I am somewhat shocked by the anti-capatalist comments below. Our justice system can really only support those with a deep pocket. Litigation is expensive. If you want to sue Google because they infringed on your patent--good luck. They won't settle and will drag out the litigation until you are dead broke. How can we level the playing field? By creating a asset class with MERITORIOUS claims. There is no clogging up the judicial system because if its not a worthy investment, no fund will agree to underwrite the matter. What wasn't acknowledged in this article is that there are ways to negotiate the best terms with these funds (my organization--for one) that make the investment far less unilateral.
2
The hijacking of one of the few American traditions that still at least pretends to offer the hope of providing a path to a level playing field to all of her citizens didn't even reach the level of importance to be carried as a front page article for "The Paper of Record". The sad part is that the Time's is right in understanding that there are very few dollars to be made in reporting a story that ends up being about the erosion of integrity to a process that promises to allow even the most destitute of us a chance for an impartial judgement of any grievance. Their placement of this story was exactly correct for an American audience. No one gives a shit. .. and so Rome burns, from the inside out.
Much like the mass stupidity of born again Christians to fail to perceive current quantum theory as a recruitment tool I am struck by the niggling presence of this story on the NYT website. Doesn't a story about the moment when wealth can now directly contribute access to a process that is supposedly blind to all other influencing factors save justice... deserve front page? Sadly it just doesn't appear to be the Time's fault.....it would be so much cleaner a wound should that be the case. No, it serves as a reminder that distraction will always be first on the menu in the face of true unyielding decline, real answers are far to costly to be sincerely considered by anyone with a mortgage. Hats off for the story NYT.
Will these "investments" open the channels to more insider information leaks similar to insider trading? A really good lawyer with a client who has a really good case will consider taking the case on a contingency fee so no need to raise capital for attorney fees and hard costs.
Just what piece of the court award will the investors want? A return of capital plus another 25% per annum (cases can take years) to compensate the loan sharks ...ah... investors? So now Joe the plaintiff pays the attorney fees, hard costs and another 25% to thw investor. Joe will be lucky to get 25 cents on the dollar.
Just what piece of the court award will the investors want? A return of capital plus another 25% per annum (cases can take years) to compensate the loan sharks ...ah... investors? So now Joe the plaintiff pays the attorney fees, hard costs and another 25% to thw investor. Joe will be lucky to get 25 cents on the dollar.
Looks like the Devil went out and got himself a joint law and business degree.
Lucifer Mephistopheles, JD, MBA.
I cannot imagine an idea more likely to spawn unforeseen consequences or more likely to bend our legal system to the dictates and imperatives of mere greed.
Our constitution and laws should be separate, above and safe from the much idolized "marketplace".
All the caveats about prudence in choice of lawsuit, forbearance, and neutrality in respect of legal proceedings and so on will eventually crumble like sandcastles in the tide if this development is allowed to take hold.
Lucifer Mephistopheles, JD, MBA.
I cannot imagine an idea more likely to spawn unforeseen consequences or more likely to bend our legal system to the dictates and imperatives of mere greed.
Our constitution and laws should be separate, above and safe from the much idolized "marketplace".
All the caveats about prudence in choice of lawsuit, forbearance, and neutrality in respect of legal proceedings and so on will eventually crumble like sandcastles in the tide if this development is allowed to take hold.
Hmm, do they make book in Vegas about how juries will return verdicts? How judges will sentence? How long till the new oops-we-forgot-to-inspect-the-components Bay Bridge collapses?
Maybe investors can hedge their bets by investing both in VW and in lawsuits against it.
Soon there will be a mutual fund devoted to lawsuit investments, one of whose investments will be in lawsuits against the fund itself. Wait, is there an infinite regress brewing there......
I'm glad my father is not around to see what has happened to his beloved profession; he was horrified and outraged when lawyers were first allowed to advertise.
Maybe investors can hedge their bets by investing both in VW and in lawsuits against it.
Soon there will be a mutual fund devoted to lawsuit investments, one of whose investments will be in lawsuits against the fund itself. Wait, is there an infinite regress brewing there......
I'm glad my father is not around to see what has happened to his beloved profession; he was horrified and outraged when lawyers were first allowed to advertise.
1
I'm a derivative and direct plaintiff as an indirect consequence of lawsuit filed against me (I'm also defendant) by the company that I founded shortly after bringing-in outside purported-investors who immediately took over 'my' company starting the day after the purported transaction. The purported investors then shipped non-standard compliant ski-bindings that were not ready for market introduction into the consumer and retailer markets — then attempted to cover it up. The core technology—the issued utility patents, once properly configured into a binding that also provide the function that's expected of all ski-bindings—has the capacity to provide knee-friendly skiing. I assert $16M in damages. We feel we have a solid case. The litigation has gone-on nearly full-time for 6-1/2-years and has caused me to pay-out over $645,000 in legal fees, without income, all during this time-period. I am not a millionaire by any means. I have exhausted my all of my resources attempting to regain 'my' original company's assets ... and am now only weeks from the beginning of the 2-week trial ... without funds to go forward. If there are funding-providers 'out there' — now is the time to come forward in a case that might provide not only a significant monetary return, but also provide a social return (reducing knee injuries) and provide a legacy return (as a consequence of causing the social return). Large risk factors are present.
Rick Howell
Howell Ski Bindings
Stowe, Vermont
Rick Howell
Howell Ski Bindings
Stowe, Vermont
Wow. Lots of misinformation and assumptions here. First, 3rd party funding will not encourage frivolous or questionable litigation. Second, it's not "gambling". Funders will only invest in meritorious claims after painstaking review and underwriting. Only claims that are compelling in their legal and factual merits, and that have capable counsel, competent plaintiffs, a solvent defendant, an acceptable venue and judge, and an expectation of recovery within a 24-36 month timeframe will be funded. More often than not, the investors will not consider cases that are in pre-discovery phases. Clearly, we are not talking about gambling or encouraging baseless lawsuits. We are talking about making investments that have a strong likelihood of a return on those investments. Granted, there are risks associated with investing in litigation that include the late revelation of unforeseen evidence, changes in the law, or decisions of juries or appellate courts; however investors will not fund cases where those risks are too high or cannot be mitigated.
1
What universe are you from? Contingency-based attorneys frequently borrow operating capital to carry them until a case is settled at a reasonable rate from a bank. They don't need a loan shark nor do they need dead weight feasting off the court awards.
1
Litigation financing appears to be an attempt to address a very real need putting the little guys on equal footing with the Goliaths that regularly abuse the system. This is no different than allowing class action lawsuits to make funding and quality representation available to plaintiffs.
2
A stock market is a useful servant to a vigorous economy, but a terrible master. Today's firms are too often run to keep up eps, in hopes of keeping up share price. With this orientation firms play to the banks and investment banks rather than focus on their social mission -- making safe, quality products that compete to satisfy consumers.
Similarly, a market in future outcomes of major legal suits would be a terrible mechanism to set over upper-end law suits.
Similarly, a market in future outcomes of major legal suits would be a terrible mechanism to set over upper-end law suits.
1
Only licensed attorneys can share in the profits under traditional arrangements. License suspension or malpractice, are threats that keep most attorneys on their good behavior. Having clients willing to pay the bill and approve the important step-by-step decisions in litigation are important moderating factors. Contingency arrangements where law firms recover only if they win is another less wholesome arrangement allowed to expand representation to those who otherwise could not afford protracted hourly rates and significant incidental costs. With contingency arrangements, it is the firm, rather than the client, that often exerts the most influence about when to settle and at what price.
Litigation financing takes the game to a new level and all but eliminates client control of the decision making process. It also puts the attorneys in the back seat as the investors generally insist on going forward to roll the dice. The article notes that 28 “states now explicitly permit champerty, as long as funders do not act out of malice, back frivolous lawsuits or exert too much control over trial strategy.” What constitutes “malice”, “frivolous lawsuits” and “too much control” is almost never know at the onset and becomes a problem only when it too late.
If there is truly nothing “icky” about this type of gambling, at least the judge and jury should be fully apprised of the motivating financial details that underlie all of the testimony. The jury can then determine if it is “icky”.
Litigation financing takes the game to a new level and all but eliminates client control of the decision making process. It also puts the attorneys in the back seat as the investors generally insist on going forward to roll the dice. The article notes that 28 “states now explicitly permit champerty, as long as funders do not act out of malice, back frivolous lawsuits or exert too much control over trial strategy.” What constitutes “malice”, “frivolous lawsuits” and “too much control” is almost never know at the onset and becomes a problem only when it too late.
If there is truly nothing “icky” about this type of gambling, at least the judge and jury should be fully apprised of the motivating financial details that underlie all of the testimony. The jury can then determine if it is “icky”.
3
Bottom line as I see it. This trend will only clog the courts further with bigger and more frequent lawsuits. The lawyers will love it, since their risk of funding a contingency lawsuit goes down to zero. Therefore they make take up cases they might not have thought were valid.
Another speculative financial instrument will be created. See how well the derivative fiasco turned out. The large capital companies will make out like bandits. See the 61% profit you referenced in the article. The lawyers will do well. The only ones who will suffer are the plaintiffs, who will see their settlements reduced to almost nothing, the defendants who will be paying even more huge sums, and the public which pays for the courts and the judges. Not to mention the little guys who will lose their day in court since the system will become clogged with the huge cases
Another speculative financial instrument will be created. See how well the derivative fiasco turned out. The large capital companies will make out like bandits. See the 61% profit you referenced in the article. The lawyers will do well. The only ones who will suffer are the plaintiffs, who will see their settlements reduced to almost nothing, the defendants who will be paying even more huge sums, and the public which pays for the courts and the judges. Not to mention the little guys who will lose their day in court since the system will become clogged with the huge cases
1
We should apply timely results as well as timely trial to civil actions. Perhaps we should limit legal payments or some way to even playing fields between large and small companies. It seems that third party funding complicates resolution. Mediation and Arbitration should be tried. When trials take a life of their own society is not well served.
I'm sure there are platoons of lawyers and litigation financiers licking their chops as they pursue class-action lawsuits against Volkswagen, seeking to profit from VW's crimes in rigging the emission controls in diesel engines. Greedy lawyers and financiers are facing off against greedy VW executives.
Our society is mad about money. Everywhere we look, middle class consumers are being chiseled, manipulated, deceived, tricked, lied to, nickeled and dimed at every turn by banks, insurance companies, corporations, investment companies, brokers, real estate salesmen, landlords, software and computer manufacturers, tobacco merchants, food processors, lawyers, doctors, politicians, courts, and everyone else. It seems there is no real integrity anywhere in U.S. institutions.
It's all about grabbing as much money as possible, as fast as possible, in matters small and large. I can't even turn on my computer to view e-mails without being hit with unwanted advertisements on the screen.
It seems that in the United States, it's always about the Big Money Grab. Integrity and honesty just don't stand a chance. Maybe there are still countries in the world where ordinary, decent people can live happy, productive lives without being either victims or victimizing others. I'm thinking Switzerland, Denmark, Norway, Sweden, the United Kingdom.
The U.S. is all about money (and guns). How did we get to this point?
Our society is mad about money. Everywhere we look, middle class consumers are being chiseled, manipulated, deceived, tricked, lied to, nickeled and dimed at every turn by banks, insurance companies, corporations, investment companies, brokers, real estate salesmen, landlords, software and computer manufacturers, tobacco merchants, food processors, lawyers, doctors, politicians, courts, and everyone else. It seems there is no real integrity anywhere in U.S. institutions.
It's all about grabbing as much money as possible, as fast as possible, in matters small and large. I can't even turn on my computer to view e-mails without being hit with unwanted advertisements on the screen.
It seems that in the United States, it's always about the Big Money Grab. Integrity and honesty just don't stand a chance. Maybe there are still countries in the world where ordinary, decent people can live happy, productive lives without being either victims or victimizing others. I'm thinking Switzerland, Denmark, Norway, Sweden, the United Kingdom.
The U.S. is all about money (and guns). How did we get to this point?
2
Litigation should be between the real parties at interest. When one party has sold a significant share of its interest, it is no longer a true party at interest.
1
Allow me another viewpoint: a novel of mine had an intimate connection to a very major film of a major Hollywood studio. I went to a large Westwood law firm who studied it and became really positive.Yes, they would take it on a contingent fee basis. they expected their time investment to be over $750,000. Then they said that the studio involved was famous for not settling cases, largely to discourage others whose rights had been trampled. In my case, plagiarizing a novel is far more grave than the usual screenplay/studio suit so the defense would go to the limit.
That meant that I would have to be prepared to come up with the cash outlay on the suit which could involve independent investigators to prove the chain of aquisition of my rights to the producers. How much? Up to $150,000. 99.9% of the world's writers don't have that, including me.
In NY I went to a law firm specialized in plagiarism. Same excitement, same agreement to take the case on a contingency basis. Lower estimate of my cash outlay exposure: $100,000/115,000.
So I stood by while it became one of the greatest all-time grossers and launched the careers of several actors and the director. I got zip.
Lawsuit investing is certainly a double-edged sword, but in a case like mine it would have changed my life and the now famous director-producer wouldn't be a star on the Hollywood Santa Fe circuit.
That meant that I would have to be prepared to come up with the cash outlay on the suit which could involve independent investigators to prove the chain of aquisition of my rights to the producers. How much? Up to $150,000. 99.9% of the world's writers don't have that, including me.
In NY I went to a law firm specialized in plagiarism. Same excitement, same agreement to take the case on a contingency basis. Lower estimate of my cash outlay exposure: $100,000/115,000.
So I stood by while it became one of the greatest all-time grossers and launched the careers of several actors and the director. I got zip.
Lawsuit investing is certainly a double-edged sword, but in a case like mine it would have changed my life and the now famous director-producer wouldn't be a star on the Hollywood Santa Fe circuit.
1
But doesn't the legal system already favor the wealthy? Surely wealth does not signify innocence, but it hugely effects outcomes.
I would also add that as litigation financing becomes more prevalent the ethical obligations of the lawyer can become murkier. Who is the client? Will attorney-client privilege be waived? What happens if the client wishes to settle but the lender does not or vice-versa? How deeply involved will the lender be in the litigation? These questions are only the tip of the iceberg.
These questions and others will be eventually be answered via... you guessed it....law suits. Maybe that litigation will be financed as well.
These questions and others will be eventually be answered via... you guessed it....law suits. Maybe that litigation will be financed as well.
1
The answer is 'of course'. In America, and all of the rest of the world, you can have all the 'justice' you can afford. That being true, your 'justice' requires large sums of money. If you do not have it, you will need to get it from investors. To not be able to do so will deny you the justice you are entitled to. Justice matters, and it takes money, lots of it. If you think otherwise you are engaging in 'stupidness'. Wise up.
Greed, always seeking new frontiers to exploit. Think of Martin Shkreli, the current poster child of avarice; at the end of the day, he doesn't care, because he'll be a billionaire.
Ambulance chasers, chasing the ambulance chasers, chasing the ambulance chasers.....
Ambulance chasers, chasing the ambulance chasers, chasing the ambulance chasers.....
So a small company with a patent that is its only major asset is greedy if it wants to bring legal action against someone who is infringing that patent? The patent litigator who represents that small business is an ambulance chaser? Really?
1
To the extent that that funds are being funneled to the biggest cases involving the biggest litigants with the biggest law firms representing them, and, moreover to the extent that these funds are actually diverting funds that would otherwise allow would-be litigants with legitimate claims to actually pursue them, this trend is worrisome.
The prospect of an influx of billions of dollars into the legal industry can troubles me insofar as these dollars aren't chasing legitimate claims, but rather the best investment, i.e., the highest expected return on winning a case or reaching a favorable settlement. The EV of such investments would, in an ideal world, closely reflect the strength of the legal claims being funded. Unfortunately, for whatever reason, the best claims often never get heard while far less legitimate litigation, often the product of strategic objectives, take up the lion's share of our courts' time and resources.
The prospect of an influx of billions of dollars into the legal industry can troubles me insofar as these dollars aren't chasing legitimate claims, but rather the best investment, i.e., the highest expected return on winning a case or reaching a favorable settlement. The EV of such investments would, in an ideal world, closely reflect the strength of the legal claims being funded. Unfortunately, for whatever reason, the best claims often never get heard while far less legitimate litigation, often the product of strategic objectives, take up the lion's share of our courts' time and resources.
Wait a minute. By definition, aren't legitimate claims those claims that have a strong likelihood of recovery through verdict or settlement? The high value/high stakes cases are probably going to go to bigger law firms anyway, right? Nothing prevents any claimant from taking his case, irrespective of value, to smaller firms. Also, litigation funding may be available for smaller cases.
2
Is there any reason to even Wake up in the morning anymore ? Do even 2 seconds pass through their Besotted minds before they lust for yet More ? Or do these people (if you can call them that) Sleep with a Checkbook and Bank Statement?
What a disgusting development. As if this Nation has not been brought Low enough by these Vampires
What a disgusting development. As if this Nation has not been brought Low enough by these Vampires
1
The headline asks whether one should be able to "invest in a lawsuit." However, that is not the real issue.
The real issue is: Should a large corporation be allowed to get away with improper and/or illegal behavior simply by making litigation against it so expensive that a plaintiff who lacks millions of dollars in funds to pay for attorneys' fees cannot pursue a valid claim?
The real issue is: Should a large corporation be allowed to get away with improper and/or illegal behavior simply by making litigation against it so expensive that a plaintiff who lacks millions of dollars in funds to pay for attorneys' fees cannot pursue a valid claim?
10
It's not just for litigation against big corporations by destitute plaintiffs. It's used by those same big corporations against other big corporations, individuals against individuals or corporations, and businesses of all sizes against individuals and other businesses of all sizes. It can be used to share, spread, or offset risk and costs for valid claims. There is no practical difference between litigation funding and insurance. In fact, insurance is nothing more than pre-paid litigation funding.
1
Litigation finance is no more than another term for gambling. Any lawyer who has tried cases will tell you that there are hundreds of variables that are involved in a lawsuit. These variables can range from ambiguity in the law, the credibility of the witnesses, the attitude of the judges and the ever present surprises that can come from discovery.
Many years ago a lawyer came to my office and said he had the easiest case against a client of mine he ever seen. Two years and a three day trial later his client received nothing.
Law suits can change on a dime. Like the lyrics in Frank Sinatra's "That's Life", in litigation, you can be riding high in May and shot down in June.
Litigation finance will make sub-prime mortgages seem like sturdy investments by comparison.
Many years ago a lawyer came to my office and said he had the easiest case against a client of mine he ever seen. Two years and a three day trial later his client received nothing.
Law suits can change on a dime. Like the lyrics in Frank Sinatra's "That's Life", in litigation, you can be riding high in May and shot down in June.
Litigation finance will make sub-prime mortgages seem like sturdy investments by comparison.
5
Sure would hate to be called as a juror and paid $5 a day to listen to weeks of testimony about the design of a bulldozer on behalf of people only interested in a return on investment. This isn't a topic for a court of law, it's more of a clown show.
I'm a solo attorney. I represent whistleblowers on a contingency basis. I invest a lot of time and knowledge and overhead $ into these claims, hoping some day for a payoff. I don't see the difference and I don't see the harm.
1
Yet another proof of the sheer ridiculousness and dangerousness of life in America. Everything is up for sale.
1
Why not allow under-resourced plaintiffs to level the playing field with deep-pocketed defendants? It's true, resources matter in achieving legal results. So why should corporate defendants or government prosecutors be the only ones with resources?
Who knows where will be in 20 years! In the meantime I wonder how the judges feel presiding over such cases. Or how the lawyers behave.
A middle class plaintiff can prevail by exercising his
right to choose the forum. In many counties there
are only 1-3 elected judges in the court of general
jurisdiction and it is they who decide all cases
brought by residents of those counties.
They are simply not equipped to handle complex
litigation as our courts in New York, Los Angeles
and Cook Counties.
Juries, of course, are more favorable to their
fellow residents than outsiders.
The path for middle class plaintiffs is to move
to a rural county and then commence your action.
Rey Olsen
right to choose the forum. In many counties there
are only 1-3 elected judges in the court of general
jurisdiction and it is they who decide all cases
brought by residents of those counties.
They are simply not equipped to handle complex
litigation as our courts in New York, Los Angeles
and Cook Counties.
Juries, of course, are more favorable to their
fellow residents than outsiders.
The path for middle class plaintiffs is to move
to a rural county and then commence your action.
Rey Olsen
IMO, if lawsuits are going to be financed by investors, there should be a loser pays mechanism, and the investor should be on the hook for the payment. The same with contingency fees.
1
Then defendants that lose (and their insurers) should be obligated to pay the plaintiffs' attorneys fees and costs?
1
If you acquire a 51% interest in a lawsuit, does that mean you get to decide what the lawyer does? What the client does? Do you get to sidebar with the judge to protect your nest egg? Can you sue if your investment's lawyer doesn't serve your interests?
This is a topic that deserves to be explored in its own TV series.
This is a topic that deserves to be explored in its own TV series.
1
In short, no. The client remains the client. The attorney's ethical duties remain to the client. The attorney also has the duty to exercise independent professional judgment. The legitimate funders know this and act accordingly.
I was recently offered the option of investing in a lawsuit initiated by a company in which I have an investment. The price was a bit too high for me, but I suspect that it will be a good gamble as it's a patent infringement case.
I doubt that such financing methods will generate frivolous lawsuits, and it allows small plaintiffs to seek redress from much larger entities, just as in the Miller-Caterpillar instance.
I doubt that such financing methods will generate frivolous lawsuits, and it allows small plaintiffs to seek redress from much larger entities, just as in the Miller-Caterpillar instance.
1
What happened to the proposals for 'the loser pays the winner's legal costs' as a method of limiting frivolous lawsuits. The are too many lawyers with time on their hands hoping for the big payout. Or at least a modest settlement to walk away. The innocent are now forced to spend to defend themselves and could end up penniless even if they win!
1
Is this not unlike the Fed printing $16 trillion and giving it to the banks who were bankrupt to fight off all the foreclosures? Citi got $2 trillion but should have been done like Washington Mutual Bank or IndyMac before it!
How do you lend one bank $2 trillion? However the same Fed against bailing out the homeowners that Congress had approved TARP to buy the bad paper, yet Goldman's ex-CEO in Henry Paulson took the 1st half of the TARP monies and gave it to the banks, and the 2nd half Obama administration did anything but help the homeowners.
How do you lend one bank $2 trillion? However the same Fed against bailing out the homeowners that Congress had approved TARP to buy the bad paper, yet Goldman's ex-CEO in Henry Paulson took the 1st half of the TARP monies and gave it to the banks, and the 2nd half Obama administration did anything but help the homeowners.
And then there's the problem of collecting. I won a case against Fedex without a lawyer, but was never able to collect on the judgment.
1
And I thought Credit Default Swaps were are low point. What's next, life insurance policies?
Actually those have been being traded for years. By buying life insurance policy payouts from people for a lump sum earlier.
Life insurance policies are already being sold by beneficiaries to investors. Present versus future dollars; the time value of money...
"Viatical settlements allow life insurance policyholders to sell their policies to investors for an immediate cash benefit. In return, the buyer of the viatical settlement becomes the new owner of the life insurance policy, pays future premiums and collects the death benefit when the insured dies."
"Viatical settlements allow life insurance policyholders to sell their policies to investors for an immediate cash benefit. In return, the buyer of the viatical settlement becomes the new owner of the life insurance policy, pays future premiums and collects the death benefit when the insured dies."
What do you mean 'next'. They are already here - life insurance policy brokers exist. Basically everything that has value is trade able -- players, performers, life insurance, students [pay for their education for a % of their earnings for x years or lifetime -- indentured servants comes to mind], etc
Maybe this is the market-driven solution to healthcare costs we've been looking for. Investors can speculate on patient outcomes, going either short or long. If a patient recovers, investors who went short lose their capital to pay for the hospital fees plus those who went long. If the patient does not recover, those who went long do the paying.
This would be a boon to the patient in either case, since their fees are covered whether they personally win or lose.
We would just have to watch out for insider trading by the patients, who, given their privileged access as the speculative medical instrument, would have to sign off they have no undisclosed financial stake in either side of the venture.
This would be a boon to the patient in either case, since their fees are covered whether they personally win or lose.
We would just have to watch out for insider trading by the patients, who, given their privileged access as the speculative medical instrument, would have to sign off they have no undisclosed financial stake in either side of the venture.
1
I used to believe that the system is just. Not anymore. Not when much deeper pocketed "partners" steal the assets you created with your lifesavings and leave your business in the dust and see nothing wrong. "So sue me" is their bulwark. For them, legal risks and fees are merely a cost of doing business.
To get the best team in corporate law, you have to pay up. How else can one hire them? This is not a case of consumer product class action where a large number of plaintiffs can make up for the expenses. There is only ONE little guy.
When the time comes, the industry will hold me up as a poster child.
To get the best team in corporate law, you have to pay up. How else can one hire them? This is not a case of consumer product class action where a large number of plaintiffs can make up for the expenses. There is only ONE little guy.
When the time comes, the industry will hold me up as a poster child.
I'm not sure why you thought the system was just in the first place.
The system we have today is substantially more just than it has been in the past. In prior eras there would have been no viable opportunity for anyone to contest an individual with much deeper pockets, or in other times, would simply have never even been given a day in court. Now both of these things are available. I will not deny it is not in the form that is ideal, but it is much better than it has been historically.
Regarding this specific formation. I have to say I have no problems with it. There are many examples where justice is simply too expensive for people, and they have to hope that a law firm with big pockets will be willing to take on their case. Now there is one more possibility for financing a lawsuit. True, it is not likely to help a lot of "Davids", but it creates one more avenue than has existed in the past.
The system we have today is substantially more just than it has been in the past. In prior eras there would have been no viable opportunity for anyone to contest an individual with much deeper pockets, or in other times, would simply have never even been given a day in court. Now both of these things are available. I will not deny it is not in the form that is ideal, but it is much better than it has been historically.
Regarding this specific formation. I have to say I have no problems with it. There are many examples where justice is simply too expensive for people, and they have to hope that a law firm with big pockets will be willing to take on their case. Now there is one more possibility for financing a lawsuit. True, it is not likely to help a lot of "Davids", but it creates one more avenue than has existed in the past.
The "Davids" of this world would have no power over the "Goliaths" if it were not for certain ingenious methods to defend themselves.
However, litigation finance is troubling. While it would undoubtedly help the Miller company, how it will evolve is another matter.
Currently a middle class person has no mechanism in place to obtain good legal help without going absolutely broke, if they can swing it.
Our legal system is geared toward the wealthy only and their ability to fund lawsuits, whether they are winners or not.
In this case, "Cat" apparently became the bully and allegedly stole something that was not theirs but they had access to. How convenient for "Cat".
They have the army of lawyers to defend themselves for as long as they want without fear of losing anything. The greed of a corporation such as "Cat" has turned criminal, without ethics or morality. And its minions of lawyers seemingly are without souls.
Methinks litigation finance is here to stay but I would earnestly hope that judges look long and hard at those who would do the kinds of things "Cat" is being accused of. And if it shows the depths of their criminality, they should be criminally penalized as well in terms of putting away the head honchos in addition to paying obscene damages.
The tragedy in all this is that our legal system is being hi-jacked by money and the corruptibility it imputes.
How much for your soul?
However, litigation finance is troubling. While it would undoubtedly help the Miller company, how it will evolve is another matter.
Currently a middle class person has no mechanism in place to obtain good legal help without going absolutely broke, if they can swing it.
Our legal system is geared toward the wealthy only and their ability to fund lawsuits, whether they are winners or not.
In this case, "Cat" apparently became the bully and allegedly stole something that was not theirs but they had access to. How convenient for "Cat".
They have the army of lawyers to defend themselves for as long as they want without fear of losing anything. The greed of a corporation such as "Cat" has turned criminal, without ethics or morality. And its minions of lawyers seemingly are without souls.
Methinks litigation finance is here to stay but I would earnestly hope that judges look long and hard at those who would do the kinds of things "Cat" is being accused of. And if it shows the depths of their criminality, they should be criminally penalized as well in terms of putting away the head honchos in addition to paying obscene damages.
The tragedy in all this is that our legal system is being hi-jacked by money and the corruptibility it imputes.
How much for your soul?
1
How is litigation finance different from patent trolls - in fact there is a booming patent litigation practice [and startups] rising in silicon valley
Patent trolls purchase the patents with the intent of asserting claims against potential infringers. Litigation funders, on the other hand, aren't purchasing some possible future claim. Instead, they are investing only in existing claims that are meritorious.
1
This certainly has the possibility of being exploitive, but it's not as though the system before was so pure and just. The costs of litigation is so astronomical that it is very hard for a little guy to win against the big guy. It didn't matter how solid and strong your case is, you will run out of money long before you can get a judge or jury to decide the case.
Litigation financing at least offers the little guy a chance at a fair fight, even though a lot of the money meant to correct the injustice will instead go to the investor. If we want to fix the system, it shouldn't start wit litigation financing. It should start at a much more fundamental level about how accessible the courts are.
Litigation financing at least offers the little guy a chance at a fair fight, even though a lot of the money meant to correct the injustice will instead go to the investor. If we want to fix the system, it shouldn't start wit litigation financing. It should start at a much more fundamental level about how accessible the courts are.
1
I might be able to see the value of this in David and Goliath cases. But absent that it is often the case that both parties have risk to lose providing an incentive to settle. If the guns on one side get too big the scales will tilt in favor of the money.
Money is a fungible commodity. To a certain extent, cases like these are already "funded". A plaintiff's attorney who takes a case on a contingency is calculating their costs vs. the potential payout. And a business with lenders and investors is using those same corporate funds to finance all of their operations, which includes legal costs.
This is a completely rational response to the unfair advantage deep-pocketed litigants otherwise enjoy.
This is a completely rational response to the unfair advantage deep-pocketed litigants otherwise enjoy.
7
I think it would be helpful to finance the process of appeals, where disputes about what the law "is" are settled (as opposed to disputes about facts, which are determined at trials).
Appellate courts, and especially this Supreme Court, are reluctant to make broad pronouncements about the law, preferring to let it evolve incrementally, and of course only need to rule when a matter is ripe for adjudication between two adverse parties unwilling to settle out of court or forgo the appellate process. Appeals of course are expensive and time consuming and before they being is often a good time for the parties to settle.
So if we fund more appeals, we get the benefit of clarity in the law, which is helpful to all, despite the action being between 2 self interested litigants.
Appellate courts, and especially this Supreme Court, are reluctant to make broad pronouncements about the law, preferring to let it evolve incrementally, and of course only need to rule when a matter is ripe for adjudication between two adverse parties unwilling to settle out of court or forgo the appellate process. Appeals of course are expensive and time consuming and before they being is often a good time for the parties to settle.
So if we fund more appeals, we get the benefit of clarity in the law, which is helpful to all, despite the action being between 2 self interested litigants.
US courts really need to do a better job cutting off serial litigators who exploit the costs and delays of courts to shake people down. Most people never file a lawsuit. Those who file dozens of them are all shakedown artists.
This is horrific. It will lead to the financing of many many increasingly frivolous lawsuits. As much as lawyers compensation from lawsuits depending on contigency of winning has problems, at least such a system discourages lawsuits with a low probability of success.
This should be ILLEGAL. It will have terrible societal and economic effects.
This should be ILLEGAL. It will have terrible societal and economic effects.
2
Litigation funding was really developed here in Australia, as a way around this country's ban on contingency fees. Try having access to justice for poor and middle class people without contingency fees or an alternative. However, what I have seen here is that your concern is misguided because litigation funders vet suits just as closely as the lawyers do, if not more. The funders have no incentive to invest in a weak lawsuit; they certainly do not want to throw their investors' money away.
1
Often, it is the prohibitive costs that prevents wronged parties from pursuing claims. If you remove this, it might have the unintended effect of neutering bullies, who calculate that their opponents can't afford to go after them.
1
This article (which is generally good) needs to go into greater depth about the Chevron/Donziger lawsuit. I don't think it is fair to let Burford use the words "fraudulent conduct" and "deception" without hearing what the other side has to say. In fact, that lawsuit was upheld to the highest court in Ecuador, and these charges about ghostwriting have generally found to be baseless. It is true that the NY federal judge found the Ecuador litigation liable under RICO, but actually that judge has been overruled once before for bias; it's likely to happen again. But I think it's as travesty of justice to hold Donziger liable under RICO.
1
Let's just call it the illegal system, and all these perversions will become virtues.
Money and power has corrupted the simple search for "who's right?" to the point where one begins to see the advantages of Sharia law.
Money and power has corrupted the simple search for "who's right?" to the point where one begins to see the advantages of Sharia law.
What could go wrong?
1
Justice should not be for-profit.
How can it be any worse? Allow folks to gamble on a lawsuit...
As a party to several class action lawsuits over the years, I think the whole process is a joke. It is just a way to transfer funds from someone with deep pockets to the litigating lawyers. The plaintiffs, particularly the little folks, see little or nothing other than a ton of paperwork and increased costs down the road.
As a party to several class action lawsuits over the years, I think the whole process is a joke. It is just a way to transfer funds from someone with deep pockets to the litigating lawyers. The plaintiffs, particularly the little folks, see little or nothing other than a ton of paperwork and increased costs down the road.
6
The little folks do not put up the costs of the law suit, either. The purpose of class action is usually to stop some person or entity from engaging in certain types of conduct, where it's not worth it for individual plaintiffs to sue on their own.
So when a cell phone company is overcharging its customers an extra $2 per month, most of the settlement goes to the lead plaintiff And laywers because that's who usually fronts the costs and does the work on the litigation. If you want to hire your own lawyer and pay your own costs, you can opt out of the class action.
So when a cell phone company is overcharging its customers an extra $2 per month, most of the settlement goes to the lead plaintiff And laywers because that's who usually fronts the costs and does the work on the litigation. If you want to hire your own lawyer and pay your own costs, you can opt out of the class action.
3
Funny thing about that, I have never seen the costs go down, but have seen them rise after such litigation...
1
Mr. Mattathias writes, "In 2014, a federal judge ruled that [once high-flying plaintiffs' attorney Steven] Donziger could not continue to pursue Chevron in the United States." In fact, in a RICO lawsuit brought by Chevron, the judge found Donziger liable for coercion, bribery, money laundering and other misconduct "offensive to the laws of any nation that aspires to the rule of law...."
So readers should understand that when shysters' lawsuits are funded by third parties to the tune of many millions of dollars, some will feel extra pressure to win a big verdict or settlement and perhaps be more likely to consider defrauding our civil justice system as a means to such an end.
-Darren McKinney, American Tort Reform Association, Washington, D.C.
So readers should understand that when shysters' lawsuits are funded by third parties to the tune of many millions of dollars, some will feel extra pressure to win a big verdict or settlement and perhaps be more likely to consider defrauding our civil justice system as a means to such an end.
-Darren McKinney, American Tort Reform Association, Washington, D.C.
3
I do not understand what you are getting at. If the potential pay-off from the settlement a financial incentive to commit fraud, what does litigation financing have to do with it?
In fact, if the lawsuit is so weak as to require fraud on the part of the plaintiff, I seriously doubt litigation investors will put their money into it.
In fact, if the lawsuit is so weak as to require fraud on the part of the plaintiff, I seriously doubt litigation investors will put their money into it.
1
"The love of money is the root of many evils." Jesus
9
Pity the eyes of needles.
Vatican bankers must have skipped that passage.
This country has 5% of the world's population, 25% of the wealth and over half the world's lawyers.
Being able to invest in lawsuits will only increase the magnitude of this problem. In Europe, it is possible to sue to recover damages but if you loose the suit for damages, you pay for ALL lawyer's fees.
It is called judicial reform - don't hold your breath - lawyers run our political system.
Being able to invest in lawsuits will only increase the magnitude of this problem. In Europe, it is possible to sue to recover damages but if you loose the suit for damages, you pay for ALL lawyer's fees.
It is called judicial reform - don't hold your breath - lawyers run our political system.
9
In my experience, at at least a general rule whenever a proposed legal or governmental change is couched in terms of the word 'reform,' it's more likely than not a ploy to make the weak weaker and the wealthy wealthier.
1
It's "lose", not "loose."
Not every lawsuit is real. Some are based on lies, and some on paranoid delusions. As someone who was dragged through a "frivolous" lawsuit filed by a paranoid, delusional and frankly lying person, I can tell you that lawsuits for "fun" are filed by some very sick people - who are preyed on by greedy attorneys. A big NY law firm "took" that sick person, clearly psychotic in her rantings, for over $1 million in fees for this garbage suit, and yes, she lost. The plaintiff was so mentally ill, and so paranoid that I did not countersue, for fear of driving her paranoia to personal violence against me. So your article should not be so flippant about the reasons for lawsuits - but should dig deeper into the motivations of attorneys are live parasitic lives.
1
It seems to me that your legal rights are your property and if you need to sell (or leverage) some portion of your property in order to realize its true value or, indeed, to make it valuable at all in the case that you are fighting a corporation or government entity with effectively unlimited resources, then the ability to so do is very much a protection of the little guy against the faceless system. The easier it becomes to finance litigation, the more institutional the system of obtaining such finance becomes, the stronger the protections that each of us will have against the insurance companies, drug companies and malfeasant actors who would otherwise injure us and get away with it. This is a very powerful victory for democracy.
Knee jerk reactions against "wall street" or capitalism" are wholly misplaced in this case where the investors are empowering the common people.
Knee jerk reactions against "wall street" or capitalism" are wholly misplaced in this case where the investors are empowering the common people.
19
Maybe we are funding the 'little guy' or maybe not... I see an analogy here between finance litigation and education loans... are we helping those without means to have access to the legal system and higher ed. or are we driving up the cost of both of these by caving into the idea that an ordinary citizen doesn't have the means to afford either of these. Perhaps we should start with the assumption that a middle class person should have access to the legal system. able to afford good and competitive legal representation, and adjust our legal system to make this true.
7
Litigation financing only partially addresses the uneven playing field. A "little guy" plaintiff might have a legitimate claim against a "big guy." However, the judgment he is entitled might be a modest sum like $10,000. This might make a world of difference to the average American, but is likely to represent a sound return for the litigation investor.
If the courts accept litigation financing as a resource litigants count on and costs go up accordingly, will we have a future where the courts are purely arenas for "big ticket" suits while legitimate, low pay-off suits get squeezed out?
Underlying the potential problem is the investors are not looking to empower the common people. They are looking to make sound investments with a high rate of return. Perhaps sometimes that coincidentally empowers the common people, but perhaps not.
If the courts accept litigation financing as a resource litigants count on and costs go up accordingly, will we have a future where the courts are purely arenas for "big ticket" suits while legitimate, low pay-off suits get squeezed out?
Underlying the potential problem is the investors are not looking to empower the common people. They are looking to make sound investments with a high rate of return. Perhaps sometimes that coincidentally empowers the common people, but perhaps not.
First, is our legal system now already warped by the politic meddling of the fab five on the supremes? They are corrupt. When that court is corrupt, what hope its there for the rest of the legal system to resist corruption?
Second, our national values are upside down in which the personhood of corporations trumps the rights of actual human beings, as in Hobby Lobby.
Third, capitalism has past the point of maximum good for the society it is supposed to serve and has become a cancer: ever growing, feeding on everything in reach, merely slowed a tad by attempts to contain it until it breaks out at another point, and in grave danger of killing its host.
Reason, common sense and decency are in retreat. Is this the society we wish to be? Can we muster the will to confront "and by opposing, end it"? I am not confident we have the will.
Second, our national values are upside down in which the personhood of corporations trumps the rights of actual human beings, as in Hobby Lobby.
Third, capitalism has past the point of maximum good for the society it is supposed to serve and has become a cancer: ever growing, feeding on everything in reach, merely slowed a tad by attempts to contain it until it breaks out at another point, and in grave danger of killing its host.
Reason, common sense and decency are in retreat. Is this the society we wish to be? Can we muster the will to confront "and by opposing, end it"? I am not confident we have the will.
11
Yes, they are warping the system! Also, lawyers (sometimes spelled L-I-A-R-S) should not be allowed to advertise that they will "help" you file your claim for a class action civil suit that has already been settled, so they can steal a share of the money. The slime balls are doing that, right now, with the VW issue.
1
"Hourly billing rates that run $500 or more for the largest and most sophisticated law firms." Hahaha. If only it were close to $500. I was billing at more than that as a 4th year associate at a large New York firm, and many partners billed at over $1,000/hr. When you're doing billion dollar litigation or deals, a million bucks in legal fees isn't even noticeable. I can totally see why one would need to find investors to finance big litigation. It can take an army of experts to come up with a solid case and pursue it.
The annoying thing that can happen is that when the stakes get big enough, it an be rational to find investors to spend a million bucks on lawyers to pursue cases with even relatively small, 10-20% chances of a litigation win. And this just bogs down both the legal system and business, and makes everyone ever more frightened of any risks. I can imagine that when you're betting other people's money, the temptation can become irresistible.
The annoying thing that can happen is that when the stakes get big enough, it an be rational to find investors to spend a million bucks on lawyers to pursue cases with even relatively small, 10-20% chances of a litigation win. And this just bogs down both the legal system and business, and makes everyone ever more frightened of any risks. I can imagine that when you're betting other people's money, the temptation can become irresistible.
13
"makes everyone ever more frightened of any risks".
True. But the biggest miscreants - bankers and such - can take even more absurdly high risks than they did prior to 2008 because they will be bailed out with taxpayers' money.
True. But the biggest miscreants - bankers and such - can take even more absurdly high risks than they did prior to 2008 because they will be bailed out with taxpayers' money.
I would prefer the word 'corrupting' to simply altering. Will prosecutors notice?
2
Call it "investing", call it "gambling"; regardless, if the losers don't pay-up, break their couplers.
Lawsuits are there, supposedly, to achieve justice and the redress of grievances.
I see that they are now an investment tool and a for profit business.
What a shame.
I see that they are now an investment tool and a for profit business.
What a shame.
52
What a sham! Is there nothing, absolutely NOTHING, that the greediest can keep their hands off when money is involved? Have they no shame?
As Keynes described them "Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone." What a farce!
As Keynes described them "Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone." What a farce!
14
In many countries lawsuits have to satisfy an ombudsman that there is a legitimate dispute of fact and/or law before a case is referred to the relevant court.
Exactly how are those grievances to be redressed and justice meted out? Through money awards and sometimes some sort of injunctive relief. The judge doesn't turn to a losing defendant and say, "okay, you now have to apologize to the other party". What do you propose to achieve justice and redress grievances other than money awards?
As long as corporations are considered people, no. The legal system is already corrupted.
26
My world is becoming more absurd by the day. I'm starting to believe capitalism is a disease that feeds on itself until it collapses. Like a dying sun.
59
We've got several billion years before our sun collapses, vardogrr. So try to cheer up a bit.
1
It is also true of fire. It dies as soon as it stops consuming. Betting on lawsuit should be totally illegal as it should be for any profession even professional sports. It brings the worst in people. I don't want us to become like the Roman arenas. We all know what happened to the Roman Empire!
7
Both our sun and market capitalism are going to be around for a long, long time, vardogrr, so try to cheer up and make the best of 'em.
Of course. I also want to be able to wager on people's surgical outcomes. That ok?
43
Law has always been a business. You pay your money, you get your justice.
11
Law doesn't dispense justice, just decisions. The weak and under-financed are trampled. I don't think this civilization is going to move too much further forward on that model.
Still, it worthwhile knowing that even the mighty and corrupt Goliaths of this world live each day with the fear that sooner or later one of the "weak and under-financed" Davids' stones will find its mark.
i have a theory that the period between ww1 and end of the cold war is an anomalous period in history where there was a modicum of fairness and government generally represented the majority....as opposed to the periods before and after where the main concerns where the whims and desires of nobles and oligarch's.....this article seems to provide proof!
28
There is some strength to that idea. If some of the current inequality existed during the Cold War those Marxist ideas might have spread further into the mainstream...
Duh. Money warps everything.
8
Yes, they are warping it. The concept gives the crooks and swindlers at the banks and the Wall Street firms just one more way to grab money without working for it.
And the term "investors" is misused. The correct term should be "gamblers."
And the term "investors" is misused. The correct term should be "gamblers."
38
Isn't liability insurance the same thing? Unless you're willing to eliminate insurance, then you're being disingenuous.
1
This is a great premise for a dark comedy, plaintiff's suing lawyers for not returning the anticipated ROI's on lawsuits invested in due to bad lawyering, being sued by other plaintiff's not getting the ROI's on their lawsuits due to bad lawyering, who were suing other lawyers suing other lawyers ......very "Waiting for Godot"
21
LOL!
The first is the so-called "American rule" on attorney fees. Absent an authorizing statute or contract - this rule denies the prevailing party the recovery of their attorney fees. As a consequence, large corporations can use litigation as a sword to crush smaller or financially weaker competitors.
The other is discovery in civil litigation coupled with the institution of time billing. Discovery takes time - lots of it - infinite amounts of it if your client's pockets are deep enough. This makes attorney fees themselves virtually unlimited even in the "simplest" or smallest case. Outside of the world of major corporate litigation and its financing that is the subject of this article, the open-ended nature of attorney fees is the factor that deprives most meritorious litigation of its day in court.
The solution to these problems in tort litigation was the contingency fee (unethical in most legal systems even when only lawyers are involved) and the development of ever more ludicrous - or imaginative - theories of "damages".
The class action law suit is itself another economically necessary reaction to the bizarre, only-in-America rule on attorney fees.
"Small claims" have proliferated and their threshold amounts have steadily increased as the middle-class American public has been forced into DIY lawyering.