Silicon Valley Billionaire Bankrolls Third-Party Litigation Funder


Peter Thiel, a Silicon Valley tech billionaire, is a busy man. After paying for a lawsuit that bankrupted, his Thiel Foundation granted $100,000 to Legalist, based in Westborough, Massachusetts, a startup third-party litigation funder, recently.

Third-party litigation is an industry that invests to reap returns from awards in lawsuits. Third-party litigation funding is growing, according to Burford Capital, a third-party litigation funder.

Its 2016 Litigation Finance Survey, for example, found that “28% of private practice lawyers say their firms have used litigation finance directly—a four-fold increase since 2013.” This business is booming.

Back to Legalist. The startup has a unique business model.

Legalist applies an algorithm to calculate investment return on lawsuits for which it can reap up to 50% of awards, according to its co-founders, Christian Haig and Eva Shang, previous students at Harvard University.

According to the firm’s website, “Our algorithms analyze millions of court cases to source, vet, and finance commercial litigation. Find out if your lawsuit qualifies for financing.”

Is this high-tech ambulance-chasing?

“Legalist’s mission is to expand access to justice for small businesses who can’t afford existing, meritorious lawsuits,” Shang said in a statement. “All cases we take on are already underway, such as a local Mass. paper company with a breach of contract case or a small bakery with a busted water pipe.”

An official with a leading American business group is none too thrilled at the rise of third-party litigation.

In an op-ed for the New York Times, Lisa A. Rickard, president of the United States Chamber of Commerce Institute for Legal Reform, delivered a sharp critique of third-party litigation. “This practice is a cancerous growth on our civil justice system, turning our courts into profit centers, increasing the number of lawsuits in our already over-sued society, shifting control of lawsuit decisions toward funders rather than litigants, and reducing settlement dollars for truly deserving victims.”

Conflict between businesses of course is nothing new to the US political economy. Companies demand and receive a hand from government for reasons of growing the bottom line.

Meanwhile, Thiel’s granting of funds to Legalist to launch its business follows the Silicon Valley billionaire’s investment in a multi-million dollar lawsuit on behalf of pro wrestler Hulk Hogan against, the former online media outlet that had posted a sex video of the grappler without his permission.

In time, the Hogan lawsuit drove Gawker into bankruptcy, and it ceased all operations this August 22. What motivated Thiel to bankroll Hogan?

One possibility is revenge. Gawker had revealed Thiel’s homosexuality in 2007, a public “outing.”

Shang dismissed Thiel’s active involvement in Legalist and its funding of lawyers and litigants.

“We are not affiliated with Peter Thiel,” Shang said in a statement. “It would be akin to a nonprofit receiving a Soros Justice Grant—it doesn’t mean they have any interaction with George Soros.”

Soros, a multi-billionaire investor like Thiel, is a Hungarian-American financier who earned a reputed $1 billion speculating against the Bank of England and British pound in 1992. The currency speculator has become a philanthropist, funding prison reform among other political causes recently.

“I personally have a background in prison reform,” Shang said, “so I’ve been passionate about access to justice for a long time.”

Seth Sandronsky is a journalist and member of the Pacific Media Workers Guild. Email

From The Progressive Populist, October 1, 2016

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