We originally ran our interview with Christopher Bogart on our Am Law Litigation Daily website. After it appeared, Lisa Rickard of the U.S. Chamber of Commerce’s Institute for Legal Reform wrote to us to take issue with what Bogart had to say about the Chamber’s opposition to litigation funding. We then offered Bogart a chance to respond. Their exchange follows.
Burford Group’s mischaracterizations of the U.S. Chamber [of Commerce] Institute for Legal Reform’s (ILR) efforts to curb third-party litigation financing abuses are inaccurate. Burford’s claim that certain plaintiffs cannot sue without third-party litigation financing rings hollow. With contingency fee cases widely available in the United States, we are already the world’s most lawsuit-happy nation. Third-party litigation financing encourages meritless lawsuits, since one windfall can subsidize many losses, and investors verify a lawsuit’s "jackpot" potential, not its legitimacy. The practice also clouds who controls the lawsuit, compromises the attorney-client relationship, artificially inflates settlement values, and can crowd court dockets.
Centrally, third-party litigation financing is about making money off of the little guy, not benefiting him or advancing justice. Tellingly, Burford’s comments focus on how profitable the industry has become, not how it has improved plaintiffs’ lives.
A case in point is the infamous Chevron lawsuit out of Ecuador concerning environmental cleanup that seeks multiple billions of dollars for investors and other parties while leaving murky what the actual plaintiffs may receive. An ex-Ecuadorian judge recently said that plaintiffs lawyers offered a $500,000 bribe to secure an $18.2 billion judgment and actually wrote the government’s decision against the company. This was just the latest in a string of alleged fraudulent activities in this case.
ILR has called for commonsense safeguards to prevent third-party litigation financing from undermining our justice system. Allowing the industry to police itself will further turn our courthouses into cash machines while bogging down our legal system in a continuing flood of lawsuits.
Lisa A. Rickard
President, U.S. Chamber of Commerce Institute for Legal Reform
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Ms. Rickard and the Chamber of Commerce make an extraordinary statement: busi­nesses that don’t want to, or can’t, pay the cash costs of ongoing litigation should be restricted to using contingency-fee lawyers.
To be sure, there are many excellent contingency lawyers. But when I was the general counsel of Time Warner, many of them spent their time suing us. Instead, I wanted to use my relationship law firms — which did not work on contingency — in a way that met my budget. Thus, Burford was born, with lawyers from firms like Cravath, Latham, Debevoise, and Cleary. We have committed $400 million in the last three years, most of that to major law firms and their clients.
Why is the Chamber agitating about litigation finance, when many businesses are clearly happy with financial options for the high costs of commercial litigation? Unfortunately, because tort reform has largely failed, and a new issue is needed to keep money flowing in to employ Ms. Rickard — and because some of the Chamber’s large supporters don’t like the idea of a level playing field in litigation that interferes with steamrolling opposition through high spending and aggressive discovery litigation.
And why does Ms. Rickard stoop to the attack language of mainstream American politics? Sadly, because she doesn’t have anything better to say. None of her "arguments" survive scrutiny. The idea that Burford would deliberately invest in weak cases is simply daft — that is a recipe for business failure. Surely the Chamber has better things to do.
CEO, Burford Group LLC