Yes, it’s an informative piece, and yes, it does explore some of the drawbacks and abuses, particularly for clients whose lawsuits are being financed by banks, hedge funds or other investors. But the Times (with its reporting partner, the Center for Public Integrity) also buys in to what David Oliver correctly identifies as a big, central fallacy when it claims that the influx of money into plaintiff’s cases “is helping to ensure that cases are decided by merit rather than resources.” So when an outside investor makes it possible for, say, a patent troll to launch mass royalty demands on behalf of marginal patents, or a mass tort firm to roll out scientifically dubious toxic-injury claims, or an Indian tribe to assert 200-year-old land claims against nearby farmers for casino-seeking leverage, it means that cases are now suddenly being resolved on a basis that more closely tracks the merits? Check your premises, please. More: Dan Fisher/Forbes and Ted Frank/PoL, and earlier on Counsel Financial.
P.S. Good round table at New York Times “Room for Debate”, check out in particular the Paul Rubin and Richard Epstein contributions; Kenneth Anderson/Volokh (“insurable interest”).
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“Putting Money on Lawsuits, Investors Share in the Payouts”…
The New York Times covers the issue of litigation financing, which can range from basic high-interest loans to law firms; to contingent arrangements linked to specific lawsuits; to the potentially troubling practice of tricking consumers to assign liti…
An article on Sunday stated that lawsuits in the United States are typically decided on the basis of financial resources rather than merits. While the Times stands by this statement, readers are encouraged not to think too deeply about the implications of this statement for other extraneous factors such as politics and media-driven publicity.