Hello and welcome to What’s Next, your weekly download on the future of law. In this edition, will Wisconsin be a future model for transparency in legal finance? Plus, news on YouTube and privacy laws, the emerging patchwork of net neutrality rules, and some food for thought about regulation as Mr. Zuckerberg goes to Washington.

Got tips? Other events on your radar? Contact me at bhancock@alm.com or on Twitter @benghancock. Check out all of my colleagues’ insightful briefings here.

 

Watch This Space: A Bellwether On Lit Funding?

 

This isn’t a story about technology, but it is a story about where the law is going. From all outward appearances, third-party litigation funding—i.e. investing in lawsuits—is on the rise. Really gauging the pervasiveness of litigation funding in the court system, though, has up till now been more art than science. Almost all funding deals are done under NDAs.

But last week, Wisconsin became the first state in the nation to adopt a law requiring the disclosure of any third-party litigation funding agreement in civil actions filed in state court. It was a sudden victory for the U.S. Chamber of Commerce, the most vocal opponent of the litigation finance industry, amid what has otherwise been a long, slow grind to force more transparency.

So how did this happen? And is Wisconsin a bellwether for how rules might be shaping up in other states around the country?

To start, it’s not like this came after some big public outcry over litigation finance in Wisconsin. In fact, litigation finance is still hardly on the radar there. “This is something that does not appear to be used that often in Wisconsin at this time,” Michael Leffel, a partner at Foley & Lardner in Madison, told me. The measure was thrown in with a grab-bag of other reform provisions affecting discovery, class action appeals, and overdue insurance claims.

In other words, it was an easy vehicle for the chamber to get a policy win. “There isn’t any magic formula to it,” Lisa Rickard, head of the chamber’s Institute for Legal Reform, said when I asked about the decision to focus on Wisconsin. “There was a big bill moving, and there was receptivity to it. And there’s a very strong legal reform community on the ground in Wisconsin.”

Indeed, the record of the public hearing on AB 773 shows a bevy of local groups—mostly in the tort-reform camp—in support of the bill overall. They were led by the Wisconsin Civil Justice Council, which drew up the legislation last year. The American Tort Reform Association (ATRA) also helped coordinate with local organizations to rally support for the legislation.

So will that kind of perfect-storm scenario be easy to find elsewhere? Not necessarily.

Lauren Sheets Jarrell, counsel for civil justice policy at ATRA, told me there are tort reform bills pending in other states, such as Missouri—where like Wisconsin, the state house and governorship are controlled by Republicans. But we’re heading into elections pretty shortly, and party politics are not determinative. Florida, Jarrell noted, is solidly red but isn’t exactly fertile ground for judicial reform legislation; in fact, Florida topped ATRA’s last “Judicial Hellholes” report. “That just shows how this is not strictly a Republican-Democrat issue,” she said.

>> Takeaway: Wisconsin is the first testing ground for uniform transparency rules on litigation funding contracts. But it might be a while before other state legislatures can suss out the impact, and there don’t appear to be a ton of vehicles out there for the chamber to push this agenda.

[Photo: Wisconsin State Capitol building. Michael Ejercito/Shutterstock.com ]


On the Radar: 3 Things to Know

 

  1. YouTube may face new legal action over how it serves up content to kids.
  • A coalition of children’s health and privacy groups has petitioned the Federal Trade Commission to investigate the online video giant, arguing it is violating the Children’s Online Privacy Protection Act, Wired reports.
  • The law requires parental consent for gathering of personal data for minors under age 13. The complaint alleges that children’s content is mixed up with regular YouTube content (not just YouTube Kids) allowing the company to track kids’ viewing.

>> Think Ahead: The FTC doesn’t act on every complaint it gets. But if it’s looking to send a signal on privacy in a moment when public attention to the issue is high, this might be its opportunity.

  1. A patchwork of net neutrality rules is emerging. The telcos will probably sue.
  • Oregon has enacted a law requiring net neutrality. The legislation “forbids state agencies from purchasing fixed or mobile Internet service from telcos that violate the core net neutrality principles” laid out in the stricken FCC rule, Ars Technica reports.
  • It’s the latest state to try and reimpose net neutrality. Montana in January signed an executive order that, similar the Oregon bill, barred service providers that contract with the government from throttling internet. Washington enacted a broad net neutrality law last month.

>> Think Ahead: As Ars reporter Jon Brodkin notes, the telcos have promised to sue states that impose net neutrality laws. USTelecom CEO Jonathan Spalter recently wrote the group “will aggressively challenge state or municipal attempts to fracture the federal regulatory structure that made all this progress possible.”

  1. FOSTA hasn’t become law yet. That didn’t stop authorities from taking down Backpage.
  • If you happened to browse Backpage.com on Friday, you couldn’t miss the message that the website has been seized by federal and state authorities. The DOJ also announced that it had indicted seven individuals on a laundry list of sex-trafficking related crimes.
  • The move comes after Congress approved the FOSTA bill amending Section 230 and creating new criminal and civil liability for websites that facilitate sex trafficking. The thing is, that legislation hasn’t actually become law yet; it’s still waiting to be signed by the president.

>> Takeaway: While Sen. Rob Portman, who championed the FOSTA bill, has cheered the actions, opponents of amending Section 230 see it differently:


#FutureLaw 2018: Roundup

 

If you missed the FutureLaw conference at Stanford last week, then check out my roundup of some of the takeaways. There was a lot of ground to cover, so it’s not comprehensive, but a lot of folks were live-tweeting the event too.

One of the most interesting panels, I thought, was about fairness, accountability and transparency (FAT) in artificial intelligence. Sharad Goel, an assistant professor and executive director of the Stanford Computational Policy Lab, highlighted how skewed datasets can lead to biased AI output and the limitations of software in solving problems like criminal recidivism.

Meanwhile, CodeX fellow Bryan Casey discussed the horrifying consequences that could ensue if self-driving cars are one day programmed only to reduce the liability of the manufacturer—a coldly logical end goal if machines are wired to internalize tort law and profit maximization. He warned that would lead to robot cars that accord less value to the lives of pedestrians in poorer areas and more to those in an “upper-crust” Silicon Valley neighborhood, for example, even though human drivers (hopefully) wouldn’t act the same. (He also wrote a paper on this.)

It’s a problem that flows from something called “underspecification,” or machines not being told what the real end goal is or how to get there, explained Google Brain fellow Been Kim. She also talked about how to shed more light on how AI models reach their conclusions.


The Download: What Big Tech Should Worry About

 

I can’t go this whole briefing without mentioning the big event of the week: Zuck’s grilling before Congress. While Facebook’s lawyers are disclaiming any and all legal liability over the Cambridge Analytica scandal, here’s some food for thought: Perhaps, it’s not privacy regulations that Silicon Valley’s giants should worry about, it’s their engineering talent.

That’s the takeaway of NYT columnist Kevin Roose, who pointed to the example of Google engineers refusing to work on AI for the Pentagon. “If an antiwar group protests outside Google’s headquarters, it’s an annoyance,” Roose writes. “But if 3,000 engineers walk out, it’s a crisis. And as the tech industry goes through its moral reckoning, executives of these companies should bear in mind that their biggest risk isn’t regulation, it’s rebellion from within.”


Dose of Dystopia

 

A chance at moral redemption, or “textbook extortion”? My colleague Ross Todd writes about a civil racketeering suit over what is alleged to be a bizarre scheme involving major retailers like Walmart Inc. and Abercrombie & Fitch and a “Restorative Justice” program run by a company in Utah. Accused shoplifters who got nabbed were allegedly given the choice of paying hundreds to enroll in the company’s online course, or being reported to authorities.

The lawsuit comes after San Francisco sued the same company, Corrective Education Co., and a state judge called it “textbook extortion under California law.” We’re all familiar with the bail bond system; this seems like a novel example of how a brush with the law can make someone a target for exploitation.


That’s it for this week. Keep plugged in with What’s Next!