Wednesday, December 15, 2010

Markets in Everything: Lawsuit Futures

FOX NEWS -- "Some call it a disturbing trend.  Others call it a win-win for accident victims and low to middle-income families across America who might not otherwise be able to afford to seek justice in a court of law.

The issue is legal lending; to plaintiffs who don't have the money to pay for surgery related to a claim or pay their bills while their case is tied up in court, or to law firms who can't afford to hire expensive experts or survive a lengthy drawn-out battle with a corporate giant."

HT: Matt Bixler

13 Comments:

At 12/15/2010 10:06 AM, Blogger randian said...

Champerty and maintenance used to be illegal as an offense to the common law. The plaintiff's bar has spent decades chipping away at this necessary protection, and are finally getting payoff.

 
At 12/15/2010 10:32 AM, Blogger Buddy R Pacifico said...

From the FAQ page of Law Street Capital:

"

Q. What kind of cases does LawStreet Capital advance money against?
A. Motor Vehicle Accidents, Slip & Falls, Premises Liability, Products Liability, Discrimination/Wrongful Termination, Construction Accidents, Medical Malpractice, False Imprisonment, Commercial Litigation."


Is this not logical proof that courts (judge and juries) award overly rich settlements? There seems to be a lot of excess for damage recipients to enrich lawyers, settlement brokers and settlement buyers.

 
At 12/15/2010 11:16 AM, Blogger morganovich said...

this has been going on in life insurance for decades.

 
At 12/15/2010 12:26 PM, Blogger juandos said...

Hmmm, I wonder how many people are investing in the future of this lawsuit?

 
At 12/15/2010 2:23 PM, Blogger Benjamin said...

Frankly, we need a system of administrative courts to quickly settle civil disputes. The whole process needs to be radically dumbed down, and sped up.

I can hear the whining already--but the end result will be an attendant and healthy radical simplication of contracts and the like.


Lawyers, like the disabled and their ADA, farmers and the USDA, and the military, have become parasites.

 
At 12/15/2010 2:57 PM, Blogger morganovich said...

benji-

we already have it.

it's called binding arbitration.

it's used for a great many business purposes.

randian-

there are strong arguments against making champerty illegal as well.

contingent fees allow those who might not otherwise be able to afford to litigate against a well funded opponent to pursue their case. in the case of a poor man injured by the actions of a wealthy one, this would seem to make a just outcome more likely.

notions of champerty also seem to contradict the idea of self determination. what business is it of yours of the government's how i choose to compensate my lawyer or assign the proceeds of my lawsuit?

it seems to me that champerty is not nor has ever been a real problem with our civil system. it is only in combination with our poorly conceived class action system that it creates bad outcomes. i would argue that it is the latter then needs to be changed.

lawyers working on contingency are incentivized to get things done quickly and to only pursue winning cases, cutting down (at least in theory) on frivolous and vexatious lawsuits.

what ills do you see arising from contingency agreements and settlement assignment that are not predicated on class action law?

 
At 12/15/2010 4:53 PM, Blogger Benjamin said...

Morgan-
I know of binding arb. and the AAA. But you cannot compel another party into binding arb. unless they agree.

I am suggesting something like AAA for all civil disputes.

 
At 12/15/2010 5:33 PM, Blogger Ron H. said...

"I know of binding arb. and the AAA. But you cannot compel another party into binding arb. unless they agree."

Benji, It's part of the contract. All parties agreed to binding arb when you signed the contract.

 
At 12/15/2010 6:01 PM, Blogger Benjamin said...

Ron H:

Exactly. If you and I agree to binding arb, we can go the binding arb route. I can enforce a contract, if it is in a contract (meaning we agreed).

What I would like if some nutball sues me, we go into a binding arb like process, and have the matter resolved in a day.

Slip and falls, malicious litigation, SLAP suits, routine business litigation, all manner of ills should be handled by a quickie-lite court system.

Lacking resort to complex litigation, all manners of contracts and laws would be simplified.

I would hope this leads the nonlitigation of much, and the rapid litigation of much else.

Yes, if the state wants to take away your rights, or imprison you, then you should have a jury trial.

Remember, the clergy, lawyers, the military, agribusiness and the disabled are parasites after your money. How much do you want to give to them?

 
At 12/15/2010 6:18 PM, Blogger morganovich said...

benji-

i'm also not sure why you think it would be faster. a complex trial is a complex trial no matter who hears it. i've seen a number of patent lawsuits handled by a judge (and no jury) which is how such things are generally handled. the same is true of bankruptcy. in neither case does it speed up the trial one minute apart from saving a little time on jury selection, which, contrary to TV, usually only takes an hour or so.

you could argue that a judge is more likely to follow the law as opposed to "jury nullification" which can yield all manner of outcomes and therefore be more predictable and consistent, but i don't see how your system would be any faster without losing efficacy.

 
At 12/15/2010 6:23 PM, Blogger morganovich said...

benji-

"Lacking resort to complex litigation, all manners of contracts and laws would be simplified. "

this seems like a pretty baseless conclusion.

lots of litigation is just complex. patent law is complex. god help you if you ever need a maritime lawyer.

there is nothing you can do to the legal system to eliminate the fact that lot's of situations are just complex, ownership and intellectual property is not always straightforward, and liability is not always easy to determine.

on top of that, there is no reason that a case brought to an arbitrator need be any less complex than that brought to a judge, and to substitute someone with lesser qualifications than a judge in as arbiter in a suit runs great risk of having him be insufficiently skilled to deal with it.

 
At 12/15/2010 7:14 PM, Blogger Benjamin said...

Morgan-
You may be right in some regards---but I contend that if I hire Morgan, and if I know my recourse in any dispute is to a one-day binding arb session, then I will design a very simple contract.

It will say something very simple, as "Morgan will produce x units a day, or be fired."

I don not believe in complex agreements. I believe in KISS.

Patents? We have a patent court and special system for resolving such issues, and that makes sense to me.

I have had dealing with bankruptcy courts, and yes they are inefficient.

Maybe we should compel any dispute under $100k into small claims court.

Listen if you ever get tagged a few times by malicious litigation, you will change your tune.

 
At 12/15/2010 8:20 PM, Blogger morganovich said...

b-

i still don't see you point. virtually every employment contract i have ever seen has binding arb. it does not make them any simpler, it just makes the outcome of disputes cheaper and more predictable.

however, such a contract only works if both sides agree beforehand.

you seemed to be speaking about other civil matters. if i hit you with my car, how is it any quicker for an arbitrator to determine liability and (if applicable) damages compared to a judge?

arbitrators also have a MAJOR disadvantage over a court in that they cannot compel discovery and disclosure. there are a number of contracts i would not even consider signing under such circumstances.

small claims courts are utterly unequipped to handle even slightly complex cases, and if substantial money is involved, both sides with lawyer up, and you are right back where you were.

malicious arbitration would be just as vexatious as malicious suits. the correct way to fix that is using a loser pays system and/or having fines for frivolous suits.

 

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