Show Me Your Hole Card

 

The United States Chamber of Commerce is attempting to convince the federal judiciary and the United States Senate Judiciary Committee to enact rules of civil procedure and laws that would require plaintiffs in civil cases to reveal the source of their funding. In other words, the United States Chamber of Commerce, who is lobbying on behalf of big business, wants a defendant to be able to find out how much money is available to the plaintiff to litigate a lawsuit and where it’s coming from. According to a Chamber of Commerce lobbyist quoted in The Wall Street Journal of March, 22, 2018, the defendant in a lawsuit “has a right to know who is driving the bus…”

 

It would be hard to overstate how unfair this is. Let me explain.

 

Every lawsuit costs money. No one hires a lawyer and files a lawsuit without the certain knowledge that money will be spent and, depending upon the case and many factors, the expense can run into the millions of dollars. In the simplest of cases, funding comes from the client or, if the lawyer is working on a contingency fee basis, the lawyer pays the expenses and gets paid from the proceeds of the recovery if there is a recovery. For average individuals and the majority of lawyers, the most expensive lawsuits can’t be litigated without finding an alternative source of funding. Sometimes funding can be obtained from banks if there is sufficient collateral. On occasion, a lawyer with a case that is too expensive for him or her to handle individually will agree to associate other lawyers in the case to share the expenses. A famous example of this type of arrangement was the decision of the Texas Attorney General to employ a team of lawyers to sue Big Tobacco. Each of those lawyers had to make a commitment to spend millions of dollars and to work on a contingency fee basis. The Attorney General believed, and rightly so, that the massive case was so legally risky, controversial, complex and expensive that his office would not be able to handle it alone. Other states followed Texas’ lead. Resources were pooled and litigation strategy was coordinated. After years of litigation and millions and millions of dollars in expenses, Big Tobacco settled. The lawyers made a lot of money, but Texas and the other states made far more. The positive  effects of that settlement can be seen to this day.

 

In recent years, lending companies have emerged that specialize in lending money to lawyers and their clients. The arrangements vary. In some instances, it is a conventional loan. In others, the lender provides money in exchange for a portion of the money recovered, if any. If the lawsuit is lost, the lender gets nothing.

 

In litigation filed by an individual against a big corporation, the individual and that person’s lawyer are at a distinct financial disadvantage. It is David versus Goliath. If the corporation has insurance, their financial advantage is even greater. The availability of financial resources to effectively compete in the litigation arena over a long period of time is essential. It is true beyond all doubt that defendants, particularly corporate and insurance company defendants, make decisions about how they will defend a claim based, in part, upon whether they believe the plaintiff has the financial resources to sustain the litigation to conclusion. If they believe the plaintiff is underfunded or is represented by a lawyer who does not have the financial resources needed or is unwilling to spend the resources, you can be assured the defense strategy will be to conduct a scorched-earth defense, delay, force the plaintiff to spend as much money as possible and, at a propitious moment, offer a pittance in settlement. Even a bad settlement can look good to a lawyer and client who are financially at their breaking point.

 

What the Chamber of Commerce wants is to force the plaintiff to reveal how much money and, therefore, staying power, the plaintiff has available. If they have this knowledge from the beginning, they no longer have to guess how long the plaintiff can continue, they will know.

 

It will no longer just be David versus Goliath, Goliath will know how many stones David has in his pouch. Or, if we were playing poker, the defense gets to see the plaintiff’s hole card.

 

Photo by schnappischnap on Foter.com / CC BY