Is it an investment? Or more like a gamble, bet, or speculative movement?
It seems like many other types of things which are also termed "investments" involve a (significant) element of risk.
Should You Be Allowed to Invest in a Lawsuit?
21–30 of 107 posts
Re: Should You Be Allowed to Invest in a Lawsuit?
#22I think the concern with investing in lawsuits should be focused on secondary motives. Lawsuits with lots of investors will have attorneys with secondary motives, such as keeping the case active as long as possible to continue to attract more investors, rather than resolve it. Perpetual cases could bog down courts in never-ending lawsuits and countersuit challenges, a legal version of Mutually Assured Destruction. Do…
Wouldn't such behavior be considered unethical and possibly grounds for disbarment? After all, that's definitely not in the interests of the client.
Delaying vs being thorough would be incredibly tough to prove.
To a degree this happens already with large vs small company law suits, where the larger company maintains proceeding in some form til the other small business runs out of cash or gives up.
Re: Should You Be Allowed to Invest in a Lawsuit?
#23I think the concern with investing in lawsuits should be focused on secondary motives. Lawsuits with lots of investors will have attorneys with secondary motives, such as keeping the case active as long as possible to continue to attract more investors, rather than resolve it. Perpetual cases could bog down courts in never-ending lawsuits and countersuit challenges, a legal version of Mutually Assured Destruction. Do…
Wouldn't such behavior be considered unethical and possibly grounds for disbarment? After all, that's definitely not in the interests of the client.
You'd think but there are issues like this today and it's difficult to prove depending on the circumstances (at least prove to the point where they can get in trouble with the bar).
Anecdotally when my father was going through his divorce his lawyer told him not to take the settlement with his now ex-wife and his lawyer promised she could get him better terms and an expedited divorce and would only need to go to one court appearance.
Two additional retainers later and she told my father he had to settle for what was offered at the court house which was a worse settlement and that she event told him she didn't feel comfortable negotiating beyond what was offered because it was "a great deal". I have a hard time believing she had my father's best interests in mind and just kept the case going for a bit longer.
I would expect a system like this would exacerbate this type of behavior.
Re: Should You Be Allowed to Invest in a Lawsuit?
#24My gut tells me that this is bad. However, intellectually I know that our court system is heavily skewed towards people and organizations with lots of money. So if this is a tool to help level the playing field, I'm all for it. If this swamps the courts, all the better, because that will force legislators to act, which will then cause a debate, which will be useful to society.
Absolutely this would increase frivolous but likely successful lawsuits. Much like patent law today. Justice IMO should not be tied to financial gain as much as is realistic.This is why I much prefer systems were personal trauma/compensation settlements are not near the levels you read about in some US cases, more about covering direct costs.
That said if they did do something like this I suspect the most reasonable way would be to treat it like political donations, similar to some countries where only citizens can donate, donations are transparent and capped as lower levels.
Re: Should You Be Allowed to Invest in a Lawsuit?
#25I find it already unethical for lawyers to take a percentage of the awarded damages, a practice which is fortunately illegal in many European countries.
Re: Should You Be Allowed to Invest in a Lawsuit?
#26Should lawsuits be open to lobbying and allow corrupt judges to make a lot of money on certain cases?
Re: Should You Be Allowed to Invest in a Lawsuit?
#27A cause of action (a lawsuit) has always been like a property interest. As such, through an assignment, you can buy and sell it, mortgage it, put a lien on it, and do about everything else you could do with a property interest. I have never heard of anyone selling shares in a cause of action, though I don't see why this would not conform to existing law, assuming you comply with SEC regulation on the sale of securities.
It's an interesting idea. However, the financial crisis of '08 happened in part because wall street innovation allowed for the selling of shares of mortgage portfolios, so I would be cautious where this goes.
The arguments for and against it in the article seem to mirror the arguments regarding a lawyer's contingent fee interest. Some would say contingency fees have done harm to the legal system. In fact, some states limit contingency fee awards in medical malpractice to limit those types of lawsuits. So, if your goal is to limit lawsuits, this kind of arrangement probably would be bad.
Re: Should You Be Allowed to Invest in a Lawsuit?
#28A cause of action (a lawsuit) has always been like a property interest. As such, through an assignment, you can buy and sell it, mortgage it, put a lien on it, and do about everything else you could do with a property interest. I have never heard of anyone selling shares in a cause of action, though I don't see why this would not conform to existing law, assuming you comply with SEC regulation on the sale of securiti…
It might be spectacularly bad judgment, but I really like the idea of creating derivatives based on slicing up tranches of lawsuit results. Okay, that's almost certainly a bad idea. Even if you could model the payouts in Haskell, as we learned earlier today.
Re: Should You Be Allowed to Invest in a Lawsuit?
#29My gut tells me that this is bad. However, intellectually I know that our court system is heavily skewed towards people and organizations with lots of money. So if this is a tool to help level the playing field, I'm all for it. If this swamps the courts, all the better, because that will force legislators to act, which will then cause a debate, which will be useful to society.
"If this swamps the courts, all the better, because that will force legislators to act, which will then cause a debate, which will be useful to society."
Considering the amount of problems that currently exist and that forced nobody to do much, I don't think the "if , then and " idea is a particularly good bet.
Re: Should You Be Allowed to Invest in a Lawsuit?
#30I think the concern with investing in lawsuits should be focused on secondary motives. Lawsuits with lots of investors will have attorneys with secondary motives, such as keeping the case active as long as possible to continue to attract more investors, rather than resolve it. Perpetual cases could bog down courts in never-ending lawsuits and countersuit challenges, a legal version of Mutually Assured Destruction. Do…
Sounds like something the free market would solve, no?