Lawsuit Trolling: Investors Looking For Lawsuits To 'Invest' In

from the this-will-not-end-well dept

Thought that American society was already too litigious? You might not like this next stage of the game, wherein Wall Street investment bankers are looking to help fund various lawsuits, in return for a cut of any eventual winnings. We've already seen how this is popular in patent trolling, but it looks like it's spreading to all sorts of civil lawsuits. Now, the core concept behind this activity is reasonable: lawsuits are expensive. And if you have a legitimate case, and it's too expensive to take on the effort, getting an investor can help you bring the case and bring a party to justice. But, like so many things that Wall Street gets involved in, what can be used for good, can also be massively abused for profits. Apparently, investors are behind some really wacky lawsuits that never should have been filed, and they often push for quick settlements in order to cash out at lower costs. Of course, it's not clear how widespread this practice is in total, since lawyers often don't reveal that there are investors behind a case.

Not surprisingly, the article notes that "lawsuit lending is a child of the subprime revolution," and often the lenders charge ridiculous interest rates, rather than being willing to just take a direct cut of any winnings. And, of course, these days, with the mortgage space being a weak investment, banks have to find somewhere new to put their money, and apparently lawsuits are attractive to some. The whole thing seems so open to abuse and excess that it seems likely that we're going to be hearing a lot more stories of lawsuit lending... and the resulting problems it causes.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Anonymous Coward, Nov 16th, 2010 @ 7:26am

    Justice Inc.

    The 80's nuttjobs were right who knew.

     

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  2.  
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    jc (profile), Nov 16th, 2010 @ 7:32am

    The idea of "lawsuit securities" and "sub-prime lawsuits" gives me nightmares.

    If this really does start to take off, even money says that Walmart goes from having 3 "accident" lawsuits filed against them per day into the low hundreds.

     

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  3.  
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    Anonymous Coward, Nov 16th, 2010 @ 7:39am

    I don't see this as fundamentally a problem: to have any chance in court against a major corporation, a wronged individual is going to need some serious financing.

    What I do see as a problem is that these "investors in lawsuits" are actually just making loans to law firms, which might be able to (due to other cases) pay back the loan even if the case in question fails.

    It seems like the incentives would be better aligned against frivolous "trolling" lawsuits if these lenders were only allowed to actually invest in the lawsuit itself (i.e. they pay some amount of money for some percentage of the winnings, if there are any, and get nothing if the case fails).

     

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  4.  
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    Anonymous Coward, Nov 16th, 2010 @ 7:39am

    just disgusting, no shame at all...

     

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  5.  
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    SUNWARD (profile), Nov 16th, 2010 @ 7:42am

    sue themselves

    how about investing in lawsuits suing wall street firms for the mess caused by the sub prime mortgage losses?

    Talk about irony. And the massive profits to be had!

     

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  6.  
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    :Lobo Santo (profile), Nov 16th, 2010 @ 7:53am

    Re: Price of Justice

    Yes, truly the correct definition of "JUSTICE" is where somebody needs to find an investor so they can bring about a lawsuit in order to seek recompense against somebody/company who has wronged them.

    Why, I see nothing wrong with the fact that the average individual cannot afford purchase an goddamn justice...

    ...

    F*ck it, I cannot troll that hard. AC, what the hell is wrong with you?

     

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  7.  
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    Anonymous Coward, Nov 16th, 2010 @ 7:54am

    The whole thing seems so open to abuse and excess that it seems likely that we're going to be hearing a lot more stories of lawsuit lending... and the resulting problems it causes.

    Or maybe we'll here about people getting justice who otherwise couldn't have afforded to get that justice. But that wouldn't interest you, would it, Mike? You're too busy being biased.

     

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  8.  
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    Anonymous Coward, Nov 16th, 2010 @ 8:14am

    Re:

    And I'd call you overly-optimistic if you weren't being so Anti-Mike.

    What do you think people with money would invest in? Small-time lawsuits where individuals want the few thousand bucks that they're owed, or large-time corporate lawsuits where billions are at stake?

     

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  9.  
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    jc (profile), Nov 16th, 2010 @ 8:16am

    Re:

    Really?

    Biased against whom? Lawyers? Or do you think Mike is biased against a justice system which requires you to seek financing for a lawsuit (which isn't really a justice system at all)?

     

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  10.  
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    DH's Love Child (profile), Nov 16th, 2010 @ 8:20am

    Maybe this will be the start of the next bubble

    The frivolous lawsuit bubble. And if we're really lucky it will take all of the f***ing IP lawyers down with it.

     

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  11.  
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    Anonymous Coward, Nov 16th, 2010 @ 8:23am

    Can we short sale or bet against a lawsuit? I suppose we can always bet for the other party.

    We should hire a bookie and everyone can start making bets as to who will win the lawsuit.

     

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  12.  
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    Anonymous Coward, Nov 16th, 2010 @ 8:24am

    Re:

    It can be like betting on which team will win the Superbowl.

     

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  13.  
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    out_of_the_blue, Nov 16th, 2010 @ 8:26am

    Separate economic myth from reality.

    "But, like so many things that Wall Street gets involved in, what can be used for good, can also be massively abused for profits."

    A fundamental point readily available to observation: Wall Street far more often abuses for profit than it does good.

    It's a capitalist / plutocrat myth that investments are ever out of *good* intentions to produce the best products and so on. Actually, almost none of the good results were due to Wall Street, but were achieved *in spite of* their machinations.

    So, Mike, I ask your professional economist opinion as to how the heck we *limit* Wall Street to only good investments? Hmm? Anyone else? Perhaps some "incentive", if you buy into the part of the myth that says we can't at all restrain the benevolent capitalists?

     

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  14.  
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    Anonymous Coward, Nov 16th, 2010 @ 8:28am

    Re:

    We have to make sure that the judges or jurors don't have stock in any of the lawsuits that they decide over. We also have to make sure that none of their family members or close friends have such stock. This can be a disaster.

    "Hey brother. Rule in favor of the plaintiff and I'll give you half the profits."

     

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  15.  
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    Anonymous Coward, Nov 16th, 2010 @ 8:29am

    Re: Re: Price of Justice

    "Yes, truly the correct definition of "JUSTICE" is where somebody needs to find an investor so they can bring about a lawsuit in order to seek recompense against somebody/company who has wronged them."

    Isn't that already what a class action lawsuit is?

     

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  16.  
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    Jake, Nov 16th, 2010 @ 8:29am

    Am I the only person who immediately thought of Shorn Conflict Investment from Market Forces?

     

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  17.  
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    Anonymous Coward, Nov 16th, 2010 @ 8:29am

    Re: Re: Re: Price of Justice

    (sorta)

     

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  18.  
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    Anonymous Coward, Nov 16th, 2010 @ 8:36am

    Credit default swaps

    For some reason, this reminded me of credit default swaps.

     

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  19.  
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    Anonymous Coward, Nov 16th, 2010 @ 8:49am

    Re:

    1 in a 10,000 if i had to "invest" in it. How much are you making from this?

     

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  20.  
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    Free Capitalist (profile), Nov 16th, 2010 @ 9:31am

    Re:

    We are through the looking glass here, people....

     

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  21.  
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    MikeLinPA (profile), Nov 16th, 2010 @ 9:41am

    Re:

    While this seems a horrible concept, I cannot think of anyone I would rather see sued to death, Walmart!

     

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  22.  
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    Mike Masnick (profile), Nov 16th, 2010 @ 10:29am

    Re:

    Or maybe we'll here about people getting justice who otherwise couldn't have afforded to get that justice. But that wouldn't interest you, would it, Mike? You're too busy being biased.

    The only "bias" I see is in your desperation to try to read this in a way to make me look bad. I stated in the post -- quite clearly -- that the basic idea behind this is exactly that. Next time try actually reading what I wrote.

    And, by the way, having an opinion is not "bias."

     

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  23.  
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    harbingerofdoom (profile), Nov 16th, 2010 @ 10:52am

    Re: Re:

    soooooo, you are not above considering this type of underhanded behavior ok, just so long as it harms those you dont approve of?

    kinda scary through there i think....

     

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  24.  
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    harbingerofdoom (profile), Nov 16th, 2010 @ 10:54am

    Re: Maybe this will be the start of the next bubble

    one can only hope.

     

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  25.  
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    harbingerofdoom (profile), Nov 16th, 2010 @ 10:57am

    Re: Separate economic myth from reality.

    its a sweeping overreaching generalization to say that all investments are solely for financial gains with zero other consideration.

    if you go seeking nothing but evil with blinders on towards any good you may stumble across... you will find nothing but pure evil and no good at all. seems a rather obvious thing to say, but few people (either hippies or capitalist pigs) take the time to look at things in any sort of context anymore.

     

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  26.  
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    Matthew (profile), Nov 16th, 2010 @ 12:51pm

    Conflict of Interest?

    I have a hard time understanding how having a lawsuit investor does not cause an immediate conflict of interest in any case.

    Justice does not come solely from dollars and cents but investment rewards do. Anything that puts more weight on the money instead of the right and lawful outcome taints the justice system as a whole.

     

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  27. This comment has been flagged by the community. Click here to show it
     
    identicon
    darryl, Nov 16th, 2010 @ 1:27pm

    Is it illegal ? No ofcourse not.. but its an easy way to kick Wall Street..

    HAHA, you like to pick the hard fights dont you Mike :)

    Wall street, is on the nose so Mike will cash in on that and gain a few cheap shots.

    Lawyers have been doing this for years, but its ok for them, as has the banks..

    You can find "no win no pay" lawyers, and you can go to a bank and get a loan to fight a court case. (depending on if you have a strong enough case).

    So that fact that wall street is involved, is not surprising, (to most normal people), its common practice.

    Mike, what do you think investors do ?

    No Mike they dont sit there all day doing sub-prime mortages, THEY INVEST in things.

    A good investor will pick and choose his investments wisely and make sound choices. Making him a good investor.

    But what are you saying Mike, that investors are not allowed to invest in certain things because Mike does not agree with those.. Prompting Mike to go on the attack of Wall Street..

    Fact is patents and IP exist, they are valued, and people seek to protect their works, they do not seek to stop you doing something better. But they do stop you doing something the same.

    And what is wrong with that, if that is the case (and it is) just make something better and STFU..

    All this whinning about how we are stopped from stealing someone elses idea, and that if we do the courts might come after us (as if that is something bad,,, it is only if you are a criminal)..

    So why fear the legal system, if you work within the legal system.. All you're utopian plans all rely on massive changes to IP, patent and copyright law.

    And that change is neven going to happen the way you want it too, seems you must enjoy hitting your head against the wall....

     

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  28. This comment has been flagged by the community. Click here to show it
     
    identicon
    darryl, Nov 16th, 2010 @ 1:39pm

    Having a biased opinion is biased, and presenting opinion as fast is too.

    @Mike
    And, by the way, having an opinion is not "bias."


    But having a biased opinion is..

    So Mike you can happily sit there and believe you are not biased in any way against Wall Street ?

    But, like so many things that Wall Street gets involved in, what can be used for good, can also be massively abused for profits.

    Sounds like bias to me.

    But, like so many things that Wall Street gets involved in, what can be used for good, can also be massively abused for profits.

    I would have said, that was a statement of fact by you, I can quote you directly on that. How is that opinion ?

    You have not presented this article as an opinion article, you present it like all you post here as fact.

    Then when questioned on it, you claim its just your "opinion".. so which is it..

    Fact of fiction ??

     

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  29.  
    identicon
    Anonymous Coward, Nov 16th, 2010 @ 2:04pm

    Re: Re: Price of Justice

    You clearly agree that the current system is problematic in this regard, but you don't think investing in lawsuits is a good way to address it.

    Okay, so what is a good way to address it?

     

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  30.  
    identicon
    Anonymous Coward, Nov 16th, 2010 @ 2:33pm

    The future.... Oh crap, they have Time Warner backing them, we're doomed

    Sounds like it won't matter one bit who the lawyers are anymore, but only who has the more investors (aka, stakeholders in seeing a profitable outcome).

    Let freedoom ring... (Freedoom ringtone available now for only $9.99, get yours today while they are hot and remember, freedom isn't free, so get your 'authorized' copy today)

     

    reply to this | link to this | view in thread ]

  31.  
    identicon
    darryl, Nov 16th, 2010 @ 7:26pm

    HAHA,, hide this one too, someone does not like the truth..

    Hide me all you like, it just makes me stronger, and shows me that at least some people are reading what I say, and understanding how Mike is.

    Very good of you to protect 'the mike' so much..

    But dont bother discussing the point, or what claims Mike has made about not being biased !!!..
    Of Mike can do no wrong, in the eyes of his guard doggies..

    It is a shame you do not have what it takes to present a vaible counter argument.. But I did not expect that from GD's..

    Nor from Mike..

    So the fact you cannot dispute my statements, and have to resort to tagging my posts. For me, and most other, shows im getting too you :)..

    And the fact you cannot answer any of the comments, but ignore them, also shows you have nothing,, NOTHING.. to offer.. So in that way,, you are a perfect match up for Mike.

     

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  32.  
    identicon
    Anonymous Coward, Nov 16th, 2010 @ 9:53pm

    Re: HAHA,, hide this one too, someone does not like the truth..

    It is a shame the "hiding" thing doesn't work for me when scripts are disabled because I have to scroll down all the way to dodge your mumblings LoL

    About offering something, who cares about what you think or write is just nonsense every time, but I do admit you amuse me a lot, you brighten my day with your completely over the top, absurd BS and it is an easy target to when I feel like trolling.

     

    reply to this | link to this | view in thread ]

  33.  
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    Mike Masnick (profile), Nov 17th, 2010 @ 1:00am

    Re: HAHA,, hide this one too, someone does not like the truth..

    But dont bother discussing the point, or what claims Mike has made about not being biased !!!..
    Of Mike can do no wrong, in the eyes of his guard doggies..


    Hi Darryl! Funny that you would make this claim when twice in the past week I proved you 100% wrong and yet you did not respond either time.

    The first one was on the Tim Berners-Lee post, where you falsely claimed he proposed HTML, not "the web." This is wrong.

    The second was when you claimed a photo from the Library of Congress' own collection was actually a modern photo. The Library of Congress lists it as early 1900s, however.

    Would you care to reply to either one?

     

    reply to this | link to this | view in thread ]

  34.  
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    Opinionated Bloviator, Nov 18th, 2010 @ 11:07pm

    Wall Street makes it's money by looting from everyone. There involvement in lawsuits for profit is social cancer and will accelerate your countries warp speed rush to third world failed state.

     

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  35.  
    identicon
    Priya Kumar, Dec 13th, 2010 @ 4:55am

    Investing in Lawsuits

    In some cases, but not all, this new phenomenon of third-party funding could lead to cases being decided or settled on the basis of merit. In other cases, it conceivably could have the opposite effect, giving artificial "legs" to bogus claims that would otherwise fall flat. But I wonder whether sophisticated investors would bet on bogus claims, when they can fund meritorious ones instead. In any event, another effect of this trend probably will be a further acceleration of the shift to offshore legal outsourcing. Corporate legal departments, already under cost pressure, will see that pressure increase, with the rise of well-funded plaintiffs' suits. And litigation investors, eager to get the best possible return, and treating litigation as a business, naturally will want to increase efficiencies through legal process outsourcing. So one of the big winners in the lawsuit funding area is likely to be the LPO industry.
    Priya Kumar
    http://www.sddglobal.com
    high-end legal outsourcing

     

    reply to this | link to this | view in thread ]


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