Litigation Funding can Influence the Courtroom

gavel in front of the world
Litigation funding is a relatively new industry. It’s less than 20 years old as a whole, having first popped up in Europe and Australia in the late 1990s and only later making its way over to the United States. Nonetheless, it is possible that in its current manifestation, legal funding has been able to influence litigation trends and the behavior of potential offenders. The overall influence may be insignificant – in Australia, for example, less than one percent of litigants opt to use legal financing, and not enough is known about the industry in the UK or the US to give an accurate estimate, suggesting that the percentage is even fewer. However, assuming that litigation funding was to become more prevalent as more people become aware of its role, there is good reason to believe that it could have a noticeable, even positive, influence over litigation trends and defendant behavior.

One area in which litigation funding is likely to have a great influence, should the industry continue to develop, is the quality of cases granted court presence. Because legal finance companies are averse to high-risk cases, they perform meticulous due diligence on all applicants, both plaintiffs and plaintiffs firms. Funders prefer to take on cases with higher merit and a good chance of winning; in this way, weaker cases are filtered out. Some stronger cases will also be filtered out, of course; a case may have high merit and have a good chance of winning, but the estimated return from the case may be too small to expect any profit after repayment.

Filtering out lower-quality cases will not necessarily reduce the amount of cases that a court oversees. Indeed, litigation funders serve the purpose of allowing plaintiffs who would otherwise have no means of pursuing litigation obtain the resources to do so; or, in other instances, they allow litigants to maintain a normal quality of life while awaiting a settlement payment. However, by effectively weeding out weak cases and simultaneously providing funding only to high-quality litigants who would otherwise not have the funds to access legal services, litigation funders would improve the overall quality of cases that the court systems would receive.

Legal funding may also have a profound impact on defendant behavior, and, in the long run, may help reduce certain offensive behaviors. When a plaintiff seeks financial assistance through a litigation funder and is approved for funding, the defendant recognizes that the case is high value, because litigation funders prefer to take on low-risk, high merit cases. This reduces the bargaining power of the defendant, which could potentially lead to earlier settlements, or a trial verdict favorable to the plaintiff. Moreover, litigation funding may enable plaintiffs to bring cases to court that were previously underrepresented, thereby increasing the likelihood that certain offensive behaviors would be put to trial and condemned. With the publication of these favorable plaintiff verdicts, it is possible that others who might have performed the same offensive acts would opt otherwise. This could also reduce litigation in the long run.

Litigation funding may have an overall positive impact on courtroom practices. In the long run, litigation funding could allow a majority of high quality cases to be heard before the court, prevent time-wasting low-merit cases from being heard, and potentially curb certain offensive and disruptive behaviors. However, at this time, when the percentage of plaintiffs utilizing litigation funding is so low, it is difficult to draw any definitive conclusions. Perhaps as the industry grows, the positive effects will be seen more clearly.

References:

“Third Party Litigation Funding in Australia and Europe”
“Litigation Funding: Charting a Legal and Ethical Course”
“Comparing Third Party Financing of Litigation and Legal Expenses Insurance”

Photo Credit: Tori Rector


Written by Shayna Keyles, a freelance blogger and social media manager based in Louisville, KY. You can follow her on Twitter at @SKLiaison or email her at skeyles@gmail.com.

Stephen Gillers: If Litigation Funding is Champertous, The Modern Courtroom is Illegal

court room
Occasionally, outdated concepts stem meaningful progress. We’re seeing this now with solar energy as opponents say it will kill the energy sector; with same sex marriage, as opponents cite biblical phrasings; and in the courtroom, as medieval definitions of champerty and maintenance prevent individual plaintiffs from funding their cases against well-monied defendants.

Most opposition to litigation funding stems from the fact that it involves a non-lawyer playing a role in the court setting. The fear is that the inclusion of this non-lawyer figure will somehow encourage frivolous litigation, or litigation for no cause but to earn a reward. These critics argue that this could count as champerty, which is a financial agreement between an outside party and a plaintiff in which the outside party provides financial backing for the plaintiff and in return receives a portion of the case recovery. Critics may also say that third-party funding could be seen as maintenance, legally defined as a third party taking up sides in a quarrel in order to promote litigation.

Stephen Gillers of the New York University School of Law argues that champerty and maintenance do not and should not apply to third party litigation funding: he claims that if third-party financing were to be viewed as unethical and thus illegal based on the principles of champerty and maintenance, then so too should conventional courtroom practices including contingency fees, third party non-lawyers (including insurance companies, corporations, friends and relatives) covering legal fees, and bank lines of credit.

“We let law firms share court-awarded legal fees with lay controlled not-for-profit entities that either co-counsel with the firms or merely recommend them,” Gillers points out. Moreover, insurance companies are allowed to “advise” law firms as to the best actions to prevent future lawsuits and the best way to reduce premiums; law firms are permitted to take out multiple lines of credit to finance their operations. These are symbiotic arrangements that are typically accepted or overlooked by the court systems.

Unlike the abovementioned arrangements, scholars, attorneys, and clients needlessly regard litigation funding with skepticism. This may be because it is unregulated, or because it is a relatively new industry. However, regardless of the cause, many rumors have circulated about litigation funding that perpetuate the myth that it is unethical, exploitative, and secretive.

The first myth, that litigation funding is unethical and encourages frivolous litigation, is incredibly unlikely. The plaintiff who accepts financing from a funding company may not see a favorable court outcome, and in this case would not receive any compensation from the funding company. Even if the outcome is favorable, the reward may be less than the plaintiff anticipated, and in this case the plaintiff might wind up owing money to the funding company. There is no guarantee that a plaintiff will win money in litigation, and even if granted compensation, there is no guarantee that the amount will match up to what was expected.

The second myth, that litigation funding exploits vulnerable plaintiffs, relies on the assumption that the plaintiff is financially unstable. If this is the case, then the plaintiff has as much of a chance of being exploited by a legal funding company as by the defendant’s counsel in a settlement negotiation. Litigation financing offers the plaintiff more control; she can decide whom she trusts more with her finances, and who she would rather take a risk with. This ties directly into the third myth, that the consumer lacks the resources to make an informed decision about litigation funding. Typically, plaintiffs will work with their attorneys to find the best possible legal funding option. Moreover, simple online research will help plaintiffs find case studies and reviews about potential funders.

A final criticism of litigation funding is that it may reduce the likelihood of settlements. When further examined, this may not be a criticism: by accepting legal funding, a plaintiff may not need to rush into a settlement and can further litigate towards a favorable outcome. On the other hand, receiving funding may fool a plaintiff into thinking that the opinion in a case will shift in her favor, causing her to abandon a favorable settlement. In this regard, litigation funding has the potential to be a double-edged sword.

Litigation funding has the potential to become a legal staple if it were regarded similarly to other third-party entities that are so welcome in courtroom proceedings. However, at present, the practice is surrounded by too many myths and prejudices. As Giller argues, these fallacies need to be cast aside in order for litigation financing to be given a fair trial.

Photo Credit: Clyde Robinson


 

Written by Shayna Keyles, a freelance blogger and social media manager based in Louisville, KY. You can follow her on Twitter at @SKLiaison or email her at skeyles@gmail.com.

Chinese Drywall Plaintiffs May See Big Payout

abandoned house
After the first complaints were filed five years ago, U.S. District Judge Eldon Fallon ruled that the almost 4,000 homeowners who built their homes with Chinese drywall will be entitled to receive compensation for the damages that ensued. Judge Fallon has ruled in favor of selected groups of plaintiffs in the past, but never before has he made a decision that would affect so many of those affected by the Chinese drywall.

Chinese drywall imported from Taishin Gypsum and other Chinese companies was used to construct and repair houses in hurricane-ravaged areas in Louisiana, Mississippi, Florida, Virginia, Texas, and Alabama beginning in the early 2000s. The drywall was found to emit a sulfurous gas that not only affected the health of residents, but also affected the construction of the homes. The drywall occasionally corroded pipes and wires. Residents had difficulty finding insurance companies that would finance the repairs, and many of the homes became uninhabitable and unsellable. Many homeowners were forced to abandon or destroy the properties, costing them hundreds of thousands of dollars.

This most recent decision, which could be worth over one billion dollars, may be a result of the Taishan Gypsum Co’s absence in court. Fallon found Taishan in contempt. While some of the plaintiffs’ attorneys are hopeful, Colleen Stephens of a group called the Victims of Chinese Drywall is a bit more skeptical. Though Judge Fallon has made his decision, the government now has to hold the Chinese companies accountable and ensure that they pay the damages that are owed. This process could take another few years.

Plaintiffs in the drywall case will be receiving compensation equal to the square footage of their properties times the current cost per square foot of repairing or replacing the defective drywall.

If you are a plaintiff or attorney involved in the litigation and have a slow-paying award or legal fee, RD Legal Funding can provide accelerated access to your funds through their Fee Acceleration program.

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Written by Shayna Keyles, blogger and social media marketer based in Louisville, Kentucky. When not working with RD Legal, she helps small businesses with their online profiles, hikes uncharted areas, and cooks incessantly. You can contact her at skeyles@gmail.com or follow her on Twitter at @SKLiaison.

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The Anatomy of an Optimal Marketing Email
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Preliminary Settlement Approved for Lenovo Class Action

lenovo laptop
On September 15th, the U.S. District Court for the Central District of California, Southern Division, approved a preliminary settlement agreement in the consumer class action against Lenovo, Inc.

Customers who purchased any of a variety of Lenovo products, including the Lenovo IdeaPad, Lenovo Yoga, and Lenovo G series have reported problems with the WiFi speed and range on the devices. These devices fall far below the standard for WiFi. The class action lawsuit filed against the manufacturer alleges that the devices have defective WiFi ports, and that the manufacturer was aware of these defects at the time of sale.

The lawsuit in question was initially filed on February 21st, 2013. According to the plaintiff claims, Lenovo allegedly marketed the devices as being “ideal for all mobile needs”, which includes optimal WiFi speeds.

The preliminary agreement, which claimants and the company agreed to earlier this year and was just recently approved by the courts, grants plaintiffs one of three options:

1. Lenovo will either repair the wireless capability of all defective devices (for those who did not return their defective devices to the company).

2. Customers will receive a $100 cash refund from Lenovo.

3. Customers will receive a $250 credit to be used toward the purchase of any product for sale on Lenovo’s website.

Parker Waichman, LLP, a firm that is nationally recognized for its dedication to representing consumer rights, represents the plaintiff class in this case. The Managing Attorney for the case, Gary Falkowitz, expressed his satisfaction with the preliminary approval, stating, “When businesses make claims about their products, they should be held responsible when those claims prove to be untrue.” The final approval for the settlement agreement will be determined on December 8th, 2014.

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Written by Shayna Keyles, blogger and social media marketer based in Louisville, Kentucky. When not working with RD Legal, she helps small businesses with their online profiles, hikes uncharted areas, and cooks incessantly. You can contact her at skeyles@gmail.com or follow her on Twitter at @SKLiaison.

RD Legal Funding Gets Ready for BBBS’ Walk for Kids’ Sake

smiling kids
Joseph Genovesi, President of RD Legal Funding and Board Member for the Big Brothers Big Sisters (BBBS) of Bergen, Morris, Passaic and Sussex, is rallying up the team at RD Legal to participate in the Walk for Kids’ Sake for the second year in a row.

Last year, with the help of friends, family, and the RD team, Genovesi managed to raise over $1,500 for the Walk. This year he hopes to exceed that amount. The walk is being held on October 26th, 2014 at the Wyndham Worldwide Headquarters, 22 Sylvan Way, Parsippany, NJ.

The Walk for Kids’ Sake is an event held annually by BBBS in order to fundraise for its mentorship program and to celebrate its successes. Founded in 1904, BBBS operates in order to inspire, support, and motivate children by offering positive mentoring. Studies conducted by Public/Private Ventures have shown that children with a mentor of some sort are less likely to engage in dangerous, illegal, or otherwise detrimental activities, and are better able to thrive in a family environment.

Genovesi has been an active member of BBBS for over 13 years, and has been on the Bergen, Morris, Passaic and Sussex board since February 2013. He has been a mentor to the same child for over 13 years, and has seen the effects of positive mentoring firsthand.

If you are interested in learning more about BBBS, visit www.northjerseybigs.org. You can support Joseph Genovesi’s team by visiting www.walkforkidssake.org/joegenovesi.

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Written by Shayna Keyles

Shayna Keyles is a blogger and social media marketer based in Louisville, Kentucky. When not working with RD Legal, she helps small businesses manage their online profiles and explores uncharted areas. You can follow her on Twitter at @SKLiaison or contact her at skeyles@gmail.com.

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The Contamination Tragedy at Camp Lejeune

marines
The United States Marine Corps: The Few, The Proud, The Forgotten. For those who were stationed at Camp Lejeune in Jacksonville, North Carolina from 1953 – 1987, this modified motto rings true. “The Few, The Proud, The Forgotten” is a term coined by an advocacy group for those marines and their families who were stationed at Camp Lejeune. Unlike other marines, who are not typically manhandled by their governments, those who were stationed at Camp Lejeune during this 35-year span were exposed to water contaminated with multiple toxic materials.

Between 1953 and 1987, marines and their families lived at Camp Lejeune and bathed and drank in contaminated water. Contaminants included TCE, which is a chemical typically used as a degreaser; PCE, which is a dry cleaning solvent; and benzene, an industrial solvent. These are all shown to be human carcinogens, which are chemicals that tend to promote cancer. At Camp Lejeune, these carcinogens led to increased prevalence of lung cancer, bladder cancer, kidney cancer, breast cancer, esophageal cancer, and leukemia. Many have since died of these complications. Children who were conceived and / or born on base tended to suffer from birth defects including cleft lip and low birth rates, while women experienced infertility, or experienced birth complications including premature births and miscarriage.

Contamination at Camp Lejeune was never a secret. The EPA labeled the camp as a major polluter in 1970, and the military added new regulations in 1984 on the proper techniques for disposing toxic and hazardous waste. Despite the apparent knowledge of these existing issues, drinking water was not tested until 1982, thirty years after the camp had opened and was established as a home base for hundreds of men, women, and children.

The Associated Press (AP) investigated the contamination long after the camp was closed due to the contaminated water. It appears that the levels of toxic chemicals had been underreported. For example, an original contractor had reported that benzene appeared in the water supply at a toxic 380 parts per billion. A later report, however, stated that the contaminant was only present in a still toxic 38 parts per billion. An even newer report failed to mention benzene at all.

While the Veterans Affairs division recognizes that the water contamination has lead to serious diseases and complications amongst those who lived at Camp Lejeune and offers medical care and other resources to those who can provide records of residency and suffering, there is no established program to compensate families for all previous suffering from ailments and fatalities caused by living in this toxic environment for up to 35 years.

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Written by Shayna Keyles & Lulaine Compere

Shayna Keyles is a blogger and social media marketer based in Louisville, Kentucky. When not working with RD Legal, she helps small businesses manage their online profiles and explores uncharted areas. You can follow her on Twitter at @SKLiaison or contact her at skeyles@gmail.com.

Lulaine Compere is a writer and analyst for the origination team at RD Legal Funding.

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The Blueprint of an Optimal Blog Design
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Guilty Verdict Handed to Manufacturer in Bellwether Transvaginal Mesh Trial

silver gavel statue
Lead plaintiff Martha Salazar emerged victorious in a transvaginal mesh bellwether trial, when the jury determined that the device manufacturer Boston Scientific Corp owed a total of $73.4 million to affected claimants.

First developed to treat pelvic organ prolapse, transvaginal mesh systems had been implanted in over 185,000 women by 2010. However, many women noticed complications, ranging from mild to severe, with their implants. These included “erosion” of the implants, where the mesh would break through the vaginal wall. Other complications included infections, nerve damage, extreme pain, and the inability to urinate without a catheter.

Salazar, whose trial is one of many in a larger ongoing multi-district litigation, filed suit against Boston Scientific after experiencing severe complications directly resulting from the use of their Obtryx transvaginal mesh implant product. She had the product implanted four years ago to treat her stress urinary incontinence condition; however, since receiving the transvaginal mesh implant, her suffering has only worsened. For example, one of the new symptoms Salazar allegedly experiences is permanent nerve damage.

Earlier in this year, Endo International, supervisor of American Medical Systems, agreed to pay $830 million to settle the claim that the company had been negligent in not properly warning doctors or patients of the risks associated with transvaginal mesh, though the company did not admit fault and a jury of peers did not hand down a verdict of fault. Unlike that previous case, Salazar’s is the first of its kind, in which a jury found the manufacturer of the transvaginal mesh product guilty of negligence.

Despite Salazar’s victory, there are still 12,000 pending vaginal mesh lawsuits. Other trials that fall under the jurisdiction of Boston Scientific are set to be tried later this year; one of these will be affecting at least eleven separate Obtryx vaginal mesh lawsuits.

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Written by Shayna Keyles

“Shayna Keyles is a blogger and social media marketer based in Louisville, Kentucky. When not working with RD Legal, she helps small businesses manage their online profiles and explores uncharted areas. You can follow her on Twitter at @SKLiaison or contact her at skeyles@gmail.com.”