4 ms·

Ask HN: Would you fund a lawsuit

5 points by will_brown 10y ago

A lot of back and forth on HN about Thiel funding the Bollea v Gawker lawsuit. A lot more against the general concept than I would have expected on HN, but also plenty of understanding that outside funding of lawsuits is indeed necessary. Makes me wonder, how would you feel about a platform where you could review potential/on going lawsuits, get insight from independent lawyers (likelihood of winning at trial and estimate of damages/settlement offers), and the ability to fund the lawsuit for a percentage of the award/settlement (you could also waive your interest in the award and just fund cases based on your sense of justice). It is terrible language but for sake of explanation crowd-funding lawsuits for equity. Note: Due to Bar Rules any funding would give funders zero control or influence over the case and/or attorney-client relationship.

jeffmould 10y ago
One thing I am curious about with this whole Gawker lawsuit and in particular the Thiel funding, is did he really outlay cash to the attorneys or did he tell the attorneys to pursue the case at whatever expense. In many cases like this a court award is going to include attorney fees/expenses, with attorneys working on contingency. Now I understand that in many cases even a "win" does not guarantee the attorneys will get the full amount for their fees/expenses, but often they will get a third of the award. I would be curious to know what the exact fee/expense arrangement was in the case of the Hogan/Thiel attorneys. The impression that I get, and I could be completely wrong, is that Thiel basically associated his name with it to keep Gawker from throwing high-priced attorneys at Hogan and having Hogan submit to a settlement when he could potentially win more. There was no real exchange of money between Thiel and the attorneys though. Again, could be completely wrong, so I am curious. Sorry to go off on a tangent there, but I wanted to lay out a little context. Since many attorneys operate on contingency, how much of market is there to actually "fund" a lawsuit?
- will_brown 10y ago
  I can't answer the specifics of the Thiel/Bollea deal. But there are rules so whatever the deal is, we at least know the boundaries. One of the most important is that any third party funding a lawsuit can not interfere with the independence of the attorney-client relationship (that's a term of art, but there are many examples and actually cases to guide a lawyers behavior). In Florida our contingency rule is 33% max pretrial and 40% max thereafter. There are other caps on different types of cases (i.e. Class actions). One of the reasons contingency is so popular, I suppose like healthcare, people can't normally fund large lawsuits out of pocket. So while contingency helps people who otherwise could not afford lawsuits, it also has the consequence of lawyers being more selective on cases (so even winners might get passed, because a lawyer could theoretically lose money winning). Answer? A platform like mine could really open the door to hybrid contingency/billable cases which is currently rarely used, but would be a great incentive for lawyers to take cases they might otherwise not be able to take financially.
  - jeffmould 10y ago
    Makes sense. The problem I see is that we already have a litigious society. The one plus to lawyers being selective is that while they may miss a few lawsuits, it reduces the number of frivolous lawsuits, which opens a liability to the attorney if they are found the be filing lawsuits just to file. In a way the idea is kind of a spin-off of structured payment lending which is a proven market. Personally I wouldn't invest, the risk is to great and the investment could be tied up for years with a better than average chance of little to no return. That said, it is an interesting concept, and part of me does see some benefit. I think the problem to solve would be to sell the platform to potential plaintiffs. There are probably numerous valid lawsuits that do not get brought because the plaintiff thinks it will cost them a fortune to even talk to an attorney in the first place. Put aside healthcare/accident related claims, but I am thinking more employer related lawsuits.
- ksherlock 10y ago
  The Peter Thiel connection wasn't known until after the trial was over. Key phrase from the NY Times article[1]: "What the jury — and the public — did not know was that Mr. Bollea had a secret benefactor paying about $10 million for the lawsuit: Peter Thiel". 1. http://www.nytimes.com/2016/05/26/business/dealbook/peter-thiel-tech-billionaire-reveals-secret-war-with-gawker.html?_r=0 http://www.nytimes.com/2016/05/26/business/dealbook/peter-th...
slap_shot 10y ago
I've seen lawsuits funded on GoFundMe. In particular Adam Carolla raised a lot of money to fight a patent troll. I don't know much About trial processes, but I was curious what would happen if the defense wins. Does the other side pay their legal expenses? If so, would the donations be redistributed to the donors? The aspect of receiving a percentage of the settlement seems very interesting. I've personally known people who had to give up on settlements because they were bled dry by large, well funded companies' legal teams. This essentially providing a longer run way to these parties in exchange for a part the settlement they may not otherwise be capable of getting. Very curious to see if you turn this idea into something.
- will_brown 10y ago
  In the U.S. Fees are award by statute or contract, but there are a few other legal mechanisms to have the other side pay fees (even if just partial, or oddly it is even possible the winning side is liable for the losing side's fees). As a rule of thumb defendants will be liable for their own fees, even if they win, unless (insert specific statute or contract). So this would be part of the independent case breakdown/analysis on the platform but it can't be done in a vacuum it would have to be on a case by case basis against the specific facts of a given case.
wsc981 10y ago
I would fund some lawsuits for sure. For example I recently helped fund a lasuit against the Dutch government for not following up on the results of the referendum on the EU association treaty with Ukraine (most Dutch people voted against the treaty).
6stringmerc 10y ago
At some point in time I would think it runs into US Federal laws regarding money and what might appear, superficially, to be a relative of gambling. I think the PR push-back would make the platform perhaps a little tabliod-like in public perception. Hence, as you noticed, a passionate reaction by many to both the idea and execution. Probably the only way I could see such a thing hit the market would be without money changing hands, and setting it up more like a "fantasy sports" thing - would probably be of interest to legal types but otherwise I don't sense a broad appeal.
mchannon 10y ago
The word for this is called barratry. Barratry can include "bringing or encouraging acts of litigation for the purposes of profit or harassment". It's illegal in a number of US states.

5 points by will_brown 10y ago

jeffmould 10y ago

One thing I am curious about with this whole Gawker lawsuit and in particular the Thiel funding, is did he really outlay cash to the attorneys or did he tell the attorneys to pursue the case at whatever expense. In many cases like this a court award is going to include attorney fees/expenses, with attorneys working on contingency. Now I understand that in many cases even a "win" does not guarantee the attorneys will get the full amount for their fees/expenses, but often they will get a third of the award. I would be curious to know what the exact fee/expense arrangement was in the case of the Hogan/Thiel attorneys. The impression that I get, and I could be completely wrong, is that Thiel basically associated his name with it to keep Gawker from throwing high-priced attorneys at Hogan and having Hogan submit to a settlement when he could potentially win more. There was no real exchange of money between Thiel and the attorneys though. Again, could be completely wrong, so I am curious. Sorry to go off on a tangent there, but I wanted to lay out a little context. Since many attorneys operate on contingency, how much of market is there to actually "fund" a lawsuit?

will_brown 10y ago
I can't answer the specifics of the Thiel/Bollea deal. But there are rules so whatever the deal is, we at least know the boundaries. One of the most important is that any third party funding a lawsuit can not interfere with the independence of the attorney-client relationship (that's a term of art, but there are many examples and actually cases to guide a lawyers behavior). In Florida our contingency rule is 33% max pretrial and 40% max thereafter. There are other caps on different types of cases (i.e. Class actions). One of the reasons contingency is so popular, I suppose like healthcare, people can't normally fund large lawsuits out of pocket. So while contingency helps people who otherwise could not afford lawsuits, it also has the consequence of lawyers being more selective on cases (so even winners might get passed, because a lawyer could theoretically lose money winning). Answer? A platform like mine could really open the door to hybrid contingency/billable cases which is currently rarely used, but would be a great incentive for lawyers to take cases they might otherwise not be able to take financially.
- jeffmould 10y ago
  Makes sense. The problem I see is that we already have a litigious society. The one plus to lawyers being selective is that while they may miss a few lawsuits, it reduces the number of frivolous lawsuits, which opens a liability to the attorney if they are found the be filing lawsuits just to file. In a way the idea is kind of a spin-off of structured payment lending which is a proven market. Personally I wouldn't invest, the risk is to great and the investment could be tied up for years with a better than average chance of little to no return. That said, it is an interesting concept, and part of me does see some benefit. I think the problem to solve would be to sell the platform to potential plaintiffs. There are probably numerous valid lawsuits that do not get brought because the plaintiff thinks it will cost them a fortune to even talk to an attorney in the first place. Put aside healthcare/accident related claims, but I am thinking more employer related lawsuits.
ksherlock 10y ago
The Peter Thiel connection wasn't known until after the trial was over. Key phrase from the NY Times article[1]: "What the jury — and the public — did not know was that Mr. Bollea had a secret benefactor paying about $10 million for the lawsuit: Peter Thiel". 1. http://www.nytimes.com/2016/05/26/business/dealbook/peter-thiel-tech-billionaire-reveals-secret-war-with-gawker.html?_r=0 http://www.nytimes.com/2016/05/26/business/dealbook/peter-th...

slap_shot 10y ago

I've seen lawsuits funded on GoFundMe. In particular Adam Carolla raised a lot of money to fight a patent troll. I don't know much About trial processes, but I was curious what would happen if the defense wins. Does the other side pay their legal expenses? If so, would the donations be redistributed to the donors? The aspect of receiving a percentage of the settlement seems very interesting. I've personally known people who had to give up on settlements because they were bled dry by large, well funded companies' legal teams. This essentially providing a longer run way to these parties in exchange for a part the settlement they may not otherwise be capable of getting. Very curious to see if you turn this idea into something.

will_brown 10y ago
In the U.S. Fees are award by statute or contract, but there are a few other legal mechanisms to have the other side pay fees (even if just partial, or oddly it is even possible the winning side is liable for the losing side's fees). As a rule of thumb defendants will be liable for their own fees, even if they win, unless (insert specific statute or contract). So this would be part of the independent case breakdown/analysis on the platform but it can't be done in a vacuum it would have to be on a case by case basis against the specific facts of a given case.

wsc981 10y ago

I would fund some lawsuits for sure. For example I recently helped fund a lasuit against the Dutch government for not following up on the results of the referendum on the EU association treaty with Ukraine (most Dutch people voted against the treaty).

6stringmerc 10y ago

At some point in time I would think it runs into US Federal laws regarding money and what might appear, superficially, to be a relative of gambling. I think the PR push-back would make the platform perhaps a little tabliod-like in public perception. Hence, as you noticed, a passionate reaction by many to both the idea and execution. Probably the only way I could see such a thing hit the market would be without money changing hands, and setting it up more like a "fantasy sports" thing - would probably be of interest to legal types but otherwise I don't sense a broad appeal.

mchannon 10y ago

The word for this is called barratry. Barratry can include "bringing or encouraging acts of litigation for the purposes of profit or harassment". It's illegal in a number of US states.