Building a Practice Around Delaware's Corporate Code

Katya Valasek:

We're joined today by Mark Purpura. Mark has been helping business clients in Delaware navigate complex legal matters for more than 20 years. He advises on a wide range of transactional issues. We are going to get into the work that you do in a little bit, but let's start at the beginning. You didn't always want to be a lawyer. You started off as a business major. What about the business world fascinated you?

Mark Purpura:

I think the art of deal-making was fascinating to me. The finance behind it, the negotiation process, I was really fascinated by the leveraged buyouts in the 1980s. Some of the hostile takeover cases that were more sensational really got me interested in business. And I majored in business in college and thought that I would try to go to Wall Street at some point after college. But as I went through college and thought about the rest of my career, I thought maybe the legal part was something that I might be more interested in. I had a really good business law professor in college who was a partner at a major law firm in Los Angeles. And I think that class was originally the class that got me interested in the legal field.

Katya Valasek:

But do you think it was that business law class that tapped into some of what you liked about those hostile takeovers from the 80s that really steered you in that direction? Or was your interest different at that point in time?

Mark Purpura:

Coming out of college, I really was interested in the legal field and the law behind it, but also in the deal-making part as well. The finance part, the negotiation of the transaction, figuring out how to finance it. And so it was a difficult choice for me to go to law school.

I think ultimately, the reason why I decided to go straight to law school from college was that I thought maybe if I didn't do that, that I never would go to law school. Once I was in the business world, I probably would not have gone back to law school. And so I wanted to get the legal education, at least figuring that I could always go into business if I didn't want to go into the law after law school.

Katya Valasek:

And you ended up with the best of both worlds as a banking lawyer. As a summer associate, you ended up working on one of the last hostile takeover cases that happened in Delaware. What was that like for you?

Mark Purpura:

So I was sort of like tangentially involved in the case, I guess. I was a summer associate at Richards, Layton & Finger that summer. And for the first half of the summer, I was in the corporate litigation area. The mentor that I had was a senior associate who was working on that hostile takeover case. I got to do some research for the briefs and pitch in that way. I got to see the speed at which that case was moving because it was, you know, there was a motion for preliminary injunction in it.

I was a little bit shielded from the hours part. I think they had stayed up all night the night before the hearing for the preliminary injunction. But I wasn't sort of, you know, I had some summer associate event to go to and so I wasn't there for that. But I did join the team the next morning. I got to see the court proceeding. And it was sort of playing out my fantasy in real life, participating in one of these transactions and seeing it happen in real time in the courtroom and in the Delaware Court of Chancery.

Katya Valasek:

So you used a legal term, a motion for preliminary injunction. Can you explain what that is and why you need to move quickly when one of those are on the floor?

Mark Purpura:

It's a motion to basically maintain the status quo in the case and to enjoin an action so that you maintain the status quo. And it's important in these cases because if you don't sort of do that, then your side can be at a severe disadvantage if the deal keeps going forward and even closes in the face of a challenge to it because it's very difficult to unwind actions once they occur. And so that is something that the Delaware Chancery Court is really known for is the speed at which it can move to entertain these kinds of motions for, you know, injunctive relief before there is harm or to stop harm from happening. It's one of the hallmarks of our judicial system in Delaware is the speed at which the chancellors can act and address those types of motions that can be filed like very fast in a case that comes before it.

Katya Valasek:

Well, you crawled into my head because my next question was going to ask you about the uniqueness of Delaware as it relates to business law. But before we get to that, you said that the injunction is to preserve or maintain the status quo. What does that mean in a business setting? What are you trying to prevent from happening?

Mark Purpura:

Well, it depends on the particular case. But I think in the, you know, in the hostile takeover cases, for example, you want to prevent the buyer from accepting another another bid or the seller from accepting another bid, or you want to prevent the board from taking some action from triggering a poison pill or something like that. And so I think it could be a variety of different things that you're trying to prevent from happening to disadvantage your position in the in the transaction.

Katya Valasek:

OK, so now I want to get into the Delaware of it all. What makes Delaware so central to banking and corporate practice?

Mark Purpura:

So first of all, I think it was the laws that we have are very state of the art. And so keeping the laws state of the art is one of the most important things. We adopted a general corporation law. We adopted other entity statutes that were sort of novel at the time, and they're continuously updated every year. That is really important to keep up to date with what the market is expecting and what the market needs. And the same thing is true in the banking area. We had a very aggressive piece of legislation called the Financial Center Development Act back in the 1980s, and it encouraged major banks to set up subsidiaries in Delaware to engage in what were at the time sort of novel activities like credit card lending, nationwide lending programs and securities and insurance activities that at the time were very novel and sort of experimental for banks to do at the state level. That piece of legislation attracted a lot of banks to Delaware. It also had a regressive tax rate in it. So the more business you did in Delaware, the lower tax you paid, which was attractive to financial institutions. And that built out a base of employment in the state.

There are now, I think, over 50,000 employees in the banking sector in Delaware. And so having that pool of talent also is very important to maintaining that industry for the state.

Katya Valasek:

And you mentioned the Chancery Courts before. I don't know that that's a combination of words that many people hear. So what is so special about the Chancery Court?

Mark Purpura:

So the Chancery Court is a business court. Its jurisdiction is sort of limited to business matters and equity and trust matters. And it's a very prestigious appointment to be appointed as a chancellor.

I think that's what differentiates it to some extent from other states where a lot of times judges are elected and it's much more political. The Chancery Court tends to have a balance politically. It's not a political court.

The judges are held to very high standards by themselves and by the Supreme Court. And the goal is to have decisions that come out that make sense and are fair to litigants and are done in a timely fashion.

Katya Valasek:

Would you want to be appointed to the Chancery Court?

Mark Purpura:

I would not want to be appointed. I sort of learned very early on in my career, probably when I was a summer associate, that I was more geared to be a transactional attorney, a transactional or regulatory attorney, and not a litigator. I don't have sort of the interest in doing a lot of the litigation.

I like to come to consensus and I like to do deals that make sense for both parties. And I'm not as competitive or aggressive as sometimes a litigator has to be. Every lawyer sort of has to figure out where they fit in the best. And to me, it was with a transactional practice.

Katya Valasek:

OK, so I want to dig into this practice then. What kinds of cases do you take on?

Mark Purpura:

Maybe like half my practice is banking related. It's forming financial institutions in Delaware, mostly trust companies, just because it's very rare that you form a new full service banking institution. Delaware has a very robust trust industry. And so I always have at least one new trust company formation on my desk at all times, it seems like. And then just after the trust companies form or the banks form, just advising them in their business, whatever issues they're having, whether it be examination issues or they want to do a transaction that's like a change of control, or if they want to do a merger or if they want to do some other acquisition or dividend or something like that, you know, navigating them through the regulatory process is something that is central to my practice. It could even be negotiating an entire sale or purchase of the institution or a substantial portion of their assets.

The other half of my practice is really what most people would call a corporate practice. But at our firm, it's more specialized. Our firm is sort of known for having, you know, expertise in Delaware law matters. And so we specialize oftentimes based on the type of entity it is. And so my other half of my practice is mostly focused on limited liability companies, limited partnerships, general partnerships, statutory trusts in a wide range of matters, including private equity funds, cross-border financing opinions, domestic, you know, real estate financing opinions, and basically any type of a transaction that involves one of those types of entities.

Katya Valasek:

So when you were talking about your banking practice, one of the things that you mentioned you may be advising your client on, you said examination issues. I've never heard that term before. What sort of issue would that be and how would you get involved as a lawyer?

Mark Purpura:

So in Delaware, most other states and even nationally chartered institutions have regular examinations by regulatory authorities. The examiners come in and they review a bunch of documents or files. For a trust company, they'll pull out like sample trust files, for example, make sure that the documents in the file are consistent with what the legal requirements are and what the policies and procedures of the trust company mandate.

They'll look at the board minutes and the committee minutes and make sure that they're doing what they're supposed to be doing from a regulatory perspective. They're looking at various factors like earnings and management and safety and soundness issues. Sometimes they'll ask a question during the examination and the client doesn't really know how to answer the question.

And so, you know, a lot of times it'll be calls in that context where the client is calling me. The examiners are in their office asking them questions that they don't quite know how to answer. And so they will consult with us to determine like how they should answer the questions, what they're actually required to do, what they should be doing, whether they're doing the right thing or not, so that they can respond to the regulators in a real time basis.

Katya Valasek:

It sounds similar to compliance work. Is that an accurate description?

Mark Purpura:

It is a type of compliance work, yes.

Katya Valasek:

Is there one of the buckets that you prefer to do more that just gets you really excited?

Mark Purpura:

I like sort of the big deals that are in the news. Those are exciting to work on. And so I really love it when we get one of those.

But also like I just I like working with local clients who have smaller businesses as well. I really enjoy the banking and trust company practice that we have is more client touch. You're dealing directly with the business people at these institutions, whereas the entity work, we're oftentimes dealing with other major law firms in the U.S., which also can be really a great experience as well. If you're doing a really novel transaction with one of the best law firms in New York City, for example, being able to work with really sort of just amazing, talented lawyers at these at the at the large law firms in New York is something that I really enjoy doing.

Katya Valasek:

How do most of your cases cross your desk? Is it word of mouth? Is it just that you have you're a known entity in Delaware? How do your clients find you?

Mark Purpura:

Nowadays, it's a mix. We've sort of established ourselves as a leader in the practices that I am engaged in. And something that we are very intentional to continue to be the leaders in these practice areas. And so I think it comes from word of mouth. Like I see my LinkedIn page is being looked at a lot. It's referrals, intrafirm referrals from, you know, my colleagues who have clients that need specialized assistance that I can provide for them. And it's, you know, sort of referrals from other lawyers in other cities oftentimes will refer people for particular Delaware work. So I'm seeing it happen organically like that in various ways.

Katya Valasek:

So you mentioned earlier, how meaningful it is for you to do some of the local work with your clients. And I'm wondering if you could walk us through either a past case or a pretend issue that would cross your desk and talk about how at the various points you build that relationship with that local client.

Mark Purpura:

I will give you an example. So oftentimes I'll use the banking context the best because oftentimes when you're forming the entity for them, you're establishing relationship right away with that client. And so, you know, that can easily be a starting point and a long client relationship.

Katya Valasek:

Before you get started, what does it mean for you as a lawyer to form the entity?

Mark Purpura:

So with a bank or a trust company, for example, it's the chartering process of applying for a charter from the bank commissioner's office by submitting an application. You have a public hearing and then there's a decision on the public hearing. Once your application gets approved, then you can go ahead and legally form the entity by filing documents with the secretary of state that legally form it.

And so you have to work very closely with the client in formulating the application and providing the testimony at the public hearing that will satisfy the requirements to have the application approved. And so that's often the way that I establish longstanding client relationships in the bank and trust company areas. And then, you know, they start to engage in their business and they have all these questions as they start doing more business and you're their contact person.

Katya Valasek:

And it must be really rewarding to watch a business be successful when you put in that work to help them get started from the ground up and to continue to check in as their needs change over time.

Mark Purpura:

It does feel great. I think, you know, one of the measurements that I look at the state, it's very important to the state when they form a new financial institution that they employ people in Delaware. And so one of the things that I always look at is like how the clients grow and they're employing more and more people. It's benefiting the state. It's benefiting the community. You're sort of feeding into that narrative about how the financial industry in Delaware is an economic driver for the state, providing a lot of tax revenue, providing jobs for people. It's satisfying in all those aspects.

Katya Valasek:

Beyond the practice we've already discussed, you're often pulled in to help shape the law in Delaware. Tell me more about that and some of the legal projects that you've been able to contribute to.

Mark Purpura:

That is a really interesting part of being in Delaware. It's such a small state that as a lawyer, you really can participate a lot in crafting the laws that are adopted by the General Assembly. The General Assembly has historically provided pretty great deference to the Bar Association. And has a lot of trust in the Bar Association. And so there are various committees of the Bar Association that take it upon themselves to suggest to the General Assembly updates to the laws that can be adopted on an annual or, you know, biannual basis. Like in the corporate area, in the alternative entities area, like LLCs and limited partnerships.

That's something that's done every year. There are amendments that are adopted almost every year. Statutory Trust Act gets updated every two years.

I'm currently serving on the Trust Act Committee, which is updates to our sort of common law trusts that are used more for like wealth management purposes in Delaware. I'm also the chair of our banking law subcommittee of the commercial law section. That's a less active committee, but sometimes we do have to address legislative issues in that committee.

This year has been a very busy year for me in working on legislation. The governor just announced a package of two banking bills last month that he is championing that modernize Delaware's banking code. And then a statute that implements the Genius Act, which is a regulatory framework for payment stable coin issuers. If states want to regulate and license payment stable coin issuers, they have to adopt a state regulatory framework under the Genius Act. And Delaware wanted to be a quick mover in that space. And so I was part of a small task force that conceptualized and developed those two pieces of legislation.

And we think it's going to be really great for Delaware if those two pieces of legislation pass in the General Assembly to attract more financial institutions to Delaware, to attract payment stable coin issuers, to really sort of embrace the notion of digital assets and how they're becoming more popular and a part of our financial system.

Katya Valasek:

Did you first see the opportunity to get involved in some of the legislation work that's happening in the state of Delaware when you began your practice?

Mark Purpura:

I certainly did not know that that was going to be an option when I came to Delaware. But very early on in my career, I saw the partners in my immediate group who were involved in legislative drafting. And I certainly worked on it as an associate as well.

It's something that I think is maybe more unique to Delaware than other states. I don't know how many other lawyers in other states really have the opportunity to do that. And then I've also done it in the pro bono context. I've crafted, drafted some really landmark bills in the LGBTQ space in Delaware. And that work is probably, I would say, the most rewarding work that I have ever done as a lawyer.

Katya Valasek:

You're doing a lot in your paid job. How long did it take you to establish yourself in your practice to be able to carve out time for that more meaningful to you work that you do in the LGBTQ plus community?

Mark Purpura:

First of all, I think the firm, our firm encourages pro bono participation, even when you're an associate. I think for me, when I was working on the landmark piece of legislation, like our Marriage Equality Act, our non-discrimination bills, that took a lot of time to do it. Not only was I drafting the legislation, but I was co-leading the lobbying campaign for those bills and sort of leading a statewide advocacy organization and educational organization, co-leading those organizations as a volunteer. And I think that I want to give credit to Richards, Layton & Finger for allowing me the space to be able to do that, to recognize how important that work was at the time. And it was hard. I'm not going to lie. It was a lot of hours. It was working 20 hours a day at some point, but it was important work. And I wanted to keep up my legal work at the firm as well as do this for the community as well. And so I think you just sort of, you just dig down and you do it. You just get it all done. And that's what I did.

Katya Valasek:

It's so funny because you said earlier that the kind of work that you like to do is getting towards consensus. And I think it's clear how that is beneficial to any group that's trying to pass legislation, right? You're trying to get the consensus to get it passed, but you led the lobbying effort for those LGBTQ plus bills.

And that is those skills that you said you were less comfortable with, being assertive, being aggressive. What did it feel like to tap into that skillset that you don't access so easily in your day-to-day work?

Mark Purpura:

I think it's important to develop those types of skills, even if you don't do them every day. So when I was an associate, I took on pro bono matters that were outside of my practice area that were litigation oriented. I would take on cases in family court that had trials, protection from abuse orders, where I would do a half day or a full day trial in family court.

I remember the first time I did one of those and I couldn't negotiate a settlement for it. And it went to trial and I was sitting there and I was like, oh my God, I have to object to things. And I need to know the rules of evidence.

And luckily, my law school evidence class came back to me pretty quickly in the bar exam. But it was important to me to at least try to develop those types of skills at the same time that I was actively practicing a transactional practice. I think it also helped me in those pro bono legislative efforts.

Last year, I was appointed to one of the first members of a new LGBTQ+ commission in Delaware. It's a statewide commission established by the governor. And so I'm excited about that work.

There's a lot to do, especially with the challenges that transgender people are facing across the country and in Delaware. There's a conversion therapy case that just was decided by the Supreme Court on Colorado's conversion therapy law, which I helped write Delaware's version of that. And now we're thinking like, okay, what are we gonna do?

How do we react to the Supreme Court case? What can we do to prohibit this terrible practice in Delaware while still complying with the First Amendment? So those are gonna be some challenges that I look forward to working on this year and next year.

It's very rewarding. In my view, it's the least that I can do. It's something that I feel like I need to do because I have the capability to do it.

And I look back at some of the partners at this firm who committed themselves to the community in ways that were very important to the state. And so I think that when I'm doing something like this, I'm sort of trying to model, in some respects, what they have done and to just make life better for people to the extent that I can do that.