Have some loose change under your mattress? If so, and the loose change comes in the millions of dollars, you may want to consider investing it. But, not in a paltry savings account or the stock market. You should consider investing it in litigation. Yes, there are funds, run by money managers and lawyers, that do nothing but sue for financial gain. And, if that so-called “litigation fund” happens to be suing for a cause that you believe in, then you’ll reap a two-fold reward: you’ll collect a handsome investment return, and you’ll get the pleasure of ruining your legal adversary in the process.
Here’s just one example. Burford Capital, a British litigation investment company, has recorded an almost 400 percent growth in profits over the last five years. The firm reported recent profits of $77 million and declared a staggering 70 percent net return on its investments.
So, perhaps you should ditch the notion of becoming the next Warren Buffet; trash the thought of investing in companies that innovate, create and build, and pour your retirement funds in companies that sue and litigate. Furthermore, if you seek a really stellar return on your hard-earned cash, then you should consider investing in litigation funds that sue media companies over the first amendment — that’s where the action and the money is today, and that’s where the next part of this ethically questionable story leads.
The revelation that Silicon Valley billionaire Peter Thiel bankrolled Hulk Hogan’s sex tape lawsuit against Gawker sent shockwaves through the media industry. Commentators had barely recovered from the $140 million in damages awarded to Hogan. Now they were grappling with a bigger question: Is this kind of financial arrangement even legal? Could it happen to them?
The short answer to both is yes—picking up the tab on someone else’s lawsuit is now perfectly legal (it wasn’t always), and people who do it aren’t required to reveal that they’re doing it or why. The practice is reviled by the business community, and yet Thiel, a staunch pro-business libertarian, has shown billionaires everywhere that it’s possible to not only sue a media company indirectly for revenge but to make money doing it. Now that the message is out, there’s nothing to stop other billionaires from following his lead.
“This [case] could really change the landscape, because everyone who has gripes about what the media has done is going to start thinking about dollars and cents and running to their lawyers,” says Thomas Julin, a partner at Miami-based law firm Hunton and Williams who focuses on First Amendment litigation.
“And it’s going to get lawyers thinking, ‘Maybe I should be more willing to represent other individuals against the media.’”
Regardless of how you feel about Gawker, Hogan, or Thiel, this financial arrangement sets a dangerous precedent for anyone running a business—especially a media business. Litigation finance is a booming industry, and Thiel’s success likely makes the entire media industry vulnerable to professional litigation financiers willing to fund other vendettas.
“Litigation financing is really dangerous,” says Bryan Quigley from the Institute for Legal Reform, the civil justice arm of the US. Chamber of Commerce, an advocate for American businesses. “There’s no doubt it’s going to create more litigation in general.”
Read the entire story here.