Watching all of the activists, from Jeffrey Smith to Carey Gillam, get giddy about the award of $289 million to Dewayne Johnson in the first glyphosate trial, hearing them praise the tort lawyers as heroes and applaud the jury decision as a distribution of justice, the Risk-Monger thought to himself: these voices of the people, these warriors of truth, these activists standing up against the evil of big money … these stupid fools … they don’t get it at all. The system takes care of the system. Only the Predatorts will get paid.
The activists who crow their ideals in fighting the system merely played into it – as useful idiots manipulated in the Plaintiff Playbook to make a lot of ethically bent Predatorts a lot of money. What about the people these activists nobly declared they were protecting? The consumers are paying the bill. The victims forced to suffer through years of testimonies and cross examinations? Manipulated as income generators, the first to be used, the last to be paid … if at all.
Even NGOs like SumOfUs who pretend to represent the people against corporate greed were getting in on the dash for the cash, citing Dewayne Johnson as their hero while using his name and his children to fraudulently line their own pockets.
How does the system take care of the system? How do the tort-torts move their assets around? Part 3 of the Predatorts chapter of SlimeGate looks at how these slimeball law firms have set up a financial structure to assure they never lose and always get paid first.
The Murky World of Litigation Finance
Setting up the Plaintiff Playbook costs money and takes time (NGOs, scientists and consulting services need to be paid off up front). Many cases can take years and involve large numbers of expensive people. You need to attract the best lawyers … and who would join a firm that doesn’t tout a private jet, meetings in far-off resorts or an endless stream of random emoluments? This costs! If a jury awards a large pay out, it is likely the defence will appeal and the following cases are designed to take up to a decade to finally settle. Since the plaintiff is not paying the law firm (the beauty of the “No win, no fee” or “contingency fee” model), the lawyers need some way to pay the rent and cover their fees, staff and Plaintiff Playbook incidentals (like the scientific tort-torts and the NGOs). In other words, the law firms need investors to put up the cash in advance and be in it for the long haul.
Litigation finance is an emerging means for individuals or companies to fund tort law cases at the outset and reap a good part of the profits upon settlement. This summer, The Economist published a story on this growing litigation finance industry, noting how “in the past 18 months some 30 (funds) have launched; over $2bn has been raised. Last year Burford Capital, an industry heavyweight, put $1.3bn into cases—more than triple the amount it deployed in 2016.” At the time of writing, Burford Capital’s stock price has doubled in the last year and its latest results show an operating profit of 18%.
Investors who take the risk of funding toxic tort cases can profit either from a fixed annual percentage or a via a slice of the jury settlement (often a combination of the two). It is becoming more common today for litigation finance firms to offer portfolio funds (grouping together multiple cases). So investors can plonk down an envelope on the 7800 cases against Monsanto on glyphosate and reap a nice regular return for the next ten years with added windfalls. When billions are allowed to float freely below the surface, it should not be a surprise that the sharks start to circle for a free lunch.
This rapidly growing financial tool is influencing legal advice, corporate strategy and long-term public perception campaigns. Would counsel advise a plaintiff to settle if an appeal translates into millions more in fees regardless of the outcome? Could law firms have more cash available to invest in publicity campaigns and influencers to increase public outrage beyond a single jury pool?
Litigation finance funds are products most investment advisers would not recommend for you, and it is surely one that no ethical investment fund would consider as appropriate. But it provides a way for investors to pool funds between law firms and collect on future settlements. The investment will be used to hedge against case losses, advance fees from the law firms, provide cover for the costs of cases and pay off the litigation consultants (the tort-tort scientists). So if, for example, someone like Weitz & Luxenberg’s litigation consultant, Chris Portier, needs to charter a flight from New York to San Francisco for a meeting, and that ticket costs almost 8000 USD, it is easily drawn from their slime account, no questions asked.
It is not real money and since everyone expects this investment roulette account to pay off millions once the deluge of lawsuits start settling, there seems to be little scrutiny on how the money is being spent. It is free money so anyone with an ego that needs stroking can easily pony up to the trough and feed at will. Most tort law firms fly their slime around on private jets so why should Chris Portier fly coach? When the money doesn’t belong to anyone and is in quantities far too high to fathom, gravity disappears (as does scrutiny). I make €32,000 a year as a Belgian professor – that is real money that I use to pay my rent, I raised three wonderful children on it and I’m happy with the life I have. Chris Portier spends a quarter of that amount on one flight – that is not real money. This is how a scientist can be corrupted.
But it is real money with real consequences (outside of Chris not having to pay for his peanuts with his champagne). It will show up somewhere. Take the situation presently affecting Dewayne Johnson, the first plaintiff against Monsanto on glyphosate. The judge recently dropped the payout from $289 million to $39 million. That is still a lot of money that would allow Mr Johnson to ensure his family’s financial needs are covered for life (and his counsel should advise him to take the smaller amount). But Baum Hedlund and the Miller Group have likely already spent more than $39 million on fees, litigation consultants, expenses and emoluments in this case, which they have already drawn from external financiers. They would probably advise Dewayne to reject the offer and open up a new trial (more fees for the Predatorts covered via the litigation finance investors). Dewayne may not live long enough to see a settlement and learn how much the slimeballs will actually take from a case that occupied his last days. And he may not win the new case.
Litigation finance company, Bentham Finance, presents a simulation where, in financing 50% of the risk (the law firm shoulders the other 50%), they would expect to take 20% of the settlement. That seems on the high end compared to legal specialists I interviewed for this blog, but I take the finance firm at their word. This 40% return on risk seems extortionary (similar to a rate loan sharks would offer), but if it allows Predatorts to spend, spend, spend, then I guess nobody minds (except maybe the client who is less likely to get any of the settlement).
Litigation finance allows for Predatorts to freely give bad advice – they are getting paid and have no real interest in the victims receiving anything. Chris is already back in Switzerland with his half mille in the bank (although he is always available to come back for more hearings … certainly not flying “coach”).
Free money free-for-all
A recent exposé demonstrates the audacity of lawyers feeding from the litigation finance trough. Environmental tort lawyer, Steven Donziger, took Chevron to court in Ecuador for alleged damage to the environment affecting indigenous tribes in the Amazon, winning $9.5 billion (only to have an American court reject the ruling convicting Donziger on charges of racketeering, bribery and money laundering). It seems Donziger not only bought the Ecuadorian judge, experts and celebrity influencers, he was also paying off journalists and activists.
Law Professor, Michael Krauss, broke this story looking at the financial mismanagement of Donziger’s extortion racket. Over $40 million was raised via litigation finance tools for this Chevron litigation. After the verdict, he raised a further $2.4 million to try to force Chevron to respect the Ecuadorian verdict but much of that was spent by Donziger and his wife paying off credit card bills, clubs and spas. Of the $725,000 Donziger received from the initial Ecuadorian payment, at least $500,000 went into his personal bank account (none went to the Ecuadorian Amazon forest indigenous victims he claimed to represent).
Only Donziger was punished for this unethical behaviour (he lost his license to practice law in New York) everyone else feeding off of this slimepit (judges, experts, activists, journalists, rock stars …) walked away unscathed. And what about the litigation finance investors? It’s a risky world out there … you win some, and every now and then, you lose one.
The slimiest part of litigation finance: zero transparency
There is at present no required transparency, no discovery, over who is funding the litigation finance mechanisms behind the tort cases and there are clear advantages to investing in long-term portfolio-funded litigation (regardless of any financial returns).
- Without revealing who is bankrolling the large class action suits, judges might have conflicts of interest with the funding.
- A competitor of a company under continuous attack may find it attractive to use such long-term litigation finance as a tool to build their own market advantage.
- Litigation finance tools are even seen as an ideal way for corrupt politicians to launder money (perhaps given to them by Predatorts).
Money well-spent is often money less scrutinised.
Could these completely non-transparent finance arms (misused as tort law-firm slush funds) be used to funnel cash into anonymous 501 C 3 charity accounts like the one the Organic Consumer Association has? The OCA is the main funder of the US Right to Know NGO, tasked with destroying the reputation of Monsanto and managing the case updates for Weitz & Luxenberg, one of the main law firms suing Monsanto. Nobody seems to be talking about this.
An interesting example of mass tort financing would be Counsel Financial. It was founded by Perry Weitz and Arthur Luxenberg, the leads of the firm that was the first to sign Chris Portier for the expected glyphosate honeypot rush. Weitz & Luxenberg are also using the charitable services of USRTK’s indefatigable Carey Gillam. These Predatorts have been caught underwriting the deplorable behaviour of some absolute slime like Sheldon Silver. Silver netted at least $3 million from Weitz & Luxenberg simply for referring a few potential plaintiffs to the law firm’s asbestos trust litigation setup, upon which he then turned around and invested the money back into Weitz & Luxenberg’s Counsel Financial litigation finance arm. Hey Sheldon! That should be illegal … except Silver was one of New York State’s leading lawmakers (the level of New York State corruption between Predatorts and lawmakers almost rivals that going on in the good state of Illinois)! Now Sheldon’s in prison but Weitz and Luxenberg are not (they seem, however, to keep popping up as the scuzziest scum in slimepit). The system takes care of the system and Weitz & Luxenberg are now leading the charge to feast off the rotting carcass of Monsanto (actually, their private jets will be fueled by higher insurance premiums eventually paid for by farmers and consumers).
Litigation finance creates a perfect non-disclosed financial free-for-all with cash splashed about on anyone who could be helpful to the case … or just helpful (since it is not real money). Scientists are not prepared in grad-school to manage being exposed to such largess and corruption so it should be no surprise that some scientists with vulnerabilities allow themselves to be influenced by the honeypot. More on that in Chapter 3 of SlimeGate.
Having to pay off non-disclosed investors in litigation finance schemes, politicians and judges creates higher demand for more lucrative income sources. Fortunately, the system provides several tools to allow the bigger Predatorts to keep a good flow of revenue.
Bankruptcy Trust Honeypots: Without getting into too much detail, the asbestos trust scams have created an easy uncontrolled revenue scheme for Predatorts to use to corrupt retired judges, politicians like Sheldon Silver and other potential plaintiff allies. When asbestos firms were going bankrupt, these trusts were set up to manage any future settlements but Predatorts like Weitz & Luxenberg are now essentially running the trusts themselves, paying their networks and misusing the funds for obvious non-asbestos-related claims. Weitz & Luxemberg built their firm on this slimepit and as they are sucking asbestos dry, Perry and Arthur are now moving into the glyphosate honeypot. Sweet!
Plaintiff Steering Committee. Those firms who get in at the beginning of a large number of cases against the same company or person (known as multi-district litigation or MDLs) form what is called the Plaintiff Steering Committee. In preparing the original cases, hearings and research, the Steering Committee law firms are entitled to 6% taken flat off the top of all subsequent settlements. This explains why so many law firms were piling into the Dwayne Johnson Monsanto lawsuit, including the mystical Robert Kennedy Jr (frequent celebrity guest on Russia Today, anti-vaxx naturopath and, well, quite simply the Whiskey Tango Foxtrot of the toxic tort world). 8700 cases and counting against Monsanto’s Roundup will guarantee a good long-term revenue stream for these MDL plaintiff steering committee firms.
When you think about it, another victim exploited by the Predatorts is our friend, poor Chris Portier. That half million in fees the good scientist raked in for three years of lying in public and attacking the scientific community to deliver the IARC glyphosate farce safely to the jury was actually chump change compared to the hundreds of millions his paymasters at Weitz & Luxenberg will pipe in simply as a member of the Plaintiff Steering Committee – all thanks to Portier’s relentless groundwork. While Chris may have cried all the way to the bank, every night the thought of his deceptive role in this big fraud has got to haunt him into his troubled dreams.
Like any corporation, these Predatorts seek an effective return on investment. Paying for scientists to ensure a link between a substance and a cancer is the first step. Getting the activist community “inspired” to become public relations hit-squads to develop public outrage against a company that could dry up any potential juror objectivity is the next expense. At that point, it is time to trawl for victims (and this is where the honey-honing gets serious).
Victim trawling. Anyone who has spent time in the US will have noticed the number of late-night TV commercials by tort law firms seeking victims with one disease or another. TV ad revenue for this slimeball circus is no joke – it is the fastest growing media ad spend in the US and has recently approached one billion dollars annually (excluding web, radio, newsprint, billboard and call-center expenses not to mention the ethically-questionable direct interventions with doctors and hospitals). A billion dollars a year for one sector of ad spend puts in perspective the amount of money these non-transparent slimeballs have to throw at scientists and NGOs to distort public perception and policymaking.
Online victim sourcing is the future as naturopathic tribes and communities know where their victims are and their gurus know how to exploit them. It should come as no surprise then that 23 of the top 25 Google keywords were for toxic tort law firm vocabulary (with keywords often costing more than $600 a click). Like any true artists, law firms naturally want to get quality victims that can guarantee better pay outs (children, pregnant women, educated, ethnically-attractive people …) so there are now firms that can capture big data to sort through the thousands of suffering applicants, separating the emotional gems from the less attractive, less profitable opportunities. There is even a specialisation in finding good quality glyphosate victims.
Buying a journalist or two. The Plaintiff Playbook would expect the captured activists, gurus and NGOs to leverage their media networks to put pressure on companies, but sometimes an efficient Predatort needs to add that little extra touch of outrage in the mainstream media. Returning to the Donziger-Chevron affair in Ecuador, Steven Donziger spent a good part of his litigation financed millions on putting media pressure on Chevron (hounding the company with journalists, activists, rock stars and NGOs).
Donziger paid one of the Greenpeace founders, Rex Weyler, $15,000 to write a story against Chevron. In a rather sad contrast, Donziger only paid a Reuters journalist, Cristina Munoz, $500 a month for providing consistent coverage to his story (a sign of the times when an activist zealot commands higher shill-bills than a Reuters reporter). Articles against Chevron were ghostwritten by Donziger and published in such outlets as Vanity Fair while CSRWire and Mother Jones are even still today publishing favourable stories defending Donziger while attacking Chevron.
Well-known activists, indigenous rights group leaders, press secretaries and PR experts were paid hundreds of thousands or offered percentage slices of the $9.5 billion settlement (when Chevron is forced to pay). Even Pink Floyd’s Roger Waters was promised a sliver of the future payout in order to have him speak out and add a certain “star power” to the voice against Chevron. It kind of makes your eyes water to watch Waters threaten Chevron and go on about greed and corporate malfeasance when all the people around him were also on the take. Waters stands to pull in around $1 million if his PR campaign supporting role works.
This stinks to high heaven.
The Real Victims
In tort cases that can last many years, once the lawyers take their fees, the scientific tort-torts learn how to manipulate their timesheets, staff are paid, gifts are classed as costs, the jet is gassed up, TV ads are covered, Google consultants gets paid for ad-clicks, the Plaintiff Steering Committee get their 6% off the top, journalists are paid and NGOs receive their “donations”, it is then the financiers who can reap a return on their investment, as well as the firm managing the finance arm … and maybe, just maybe, there will then be some crumbs left for the victim whom, a decade ago, was probably promised millions and has had to endure years of emotionally draining testimonies as the whole dog and pony show played out.
But it was never about the victim … Chris got to fly on a private jet.
So while these slimeballs line their pockets, enjoy the high life and bog down the legal system with bogus claims, we should not forget the real victims: the public. By manipulating science and distorting the public trust in regulatory science in the hopes of persuading a jury, consumers and worried parents no longer know what to think or whom to believe. Part 4 of the Predatorts chapter will look at the real victims of the tort industry.
Thanks to greedy tort lawyers, parents stress over whether to vaccinate their children. Thanks to the anti-industry tactics of the “Us against Them” tortologists, many industry innovations have been rejected by skittish regulators. Thanks to the opportunism around the organic food industry, high profile cases on pesticides and cancer have made terrified parents have to choose between more expensive food or consuming fewer fruits and vegetables (a known risk of cancer). None of these public fears are founded; all of them came from tort-tort opportunism.
Thank you … you pathetic, greedy scum!