THIRD PARTY LITIGATION FINANCING AND GAWKER

We've touched upon the distinction of being "legally right" and being "financially right", and the importance of knowing the difference.

Being "legally right" means the law is on your side, but if you don't have the money to litigate to protect your legal and economic interests, you will lose.

Being "financially right" means the law may not be on your side, but if you have enough money to throw at the problem and are able to hire good attorneys, you may yet prevail by wearing the other side down.

A good example of this strategy in action is Donald Trump's use of lawyers and litigation as a business tool in his business practice. He has been known to threaten litigation against business associates, partners and vendor, in order to reduce his payments to them, or to get something he wants. Sometimes the mere threat of litigation will bring the other party to its knees. Other business owners and companies do the same thing.

U.S. law does not prohibit this type of behavior. Since it is not illegal to do it, people and companies use lawyers and lawsuits as part of their business strategy and practice. Although some people may view this practice as unethical, it is important to understand that the law can be used as either a sword (offensive) or a shield (defensive) to protect or to advance your business position in the marketplace.

Corporations have deep pockets and can play the long game of litigation. People have less money and resources, and therefore have less staying power. Why can't plaintiff's find an investor who is willing to take the risk of litigation in exchange for some of the winnings, if any, at the end of the lawsuit. This is called litigation financing. The Gawker Incident brings a new twist to the use of litigation as part of your business arsenal.

To refresh your recollection:

Gawker Media was former website that published scandalous news about celebrities and high profile people. In 2007 Gawker published an article about Peter Thiel's sexuality. While what Gawker say about Mr. Thiel was true, it nevertheless upset Mr. Thiel, who then hired a legal team to scour the landscape for potential cases to be brought against Gawker and that he could financially support.

One such case involved the former wrestling star Hulk Hogan. Gawker released a sex tape of Mr. Hogan having sex with his best friend's wife. Mr. Hogan sued for invasion of privacy. Gawker tried to settle but Mr. Hogan, supported by Mr. Thiel's deep pockets, refused. Gawker loss the lawsuit and filed for bankruptcy. FYI, the lawyer representing Mr. Hogan is the same attorney who is representing Mr. Trump in the Stormy Daniels lawsuit.

Even before the Gawker-Hulk Hogan incident, there were companies that would finance your litigation, if the recovery was substantial. You can find some of them on the Internet.

Discussion

What are your thoughts about having a third party finance the litigation of a party to a lawsuit? Would this option help to level the playing field between those who have deep pockets and those that to not?

There is a twist to this Gawker incident in that Mr. Thiel had other motives than seeing that Mr. Hogan received justice (read between the lines in the attached articles). This is a good example of being financial right.

What are your thoughts on the Gawker incident? Explain. What are other examples of people suing because they have the financial resources. Is it fair? How can we level the playing field?