Corporate Law for the Poor Ben Polk Skadden Worldwide Annual Partner Meeting, April 21, 2013,

Boston, MA Good morning, ladies and gentlemen. Please let me say, first, what an honor and a privilege it is to be able to speak with you today. I am so grateful to Lauren Aguilar and Susan Butler Plum for giving me this opportunity. Your tireless work on behalf of all of the Skadden Fellows means so much to us. I work in what used to be called South Central Los Angeles. But after the gang wars of the 80s, the riots of the 90s, and the intractable poverty that has persisted since, the community decided that it needed a new start. And so in 2003 it rebranded itself. South Central LA became South LA. But new name or not, a decade later, poverty continues in South L.A. In the neighborhood where my office sits, more than 60% of residents live below the poverty line.1 For an individual, this means getting by on less than a thousand dollars a month; for a single mother, this means raising three children on less than 23 thousand dollars a year.2 But these numbers cant do justice to the daily realities my clients face. Gangs recruit in middle schools. Corner stores stock more types of liquor than of produce. Dead animals lay in the street for days before anyone comes by to clean them up. Sidewalks are unprotected by trees, and unused railroad tracks run right through the center of residential neighborhoods. Men and women draw their curtains, even in the daytime. Of course it is easier to bemoan poverty than to identify something useful to do about it. Of this I am reminded daily by the mission statement that I have taped to the wall above my computer. I am an attorney in the Community Economic Development unit of the Legal Aid Foundation of Los Angeles. Our mission is to empower Los Angeles communities and community-based organizations in their efforts to attack poverty at its roots.3

http://zipatlas.com/us/ca/los-angeles/zip-code-comparison/population-below-poverty-level.htm http://www.familiesusa.org/resources/tools-for-advocates/guides/federal-poverty-guidelines.html 3 http://www.lafla.org/service.php?sect=ced&sub=main

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To attackpovertyat its roots. What an order. Poverty has persisted throughout human history, has resisted intervention after intervention. And yet history has also marked incredible progress. Just 200 years ago, 85% of the worlds population lived on less than a dollar a day; today that number is 16%.4 Billions of men and women have risen out of poverty. Today people live longer; fewer are hungry; and children are less likely to die. In my view, these developments have been driven in large part by the rise of modern business and the global spread of the free-enterprise system. Voluntary exchange for mutual benefit has led to unprecedented advances in productivity, cooperation, and technology. The law provided the architecture for this growth, fostering innovation by protecting intellectual property, promoting cooperation by clarifying contract terms, and encouraging investment by limiting liability and making ownership transferrable. I agree with a statement I heard recently, that development of the corporation probably constitutes the greatest antipoverty innovation in human history. And yet the benefits of this abundant system clearly do not yet extend to all. In my own country, the most advanced free enterprise system in the world, 50 million Americans remain in poverty5; at least 16 million of those are children6. White Americans hold 22 times more wealth than black Americans, 15 times more than Latinos.7 Why? I share the view that the ability to participate in this system depends fundamentally on the community into which a person is born, and on that communitys history. As Lyndon Johnson said, Ability is not just the product of birth. Ability is stretched or stunted by the family that you live with, and the neighborhood you live inby the school you go to and the poverty or the richness of your surroundings. It is the product of a hundred unseen forces playing upon the little infant, the child, and finally the man.8

4 Mackey, John and Raj Sisodia, Conscious Capitalism, Harvard Business Review Press, Boston, MA, 2013, 12 (citing Francois Bourguignon and Christian Morrison, Inequality Among World Citizens: 1820-1992, American Economic Review 92, no. 4 (2002): 731; Shaohua Chen and Martin Ravallion, The Developing World Is Poorer Than We Thought, but No Less Successful in the Fight Against Poverty, Quarterly Journal of Economics 125, no. 4 (2010): 1577-=1625. 5 http://washington.cbslocal.com/2012/11/15/census-u-s-poverty-rate-spikes-nearly-50-million-americans-affected/ 6 http://www.nccp.org/topics/childpoverty.html 7 http://money.cnn.com/2012/06/21/news/economy/wealth-gap-race/index.htm 8 http://www.lbjlib.utexas.edu/johnson/archives.hom/speeches.hom/650604.asp

It simply cannot be that black Americans are 22 times less capable or less hardworking or less desirous of a comfortable life. More likely, I think, is that decades of tying school funding to community wealth produced generations of men and women lacking skills valued by the marketplace; that decades of tying criminal justice outcomes to lawyers fees eroded the human capital of poor communities; that decades of granting zoning permits to drive-thrus, liquor stores, and check cashing establishments left a community suspicious of outside investment. Poverty has an architecture, too. My project provides transactional legal services to businesses and non-profits launching revenue-generating enterprises that connect their communities with the free-enterprise system. My clients are individuals and groups; entrepreneurs and social enterprises that bring needed goods, services, and jobs to low-income communities. My clients are men and women who are seeking not only to pull themselves out of poverty, but to pull their communities out as well. I am their corporate lawyer. I help them write contracts and form corporate entities. I advise them on tax matters and protect their intellectual property. Because of my business experience before law school, I can advise them on strategy, and help them communicate with investors; press them to more rigorously think through business models, and challenge them to consider larger scale. One client, Ezequiel is the son of Mexican immigrants. As an 8th grader, he knew his family could never afford to send him to college. So he restored an old gumball machine. He persuaded a local store owner to let him place it in his shop on the condition that Ezequiel kept up his grades. By the time Ezequiel graduated from high school, he had 60 gumball machines spread across Los Angeles, and those quarters enabled him to attend a public university. Today, he is the founder and CEO of Gumball Foundation, an organization that teaches entrepreneurship to local students by apprenticing them to a vending machine business of their own. I am helping Ezequiel to secure his tax exemption and to form a for-profit affiliate. I have negotiated intellectual property agreements on his behalf, and because of this fellowship, have been able to spend hours talking through his ideas for scaling his work. Another client, Trini, leads a group of poor domestic violence survivors who met through an art therapy class offered by a local nonprofit. As these women confronted the darkness of their pasts, they began to think about their future. They came to believe that true independence depended on their ability to earn a living for themselves. One noticed
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a newspaper article about an abandoned tuna cannery at the Port of L.A. Another knew that the longshoremen often complained that they had nowhere to eat on their lunch break. The women conceived a plan to partner with the port to transform this historic building into a restaurant/brewery that would also serve as a transitional job program helping battered women on their path to economic independence. Because of this fellowship, I have been able to help them to navigate the local planning bureaucracy, to develop their business plan, and to approach investors. Two weeks ago, they presented their vision for a public private partnership to enthusiastic applause at the Planning Commission. My other clients include a social enterprise pioneering a training program for community health workers, a nonprofit seeking to connect minority owned businesses with export opportunities in Africa, and a women-owned cooperative exploring new distribution channels to bring healthful produce to undernourished South L.A. communities. There are so many public interest attorneys who work heroically every day to relieve the suffering of the poor. These lawyers, many of them funded by your generosity, help battered women leave abusive homes, protect tenants from slumlords, and help citizens secure government benefits to which they are entitled under law. But the focus of my work is different. Because for many of these clients, after these nightmares are over, their poverty continues. My clients are trying to do something about this. They are testing new ideas, trying new models, conceiving new ways of building their communitys capacity. They are seeking to overcome historical barriers, to address a community problem at the community level. And if they can do it in South L.A., they can do it anywhere. Every day I am astounded by my clients talent, ingenuity, and courage, by their commitment not only to sow their own seeds of wealth but to enrich their communitys ground. I am so grateful to you, the Skadden partners, for allowing me to dedicate my time and passion to them. It is an honor and a privilege to serve my clients and their communities, to be a corporate lawyer for the poor, and to be a member of the Skadden family. Thank you very much.