Thread by @doctorow

Early in the 19th century, philosophers like Bentham railed against #champerty, whereby "unscrupulous nobles and officials lent their names to bolster the credibility of doubtful and fraudulent claims in return for a share of the property recovered."

en.wikipedia.org/wiki/Champerty… 1/

On its face, the practice of inviting investors to back litigation against deep-pocketed, corrupt parties sounds pretty good. 2/

Large corporations and wealthy individuals have enormous litigation warchests that allow them to abuse people with impunity, using their cash to draw out lawsuits until their victims run out of money for lawyers. 3/

Opening litigation against these bullies to investors tips the balance. Think of class-action suits and no-win/no-fee cases: a law-firm locates someone with a good grievance against a deep-pocketed foe and foots the bill for the case. 4/

The longer the bully drags out the litigation, the more billable hours the plaintiff's lawyer racks up, which they can seek to recover as part of an eventual judgment in their favor. 5/

Champerty - called "litigation finance" these days - allows third parties to step in and directly fund litigation by providing plaintiffs with money to hire any lawyer, not just lawyers willing to work on contingency. 6/

Contingency lawyers have always been able to seek finance secured against eventual damages and fees, but with litigation finance, the investment can flow through the plaintiff, theoretically giving them more of a say in the ligitation. 7/

Litigation finance has been in the air for a long time. It's a major subplot of my 2009 novel *Makers*, which follows boom-and-bust cycles in a number of exotic financial fads. 8/

They start with commercialized makerspaces selling through Etsy-like hubs, then pivoting to litigation finance against large entertainment companies that use bogus trademark and copyright to attack participants in the first bubble.

craphound.com/category/maker… 9/

In the mid-2010s, the litigation finance industry started to pick up steam - naturally enough. After all, corporate America is a factory for generating aggrieved parties with legitimate legal cases. 10/

These entitle them to vast cash damages, which they can only claim if they can afford to spend a decade in court. A long @nytimes think-piece from 2015 examines the burgeoning industry:

nytimes.com/2015/10/25/mag… 11/

As late-stage capitalism ran out of productive ways to make money and private equity and other forms of looting took over broader swathes of our economy, the opportunities for litigation finance grew. 12/

The looter playbook derives its profits by gutting worker safety and product safety, producing a bumper-crop of dead, maimed or injured people who were theoretically owed giant payouts by the world's largest corporations. 13/

In 2017, Equifax doxed the world, leaking sensitive financial dossiers it had nonconsenually compiled on nearly every American, along with millions of Britons, Canadians and others. 14/

The breach was the result of sloppy systems integration following waves of mergers, and the company's top execs responded to early warnings by selling off millions in shares, but doing nothing else. 15/

That breach kicked off a wave of "algorithmic litigation finance" by companies like Legalist, who promised a highly automated form of litigation against Equifax and offered to effectively buy the grievances of the people whom Equifax had wronged.

vice.com/en/article/43a… 16/

But litigation finance is complicated. Remember when Peter Thiel was revealed to be the financial backer of Hulk Hogan's suit against Gawker, a suit that ultimately destroyed a news network in an act of petty revenge by an embarrassed billionaire? 17/

Litigation finance has colonized some of the ugliest corners of industry. Lax FDA regulation allows companies to roll out new medical implants without conducting safety testing, which has led to millions of maimings and deaths:

en.wikipedia.org/wiki/The_Bleed… 18/

These maimings and killings are quite an opportunity for the litigation finance industry. @mathbabedotorg's 2015 editorial rails against the perverse incentives that subjected women to unnecessary and dangerous surgeries:

mathbabe.org/2015/09/01/lit… 19/

Basically, med-tech companies rolled out transvaginal mesh technology without adequately testing it, causing horrible injuries in many (but not all) of the women who received them. 20/

Litigation finance companies partnered with medical practices to convince women to have complex and dangerous surgeries to remove their meshes whether or not they needed it, and sued the med-tech companies to pay for these surgeries. 21/

To top it all off, the finance companies and the surgeons colluded to gouge these women on surgeries, saddling them with massive medical debts. 22/

But for all these problems, litigation finance holds out a tantalyzing promise: *the answer to a bad guy with a law firm is a good guy with a law firm.* If you accept "creative destruction" - capitalism doesn't care where its profits come from - then it's an exciting idea. 23/

What if, for every dollar a company derives in profit from poisoning the Earth and its people, they risked $100 in damages? 24/

This week in @BW, @ManySundays, Mariana Durao, and @william_louch write about a new wave of litigation finance focused on financing lawsuits by indigenous people whose lands have been destroyed by multinational corporations:

bloomberg.com/news/articles/… 25/

In Brazil, the Krenak people are suing the mining giant BHP Group for $7b over a dam collapse that killed 19 and destroyed lands and waterways. They're backed by North Wall Capital, headquartered in London, who are paying 700 lawyers to run the ligitation. 26/

Other suits over the dam collapse are backed by Brazilian financiers SPS Capital.

These funds have a track record of delivering 300% returns to their investors, significantly outperforming traditional funds, including the PE funds that are so often behind these calamities. 27/

That holds out the tantalyzing possibility that punishing corporate murder might be more profitable than committing corporate murder. 28/

The litigation finance sector is small - $13b/year - but Businessweek argues that it's poised for growth, since there's so much money in ESG funds that are supposed to invest in "ethical" projects. 29/

These funds are notoriously bad at locating investments that are both profitable and ethical and keep getting caught plowing billions into greenwashing scams:

pluralistic.net/2021/03/24/gre… 30/

But there is an effectively bottomless inventory of grotesque corporate crimes whose statute of limitations has not run out. 31/

As a thought-exercise, it's exciting to ponder what happens if all of those wronged people are matched with the "dry powder" of the ESG sector and hooked up with armies of remorseless white-shoe lawyers. 32/

It's especially interesting to ponder in light of @SDonziger's tribulations: Donziger is an environmental lawyer who won a multibillion-dollar judgment against Chevron for its genocidal, ecocidal crimes in Ecuador.

pluralistic.net/2020/09/02/fre… 33/

In retaliation, Chevron pulled off a breathtaking act of corruption of the courts, convincing a friendly judge to let it pursue a private, criminal prosecution of Donziger that locked him up for more than 800 days, mostly at home, but also at Riker's.

reuters.com/legal/litigati… 34/

The corporate takeover the US courts is part of a long-run project by big business to deprive the public of the right to redress for its crimes. 35/

Think of the McDonald's "hot coffee lawsuit" myth, which brainwashed millions into thinking McDonald's was the victim of "sleazy ambulance chasers."

36/

The combination of ESG with litigation finance could create a giant, well-resourced big business lobby *in favor* of corporate accountability and massive fines for corporate misconduct. 37/

Like, what if half of the Federalist Society takes up the cause of litigation finance as a high-growth, secure financial instrument?

I can see a million ways this can go wrong. Hell, I wrote a novel about how this could go wrong all the way back in the 2000s. 38/

But it's a fascinating turn of events, and one I'll be watching closely. 39/

ETA - If you'd like an unrolled version of this thread to read or share, here's a link to it on pluralistic.net, my surveillance-free, ad-free, tracker-free blog:

pluralistic.net/2022/02/09/gri…