WASHINGTON, D.C.  Oct. 23 (DPI) – The burgeoning area of “litigation finance” – in which third parties take stakes in complex lawsuits, hoping for a big payout – got more exposure this week, and while readers bemoaned the trend as a likely subversion of justice,  they also shrugged there was little to stop it.  “Lawsuits are there, supposedly, to achieve justice and the redress of grievances,” wrote one poster responding to a recent article on nytimes.com . “I see that they are now an investment tool and a for profit business. What a shame.”

NYT contributing writer Mattathias Schwartz produced a report on litigation between US giant Caterpillar and a smaller UK manufacturer, Miller UK, which remain embroiled in a legal fight over a product the two companies collaborated on for several years – until Caterpillar decided to cut Miller out of the business. A litigation-funding firm has been backing the plaintiff – Miller – for several years.  As Schwartz wrote:

This new form of lawsuit funding is called litigation finance. It lies at the crossroads of two Anglo-American tendencies. The first is our litigious side, in which we celebrate our equality before the law by dragging those who have wronged us before a judge. The second is our ingenious mercantilism, as demonstrated by our penchant for turning everything from church raffles to mortgages into marketable securities to be chopped up, bundled and resold. Like the celebrity bonds backed by royalties and popularized by David Bowie during the 1990s, litigation finance represents the expansion of securitization into hitherto virgin territory. Those involved in the practice argue that it allows smaller companies like Miller to afford a day in court. Detractors worry that it could give rise to a litigation arms race, with speculative money aggravating the already high costs of the American legal system.

The rise of litigation finance is a symptom of what the American civil-justice system has become — a slow, expensive and complicated system for mediating corporate breakups.

http://www.nytimes.com/2015/10/25/magazine/should-you-be-allowed-to-invest-in-a-lawsuit.html

Litigation finance is merely an extension of third-party lenders, including banks, which help finance lawsuits. The practice is now catching on with private investment firms looking for bigger returns in an era in which the stock and bond markets are generating lower returns.

The trend is notable also because while some litigation finance is not uncommon in small-scale personal injury and tort cases, its presence now in major corporate fights, with huge law firms involved, dramatically raises the stakes – and raises serious questions about the ongoing integrity of the institutions called upon to adjudicate such cases, especially venues outside the US.

Not a single one of the 43 reader comments suggested that litigation finance enabled any access to justice for worthy litigants. Among highest recommended comments

Lawsuits are there, supposedly, to achieve justice and the redress of grievances. I see that they are now an investment tool and a for profit business. What a shame.

Yes, they are warping it. The concept gives the crooks and swindlers at the banks and the Wall Street firms just one more way to grab money without working for it.  And the term “investors” is misused. The correct term should be “gamblers.”

This is a great premise for a dark comedy, plaintiff’s suing lawyers for not returning the anticipated ROI’s on lawsuits invested in due to bad lawyering, being sued by other plaintiff’s not getting the ROI’s on their lawsuits due to bad lawyering, who were suing other lawyers suing other lawyers ……very “Waiting for Godot”