The law is now an asset class
The notion of litigation as a separate asset class is a novel one. It's hard to imagine fund managers one day allotting a bit of their portfolio to third-party lawsuits, alongside shares, bonds, property and hedge funds.
But some wealthy investors are starting to dabble in lawsuit investment, bankrolling some or all of the heavy upfront costs in return for a share of the damages in the event of a win. ...
(link)...but from another perspctive, it is the continuation along a path that we've been on for a long time. I was writing about this just the other day: there was a time when it was somehow disreputable to buy a distressed receivable. But now it's a fully developed market--heck, there is a market for unsatisfied judgments. It was close to 20 years ago that I first heard of a company, formed and selling shares--soliciting investors--for the purpose of funding a patent lawsuist. And it was Michael Milken who taught us that anything--anything--is a bargain at the right price.
An earlier generation of lawyers was brought up to believe that this sort of thing is unethical conduct, maintenance and champerty. I'm not entirely clear what happened to the maintenance and champerty, but I'm beginning to suspect that Maintenance went off and married a pipefitter in Toledo, while Champerty is sleeping under a bridge with a bottle in a brown paper bag.
H/T Tyler Cowen
1 comment:
I find this a perfectly logical extension of the unwritten principal of law - and it runs rampant in some states and in some categories such as civil suits involving individuals, individuals against corporations, and matrimonial law – that the party with the largest bankroll is likeliest to win.
All this "investing" does is allow outsiders to step in and decide who's going to have the largest bankroll.
The side that's loaded to the scuppers simply sinks the poor opposing schnook who has limited resources by whacking him over the head with constant interrogatories, demands for what is at best peripheral evidence, postponements, flooding with paper, and other legal "tools" designed to club the poorer party into submission so that he cannot get his day in court.
Parties to law suits could be saved a small fortune in legal fees if the court had a monitor for every case, who oversaw the pre-trial process and had the power to fine, or at least call the court's attention, the egregious behavior of any party or the party's lawyers.
New York State already has a precedent to discourage legal bullying in matrimonial law. It's called, I think, Stern vs. Stern – and puhleez don't ask me for a citation. I'm not a lawyer, and I don't subscribe to Lexis, and I don't want to.
My understanding of Stern Vs. Stern, and I could be wrong, is that the matrimonial trial judge may award legal and other costs to one party if the other party is egregiously playing legal games.
Problem is, that word "egregious" is highly iffy. It scares lawyers, who are afraid to invoke it lest their own tactics also get called into question. They don't like to invoke precedents which reflect badly on their opposing colleagues. And the bar for egregiousness is, from what I've heard, set so high that even a seven-foot-tall basketball player couldn't be expected to slam dunk an opponent who gets caught redhandedly.
So the law sucks on, as usual.
Crankily yours,
The New York Crank
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