Americans love to litigate. Americans also love to make money. And if money can be made off of people's misfortune, so much the better. Thus, the newest financial-services growth industry: Lawsuit lending.
See, when the little guy takes on the big bad company, he can hire a lawyer on contingency--if the lawsuit succeeds, the client wins, and the lawyer collects a fee. If the lawsuit fails, the lawyer gets nothing. (We don't believe that for a second, but that's the theory anyway.) In order to improve the odds of successful litigation, though, lawyers often must conduct extensive research, hire expert witnesses, bribe jurors--all of which costs money. Now, a client who hires a lawyer on contingency probably lacks sufficient funds to pay for al the extras. The lawyer can lay out the money himself, but then he risks a large financial loss if the lawsuit fails. If only there were another option. . . .
Enter the legal financing industry. If you've ever dreamed of making big bucks by suing people, but never had the great good fortune to slip and fall at a Trump-owned building, you can litigate vicariously by investing in lawsuits. Large hedge funds and smaller lending companies will front a plaintiff's lawyer money to prepare a case. In a sense, this represents a leveling of the playing field: Large corporate defendants can easily overwhelm an underfunded plaintiff and her attorney. Financial support from well-heeled investors can make a big difference.
The catch, though, is that, while lawyers work on contingency, their financiers do not: They must be repaid whether the lawsuit succeeds or not. And--brace yourself--the plaintiffs' lawyers, rather than graciously picking up the tab themselves, pass the debt along to their clients. Shocking, we know! To make matters worse, lawyers are under no obligation even to inform their clients that they have borrowed money--which can come as a rude surprise, especially if the lawsuit is unsuccessful.
Personally, the Solipsist is all in favor of this practice. Indeed, it has given us an idea. Funeral-day lending, anyone?
A modest proposal: Let plaintiffs' lawyers borrow money if it's necessary to argue a case. But let the people they supposedly represent in on the decision.
You know, I briefly considered law school. Do you think there is any sense of morality in lawyers? I'd rather be a whore. Now I'm too old to do either one. ;)
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