good idea to have another set of eyes reviewing a potential claim that you're making, what has your experience been with these plaintiffs when they enter into a collaboration with Harbour? I know that many plaintiffs feel that their case might be taken away. How is it that you help assure both the plaintiff's law firm and the plaintiff that you are here to add some expertise and that you're not going to simply find the case and take it away from them?

KP: That's the last thing we want to do. One of the things that is extremely important for Harbour is we stay out of the decision making, particularly with respect to the settlements. We're not involved in the settlements, we're not going to dictate settlements, we'll provide input if wanted, but at all times it's the lawyer's case, it's the client's case, and we can provide input when asked, but the client and lawyer are fully open to make their own decisions and disregard any advice or guidance we provide. We have a lot of expertise. We do want to add value. Not by just providing funding, but providing additional value, given the fact that we do have quite a bit of experience in handling litigation, identifying issues, and providing additional resources, if necessary, for the litigation case. We're very willing to provide guidance and feedback, but again, it's ultimately it's their case. We have no interest in taking the case over.

DW: Obviously there are a lot of plaintiffs who are looking for lawyers and who have filed lawsuits. Is there a particular area within the spectrum of these lawsuits where you can find the most value, both for the law firm, the plaintiff, and then obviously Harbour Litigation has an interest in all of that? What types of cases would be the best for people who are looking for some litigation support?

KP: We have a lot of different types of cases where we fund David, really across the spectrum. I would say, oddly enough, the first area back in 2007, I think that we were investing in was divorce cases and that didn't turn out well. And so that's the only type of case we do not fund. I think some of the types of cases that we can really add value are the larger class action cases. We do antitrust cases. Many times there's breach of contract cases between a small company and a large company. We're happy and we enjoy being on the David's side of the David and Goliath fight.

We stay out of the decision making, particularly with respect to the settlements. We'll provide input if wanted but we're not going to dictate settlements.

We do a lot of intellectual property cases, patent prosecutions, and I will say with patent prosecutions, David, one of our goals is that we want to focus on patent prosecutions that are being pursued by companies that are actually manufacturing a product, as opposed to someone who just ended up purchasing a patent that is not actually an ongoing concern. So there's just a broad area of cases. I've been working on a couple of large construction cases where a large construction firm had a public works job, ultimately was over budget and they are owed a significant amount of money. While construction companies generally want to move from one project to the next and not undertake litigation against a customer, but they're very valuable cases and we can provide funding and provide guidance to pursue those valuable claims for the construction entity.

DW: Kory, I'm sure a lot of our listeners would be interested in finding out whether or not this is a recourse or a non-recourse type of agreement that Harbour Litigation has with them as a client?

KP: Absolutely, David, all of our funding is done on a non-recourse basis. So what that means is, when we fund a case and if the case ends up losing, we lose our investment. So the law firm and the client are not having to put up their house as security. It's not a loan. We're taking on risk along with the lawyer and the client. And in those cases, David, we really like those matters where the law firm is willing to take the case on some type of contingency. And the reason is, that really tells us that the lawyer believes in his or her case and they believe that it's a worthwhile case, it's going to be a winner, when they're willing to put their money up and take on some of that risk.

DW: You mentioned case funding. What about operating capital for some of these small firms? I know you mentioned that you like to support the David in the David versus Goliath. What can you do for them in terms of operating capital as well?

KP: Absolutely we do that. We do provide facilities for law firms who are looking to expand. For example, David, there's a smaller firm in the UK that specializes in soccer arbitrations, salary arbitrations, and they're very good at what they do, but they were looking to expand, bring in more lawyers, more resources, expand their accounting department, and so we provided them with a significant facility that they can use for their growth platform. And in exchange, we have a percentage in their portfolio of cases, so we get paid based upon a percentage of their wins, essentially.

David, we've also had situations where the client is looking to secure not only funding for the lawsuit, but also operating capital to keep the doors open. I think intellectual property cases are a great example where you have a small manufacturing company, larger company or companies have come in and, essentially, taken their patent. And because of that, they end up taking a significant amount of market share as well. So we have, in a number of instances, provided not only the budget going forward for the prosecutions, but also hundreds of thousands of dollars, if not millions, to keep the business afloat while they're prosecuting their cases.

Thank you for listening to this Litigation Funding interview, hosted by Lawdragon. We’re in the middle of our conversation with Kory Parkhurst from Harbour Litigation Funding, a leading international litigation funding firm.

DW: So Kory, interesting that you mentioned sort of an out-of-the box type of client with the soccer team and the arbitration. Are there any types of sports law firms here in the US that might benefit from what Harbour Litigation can offer to them? I know you also talked about the intellectual property cases. What sort of other niche areas can Harbour Litigation give the upper hand to law firms in?

All of our funding is done on a non-recourse basis. So what that means is, when we fund a case and if the case ends up losing, we lose our investment.

KP: Yeah, David, I think the law firms in the US that also do the salary arbitrations, like in Major League Baseball, I think they would significantly benefit from Harbor Litigation providing funding. And for the most part, any law firm that does a significant amount of contingent cases, if they are looking to expand their operations, improve their back office, Harbour is a great solution for them. Again, it's non-recourse and we only get paid from the proceeds of the victories.

In addition to intellectual property, I would say there's a number of corporations out there, David, who have this portfolio of potential claims that they're choosing not to pursue. And it might be an economic decision, it might be a timing decision, but in my experience, especially as in-house council, we rarely look to those claims as a revenue stream and just being able to get funding to pursue those claims, that would otherwise not be pursued. I wouldn't say that's another niche that corporates need to be focused on. At Harbour we're more than happy to meet with corporates, think through their portfolio, give them the benefit of our experience and strategy on what claims to bring, what claims not to bring and provide the funding, pursue those valuable claims.

DW: So Kory, if I'm a small to medium-sized firm and I'm looking for just exactly this type of assistance, would I be able to get a no holds sort of evaluation and an initial sit down question and answer with all of you so I could decide whether or not Harbour would be the right place for me to go?

KP: Absolutely, David, we do that actually quite often. From the perspective of a medium to small law firm, all we probably do is want to take a look at the financial situation, take a look at your portfolio of cases, look at your track record of wins and losses and provide you with various solutions. And again, it'd be interesting to know what you want to do with the money. So if it's something that we don't think is really going to expand your capability, we'll tell you, but if it's something that can really streamline your business, improve your bottom line, absolutely. That's what we're in the business for, to add value.

DW: You talked a little bit about the mass tort cases. What type of a law firm would you be best situated to assist in those mass tort litigations? Is there a particular brand or type of law firm you're looking for? Does it again, depend upon what the mass tort claim is going to be? What's the best type of a law firm in those type of situations?

KP: So David, that that's a great question. There's a lot of law firms in United States who do mass tort work, represent a large number of claimants against these larger manufacturing defendants. For Harbour, we want to deal with the law firms that have a great reputation, are known by the defendants to be extremely ethical, extremely capable, and are also known by the judiciary as the law firms that will drive the cases forward, pursue them efficiently, and bring them to conclusion. So when we call them the Leadership Firms, we deal exclusively with Leadership Firms in the mass tort space. There are law firms in the mass tort space who I would refer to as more aggregators. They represent clients, they gather up cases, but they're generally not the ones who are going to try those cases, and they're not the ones that generally the defendants are interested in resolving their case with. So primarily, David, it's the Leadership Firms. There's a number of them, but it's a small subclass of the mass tort space.

With respect to the types of mass torts, we're more interested in the mass torts that have significant scientific evidence behind them. That's a big hurdle for the mass tort space. It's one of the first challenges when you get a new mass tort, is the science supporting of the claim. And I think that's one of the areas that we're focused on is, if we're deciding to fund a case where the science isn't quite there yet, we recognize that there's a significant risk that the science doesn't support the case, the case is going to go away, we will fund those early stage cases. But generally, David, we would rather look at the cases after they've had the science proven and potentially even after the voir dire hearings have gone through and the tort has survived the voir dire hearings.

We've also had situations where the client is looking to secure not only funding for the lawsuit, but also operating capital to keep the doors open.

DW: Kory, what kind of turnaround am I looking at if I'm a firm who's seeking to get some assistance from you? I know that as lawyers, we like to be prepared, we like to stay ahead of things, but quite frankly, I know that there are one or two maybe procrastinators out there in our brethren and sistren. So how quickly could a law firm expect to get an answer back from you after you've evaluated their case? And you mentioned you'd like to wait often to see the science is proven in a case, but at what stage are law firms able to get on the phone with you, tell you what's going on and seek some funding? Is it ever too late?

KP: Well, that's a great question, David. I'm not sure if it's too late, even after the verdict. We've had situations where a law firm is looking for funding for simply the appeal of a case. And with respect to timing, yes, absolutely. We are pretty much always available. We can get on a phone call and have a 10-minute conversation and get a good sense of what the case is about. I think we're very good at being able to, within probably a week or two, get back to the law firm or the client just to let them know that yes, we're interested, or no, we're not. And a lot of times in this industry, just being able to tell someone, "No, we're not interested," is very helpful. They can move on to some other funder.

And with respect to it, if we're interested, David, generally our due diligence and our internal analysis and taking up to our investment committee, that can be as quick as a month or it could be as long as three to four months, just depending upon the complexity of the cases or the portfolio or the type of funding. And I would say we're dealing with a lot of money. So we are very cautious, we're very analytical when we're looking at an investment. And many times what we'll do is, and on our own dime, David, we'll go out and hire a third party lawyer who's an expert in this particular area of litigation to review what we've done and let us know if we're missing something significant in our investment analysis. But generally speaking, anywhere from one to three months is generally how long it would take to get funding in place.

DW: Well, Kory, I know that Harbour Litigation is an international firm. Let's ask it the easy way. Is there anywhere in the world that you don't offer assistance? I know that we're focusing on US law firms here, but is there any location where Harbour would be unable to assist someone or does international really mean throughout the globe?

KP: There are going to be some jurisdictions that we're going to want to avoid, particularly those countries who are currently under sanction with the United States or the UK. Other than that, we have funded cases in South America, Central America, Africa, the Far East, Australia. So yeah, we're international.

DW: Well, it always helps to have a perspective from 10,000 feet above and somebody looking at what you're doing and certainly being in international place where people can get funding, you have experience in a variety of different jurisdictions where these cases have been tried or had some success and you're able to offer that advice to people. If there was one word of advice you had for, let's start with a plaintiff, who's out there looking to bring a case and looking for a way to find somebody to help them, what would that advice be?

KP: I think that advice would be to identify the right funder for your particular circumstances. Harbour is a large company, but we have very few professionals. We're very streamlined. There are a number of funders out there who, as I mentioned before, David, they identify the cases and then they go look for their own funding. My advice would be to identify the right funder who has experience in the type of case you have and has the actual wherewithal to employ capital as needed. Another thing we do at Harbour, David, is when we fund a case, let's say the budget for the case is $5 million over a three- or four-year period, what we do is we ring-fence that $5 million in our fund, that money is always going to be there. It's not going to be used for anything else. It's been ring-fenced specifically for that case. So we're not going to be in a situation where we don't have the money to provide the funding.

We're more interested in the mass torts that have significant scientific evidence behind them. That's a big hurdle for the mass tort space.

DW: How do you broach the subject with smaller or even medium-sized firms who in the past have had some success in these types of cases and who think that they can go it alone and they really don't need to get the outside help and that it's not really adding a value to them. What words of advice would you have to those people who had been used to going at it alone before and really aren't necessarily looking to have somebody help them out?

KP: I would say look at their bottom line, David. So if it's a plaintiff's council, mid-sized law firm, and they're going to spend the next three years on a contingent case where they're not bringing in any money, they're billing at essentially $0 per hour, then they're having to outlay significant amounts of costs. What could you be using the money for if you were being paid even 50% of your hourly rate or a 100% of your hourly rate and not having to come out of pocket for those significant costs? You're running a business and you've got expenses and your revenue is your lifeblood to keep the doors open. So I think that would be my advice. Look at your bottom line and how could you benefit from having, again, non-recourse funding for your cases, so you don't have to worry about taking on significant risk on the case over a three- or four-year period.

DW: Well, Kory, thanks for taking some time out and joining us here today. It's certainly been an informative discussion. Thank you and Harbour Litigation Funding for joining us and helping to educate people out there who might be in need of some assistance.

KP: David, thank you so much for the opportunity. It was my pleasure.

We hope you enjoyed this interview. Thank you to our guest Kory Parkhurst from Harbour Litigation Funding, a leading international litigation funding firm. You can find them on the web at harbourlitigationfunding.com. That's H-A-R-B-O-U-R, litigation funding, dot com.

Thank you to our guest host David Weinstein, a former U.S. Attorney and partner at Jones Walker in Miami, Florida. Sweet G Communications produces this interview.

Lawdragon is a leading digital media company producing the legal industry's best lawyer guides and content, all of which are freely available at Lawdragon.com.

The preceding content is informational only and does not constitute legal advice. The opinions expressed in this interview do not necessarily reflect the views of Lawdragon Inc., its clients, or any respective affiliates.

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