Investing In Lawsuits Beats the Street

guga31bb sends word on the next wave of investment in a slow market: bankrolling others' lawsuits. The practice sounds on the face of it indistinguishable from champerty. "Juris typically invests $500,000 to $3 million in a case, Mr. Desser said. He would not identify the company's backers, but said that 'on the portfolio as a whole, our returns are well in excess of 20 percent per year.' He added, 'We're certainly beating the market.'"

Comments

Ah yes.

[Jurily]

Treating the legal system as a business opportunity is not new, but to base a business model on it?

You guys should start cutting down on lawyer fees, fast.

Fire Sale

[siloko]

Investing in cultural naval gazing more like. When the process of legal shikanery yields better returns than investing in real world products then it is apparent that the our culture has run aground . . .

Re:Fire Sale

[Jurily]

When the process of legal shikanery yields better returns than investing in real world products then it is apparent that the our culture has run aground . . .

No, it's just the logical conclusion of a culture of worshipping money.

Re:Fire Sale

[malkavian]

No, it's the logical conclusion of a culture that considers ethics of no consequence.
You can worship money all you like, and still create a fantastic environment (run your own company? In a company that you enjoy being in? They're not there for the express purpose of making your life fun, they're there to chase money. Ethical companies make a great place to work, the leeches will burn you out and leave you broken). However, all this activity boils down to is parasitic behaviour. When you can make more by discarding ethics, not producing anything and basically sucking the life out of anything that does produce, then the problems start.

So what's the big deal?

[Guido del Confuso]

According to the article, they only invest in cases that are pretty much a surefire win for the plaintiff. This makes sense, because if they're in it to make money, then cases that are likely to be questionable are a bad investment.

Seems to me that they're actually doing a public service, by allowing little guys who can't afford to take on big corporations who have clearly done them wrong to proceed with a potentially expensive lawsuit. No longer can the party with deeper pockets simply fight a war of attrition and hope to run the other guy dry. If the plaintiff ends up winning he gets more than he would have gotten had he simply given up, and if somebody else makes a buck off it as well, then so much the better.

Re:So what's the big deal?

[Jurily]

Seems to me that they're actually doing a public service, by allowing little guys who can't afford to take on big corporations who have clearly done them wrong to proceed with a potentially expensive lawsuit.

They're solving a problem that shouldn't exist in the first place: the legal system is a capitalist enterprise, with heavy price fixing by the lawyer community.

Oh, and a perverted enough legal system that lawyer skill actually matters in a case.

Re:So what's the big deal?

[Jurily]

Is your proposed solution simply not to solve the problem?

My proposed solution:

1. abolish legally binding precedent. The accepted interpretation of a law should be a consensus among the legal community, not a decision of one moron 150 years ago.
2. Hire someone competent to rewrite the laws, aiming for clarity and precision.
3. Law should be treated like software: any and all changes should be incorporated into the text, not distributed as amendments. The current legal system looks like Linux 0.01 with all the patches distributed separately up to 2.6.30, and you can win a case by confusing the judge and your opponent into forgetting a critical patch.
3. Make the up to date text of every law easily accessible and searchable by anyone.
4. If you find there is no law for something new, like, say, the internet, say so. Don't torture existing unrelated laws fo fit the new situation.
5. Arguments should be based on merit, not qualifications and the overuse of jargon.

I'm sure there's more we could do, but these should solve the big problems.

Re:So what's the big deal?

[Marcika]

Is your proposed solution simply not to solve the problem?

My proposed solution:

1. abolish legally binding precedent. The accepted interpretation of a law should be a consensus among the legal community, not a decision of one moron 150 years ago. 2. Hire someone competent to rewrite the laws, aiming for clarity and precision. 3. Law should be treated like software: any and all changes should be incorporated into the text, not distributed as amendments. The current legal system looks like Linux 0.01 with all the patches distributed separately up to 2.6.30, and you can win a case by confusing the judge and your opponent into forgetting a critical patch. 3. Make the up to date text of every law easily accessible and searchable by anyone. 4. If you find there is no law for something new, like, say, the internet, say so. Don't torture existing unrelated laws fo fit the new situation. 5. Arguments should be based on merit, not qualifications and the overuse of jargon.

I'm sure there's more we could do, but these should solve the big problems.

All your points pretty much described a conversion from the Common Law system as it is practiced in the UK and its former colonies (US, India, Pakistan, Oz etc) to the Civil Law system that has been introduced practically everywhere else and has been used since the times of Hammurabi and the Romans.

However, the problem is that such a conversion cannot happen while there is a large establishment built on it - the judges would have to re-learn, the lawyers would have to re-learn, the legislators would have a gargantuan task of creating a whole corpus of laws without bad loopholes... It would only happen after a revolution. (The German-style civil law was introduced in China, Japan and Korea in the early 20th century, but the power situation were very different from the status quo in the US today...)

Unethical, but not illegal

[BadAnalogyGuy]

There are many things that people do as professions that are ethically questionable but undoubtedly legal. Not to harp on Maggie Sanger, but the ethics of abortion are intensely debated. However abortion remains legal in the U.S.A. Telemarketing is almost universally reviled, but people still make a living at it.

You would expect that ethics would take a big role in how the legal system is formulated, and for the most part you'd be right. But due to the creativity of human beings, the fruitful edges of legality and ethics can be sought out and exploited.

Re:Unethical, but not illegal

[Jurily]

You would expect that ethics would take a big role in how the legal system is formulated, and for the most part you'd be right.

I don't care about ethics. The problem is, the whole system is geared towards requiring lawyers to function. Unclear laws, obscure precedents, etc. Not to mention the special powers the lawyers' associations have, like automatic trust of a member judge.

In order to change this, laws should be written at least as unambiguous as RFC's, for starters.

Re:Unethical, but not illegal

[BadAnalogyGuy]

The whole point is that this is illegal in most everywhere in the world.

So is the death penalty, but I don't see how something illegal elsewhere makes an iota of difference here.

Re:Unethical, but not illegal

[Guido del Confuso]

You can't make laws as clear as technical documents. That's a quixotic notion held by those who fail to appreciate that other people see things vastly different from how they do. The difference between an RFC and a law is that you can reasonably expect people to follow the RFC because it is in their own best interest to do so. A law, on the other hand, will always have an exception, a border case, or some other mitigating circumstance that will require interpretation. That is the job of the courts and lawyers.

Re:Unethical, but not illegal

[lordandmaker]

It's funny, I've never heard it this way round before.

Re:Unethical, but not illegal

[QuantumG]

Umm.. by "here" do you mean New Jersey? Cause that's the only place in the US that doesn't consider champertous contracts illegal (Bigelow v. Old Dominion Copper Mining & Smelting Co.)

Re:Unethical, but not illegal

[Jurily]

You can't make laws as clear as technical documents.

Of course you can. Rule #1: Follow the intent, not the letter, And then make the intent as clear as humanly possible.

The difference between an RFC and a law is that you can reasonably expect people to follow the RFC because it is in their own best interest to do so.

Laws are not optional. They're protected by force and imposed on everyone in the area. And they have penalties, too.

Re:Unethical, but not illegal

[AlXtreme]

Of course you can. Rule #1: Follow the intent, not the letter, And then make the intent as clear as humanly possible.

I don't know if making laws that vague would solve anything, instead it would probably make things much more worse. All those lawyers would have a field day in arguing that the intent of a law is something different to what the rest of us think, or use the intent of one law to negate a completely different law.

Things aren't perfect as they are, but the legal system isn't this complex merely due to the lawyers. All these laws have to be as clear as possible, in intent and letter, which is the task the legislative branch has when coming up with a law.

The problem is that each year many laws are added to the system (because the legislative branch has to keep up the act) but there is very little incentive to actually remove laws to simplify the system. The more laws there are in the system, the harder it will be for a layman to understand even a portion of these laws and the more ammunition lawyers have in the courtroom.

Or to continue the analogy, what if you had 100 non-deprecated RFC's that define a simple protocol like SMTP? You would get a whole branch of IT workers through whom you would have to dictate your emails, because the whole system is so complex.

Re:Unethical, but not illegal

[jimicus]

Of course you can. Rule #1: Follow the intent, not the letter, And then make the intent as clear as humanly possible.

What a good idea.

Which is exactly why any half-decent judge interprets according to the spirit of the law.

Where a problem occurs is when the spirit isn't clear but the letter is - and the most obvious interpretation of the letter is pretty bad.

Myself, I think laws should have something akin to the preamble section in the GPL - a short paragraph which explains in clear English exactly what the law hopes (and doesn't hope) to achieve - in order to aid understanding the spirit.

Re:Unethical, but not illegal

[Anonymous Coward]

RFC has some precise definitions that allow such exceptions.

The device MUST implement X.
The device MUST either implement X or fall back gracefully to Y
The device MAY implement X. Presence of implementation of X is recognizable by Y.
The content of field X is undefined and subject for proprietary extensions. If the content is not recognized, the device should ignore it..

Law is a set of inclusive specs: whatever isn't forbidden, is allowed. Thus, if a case is not covered by law, it's no-case.

And border cases are precisely the reason of various injustices. They are a subject of personal interpretation of the judge, so guy X gets away with something harder and guy Y goes to prison for something lighter strictly because they were in the "border" area and their respective judges had some "gut feelings" about whether it is a crime or not. Borders should be defined strictly. If they are not, the law is faulty and needs to be fixed.

Besides, at least _some_ practices should be introduced, definitely.
- unified diffs to changes in laws. (Paragraph 1: "the word 'will' in paragraph 25 line 5 chapter XXIX tome III is to be replaced with the word 'won't'. Goddamnit, the lawmakers should be fired for publishing stuff like this as actual law.)
- one centralized, public, quickly accessible fully cross-referenced searchable source for _all_ laws. Including relevant precedents. With all the back revisions etc, repository style.
- url-like address for any law entry. Finding a referenced line can take half a hour in current style.
- strict list of priorities of laws. A quick and efficient process of resolving internal conflicts in law, without requiring plaintiffs presence. It cannot be that a government organization internal regulations overrides the Constitution.and you must obey unless you sue - you should just notify a proper body about the conflict and they should overturn the regulation within 7 days without your interaction.
- a strict list of keywords of invocation/revocation of privileges. It cannot be that the policeman asks two questions and your answer "yes" to one may be interpreted as waiving your constitutional right about which the second one is.
- FUD is evil. The law enforcement organs should be totally illegal to give false legal advice. Their job is to prevent violation of laws, and by telling the citizens falsehoods about their laws they operate strictly against their purpose. Any offers to the arrested should be considered valid legal contract offers, with equal consequences of failure to uphold it (you can sue a cop for failing to "help you out" in exchange for testimony and require all the punitive damages equal to your jail time)

Re:Unethical, but not illegal

[NonSequor]

Have you heard the expression "your right to swing your fist ends where my face begins"? Well I imagine if that were put into law the process would go something like this:

Legislator 1:I want to ban people hitting other people's faces with their fists.

Legislator 2: What about a light tap with a closed fist as a sort of, "Go get 'em champ!" endearing sort of thing? Do you really think that should be illegal?

Legislator 1: Sure, I buy it. We could put an exemption for that.

Legislator 3: I'm more worried about people hitting other people in the face with things other than fists.

Legislator 1: Like what?

Legislator 3: Well this guy slammed a door on my brother's face and broke his nose.

Legislator 2: Ouch...

Legislator 1: Sure that should be illegal too.

Legislator 2: Wait, what if it wasn't on purpose? What if, like, you were holding a door open for someone and then slipped and slammed the door in their face?

Legislator 1: Well that wouldn't count.

Legislator 3: You would still be responsible for being clumsy.

Legislator 1: Yeah, I guess that makes sense. You should have to at least pay for medical bills or something, but it's not like we're going to lock people up in jail over that.

Legislator 2: What if it's a windy day and the wind blows the door closed and it breaks someone's nose and the guy thinks that it was you slamming the door?

Legislator 1: Well if it was really the wind and not you, then you aren't responsible.

Legislator 3: Wait, how do you prove it was the wind?

Legislator 1: Well... ...And so on and so forth.

The moral of this story is that we don't just throw out old laws because we don't want to go through the trouble of hashing out all of the minutia in them over again. The law is never going to be not complex, because the essential logic that it needs to express is complex.

So long as the concerns that motivated the original law are still essentially valid (which, of course, is not always true), then it's generally better to amend the existing law and build off the work that has already been done, rather than attempt to rewrite them completely.

The law has the difficult task of objectively resolving disputes with subjective elements. When you think about it, that's a problem roughly equivalent to Hard AI. Over many centuries, law has developed heuristics for dealing with this problem. If you take the time to learn about them, you'll find that although they don't produce justice with algorithmic certainty, they do tend to produce reasonable results more often than not.

Re:Unethical, but not illegal

[NonSequor]

That's what I meant when I said the law has to objectively resolve disputes with subjective components. Intent is subject to interpretation, and the law specifies mechanisms for testing for intent.

What is and isn't illegal is simply the first question. The second question is, how should mitigating factors be considered in answering the first question? The third question is, how is a violation punished? The fourth question is, to what extent should mitigating factors be considered in determining the intensity of punishment used?

A system that doesn't attempt to consider all elements of the case is tyranny.

So how do you weigh all of the pertinent considerations against each other? Is one of them always most important? Or maybe one of them should only be important when it crosses a certain threshold.

The whole point is that the legal system is an attempt by humans to establish methods for making good guesses which take into account as many relevant factors as is possible. Since they're at best good guesses (and sometimes bad guesses) bad results do sometimes occur. However, it's better than the binary alternatives of either not punishing any crimes or punishing all suspects.

Patents on software...

[pieterh]

It relates because the business of software patents is very close to this. Patent litigation in the software sector is much higher than in any other sector and much of that litigation is speculative and funded by exactly the kind of VC TFA is talking about.

Of course I meant SCO

[Chrisq]

I should have said:
You mean like Microsoft paying SCO an "undisclosed sum" /to fund litigation/ .. cough .. for Unix licenses.