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Should You Be Allowed to Invest in a Lawsuit?

nytimes.com

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Re: Should You Be Allowed to Invest in a Lawsuit?

#51

Post by rayiner »

Afforess wrote: post #12

I 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…

Plaintiffs have zero interest in lengthening cases and neither do litigation funders. Litigation funders are paying the attorney's fees and ending the case more quickly reduces how much they have to invest. Reaching a resolution quickly also reduces how long they have to wait to get a recovery.

Re: Should You Be Allowed to Invest in a Lawsuit?

#52

Post by littletimmy »

Hermel wrote: post #39
littletimmy wrote: post #37

Earlier quoted context omitted.

Why do you think that's unethical? Doesn't it give lawyers the incentive to fight for their clients? What if a poor client cannot pay upfront and percentage of winnings is what convinces a lawyer to fight in the first place?

Because it gives lawyers a stronger incentive to escalate conflicts, instead of deescalating them, which is not in the interest of society. Lawyering up is a zero-sum game, so the economy is better off if the money in question stays in a productive sector. Take a divorce, for example. Do you prefer lawyers to have an incentive to say "calm down, I'll talk to the other lawyer, and we will find a fair deal" or "give me…

That makes sense.

Re: Should You Be Allowed to Invest in a Lawsuit?

#53

Post by schoen »

marklgr wrote: post #29
seibelj wrote: post #11

My 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.

It's akin to the originally Marxist notion of "heightening the contradictions".

http://acceleratethecontradictions.blogspot.com/2010/04/acce...

The theory is that some system is inherently bad or broken but people in general don't quite realize it, so if it gets worse it will be more obviously bad and then they'll then actually deal with it. Although sometimes this kind of behavior does happen (for example, someone choosing to go to a doctor only after an illness takes a serious turn for the worse), it seems like a risky theory of social change.

Maybe the powers or institutions you oppose are more entrenched or more adaptable than you expect, or maybe the public is less sympathetic to your analysis of the situation than you expect, or less motivated or more defeatist.

Re: Should You Be Allowed to Invest in a Lawsuit?

#54

Post by hga »

aorloff wrote: post #6

Good thing we also have the First Amendment. Citizens United v. FEC -- majority opinion essentially said that money is free speech ("Because spending money is essential to disseminating speech..."). And spending that money to fund litigation seems like a very strong kind of speech, whether or not its motivated by greed (profit).

And spending that money to fund litigation seems like a very strong kind of speech

Not to me.

Compare to Citizens United, which was about government censorship of core political speech, a video pertaining to a current candidate for office (or even a book, per the government's arguments). It's well established that "commercial speech", e.g. advertisements for products, can be subject to severe regulation (e.g. tobacco and alcohol) that's anathema to political speech.

And this sure sounds more like commercial than political speech; heck, think of all the laws, rules and regulations that pertain to what you can "say" in a lawsuit, in your written pleadings, oral arguments, etc. Even talking to the public about it can be constrained.

Re: Should You Be Allowed to Invest in a Lawsuit?

#55

Post by occsceo »

teachingaway wrote: post #33

Champerty! Champerty is the (largely defunct) rule against funding someone else's lawsuit. I always thought that was a funny word. Champerty. But TIL that it comes from the fact that in "England, litigants could hire ‘champions’ to represent them in ‘trial by battle.’ By the late 13th century, these strongmen were being compared to prostitutes, and their prevalence hastened the movement of dispute resolution to the c…

huh, TIL.

Re: Should You Be Allowed to Invest in a Lawsuit?

#56

Post by rayiner »

The arguments against litigation funding are not compelling. In particular, funded lawsuits tend to be much higher quality than contingency ones. Funders are investors. They do due diligence on the merits of the cases because they want to get their money back. And their cost structure doesn't really support funding cases where the hoped-for resolution is a hundred grand in "go away" money. If someone is willing to sink a million dollars or more into a case, that's an indication that it's not frivolous.

Re: Should You Be Allowed to Invest in a Lawsuit?

#57

Post by pratyushag »

Only if the funds are shared between the two people fighting the lawsuit... In the current market, the entity spending the most money generally wins. This needs to go away first and it can go away if both (or all) entities in a lawsuit have to pool and divide the resources. This should help equalize the ground a little bit.

Re: Should You Be Allowed to Invest in a Lawsuit?

#59

Post by branchless »

teachingaway wrote: post #33

Champerty! Champerty is the (largely defunct) rule against funding someone else's lawsuit. I always thought that was a funny word. Champerty. But TIL that it comes from the fact that in "England, litigants could hire ‘champions’ to represent them in ‘trial by battle.’ By the late 13th century, these strongmen were being compared to prostitutes, and their prevalence hastened the movement of dispute resolution to the c…

a taboo against usury - pity it didn't last...

Re: Should You Be Allowed to Invest in a Lawsuit?

#60

Post by [deleted] »

occsceo wrote: post #55
teachingaway wrote: post #33

Champerty! Champerty is the (largely defunct) rule against funding someone else's lawsuit. I always thought that was a funny word. Champerty. But TIL that it comes from the fact that in "England, litigants could hire ‘champions’ to represent them in ‘trial by battle.’ By the late 13th century, these strongmen were being compared to prostitutes, and their prevalence hastened the movement of dispute resolution to the c…

huh, TIL.

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