In a wide-ranging Q&A with the Litigation Daily earlier this month, Burford Group CEO Christopher Bogart took a moment to question the motives of tort reformers who’ve taken aim at third-party litigation financing. The U.S. Chamber of Commerce, Bogart suggested, may have targeted Burford’s line of work in a misguided attempt to score political points. Bogart’s comments clearly struck a nerve with Lisa Rickard, president of the U.S. Chamber Institute for Legal Reform. Rickard sent us a pointed letter attacking Bogart’s remarks, which we’ve reproduced below. We’ve also appended Bogart’s equally pointed response. It’s fair to say that the two don’t exactly see eye to eye.
Re: "Burford CEO Christopher Bogart: Litigation Financing Loses Its Mystery," (2/1/2013)
Burford Group’s mischaracterizations of the U.S. Chamber Institute for Legal Reform’s (ILR) efforts to curb third-party litigation financing abuses are inaccurate.
Burford’s claim that certain plaintiffs cannot sue without third-party litigation financing rings hollow. With contingency fee cases widely available in the United States, we are already the world’s most lawsuit-happy nation.
Third-party litigation financing encourages meritless lawsuits, since one windfall can subsidize many losses, and investors verify a lawsuit’s "jackpot" potential, not its legitimacy. The practice also clouds who controls the lawsuit, compromises the attorney-client relationship, artificially inflates settlement values, and can crowd court dockets.
Centrally, third-party litigation financing is about making money off of the little guy, not benefiting him or advancing justice. Tellingly, Burford’s comments focus on how profitable the industry has become, not how it has improved plaintiffs’ lives.
A case-in-point is the infamous Chevron lawsuit out of Ecuador concerning environmental cleanup that seeks multiple billions of dollars for investors and other parties while leaving murky what the actual plaintiffs may receive. An ex-Ecuadorian judge recently said that plaintiffs’ lawyers offered a $500,000 bribe to secure an $18.2 billion judgment and actually wrote the government’s decision against the company. This was just the latest in a string of alleged fraudulent activities in this case.
ILR has called for common sense safeguards to prevent third-party litigation financing from undermining our justice system. Allowing the industry to police itself will further turn our courthouses into cash machines while bogging down our legal system in a continuing flood of lawsuits.
Lisa A. Rickard
President
U.S. Chamber Institute for Legal Reform
Now for Bogart’s response:
For tort reform advocates, Ms. Rickard and the U.S. Chamber of Commerce make here an extraordinary statement: that businesses who don’t want to, or can’t, pay the cash costs of ongoing litigation should be restricted to using contingency fee law firms.
To be sure, there are excellent lawyers who will take cases on a contingent basis. But when I was the general counsel of Time Warner, many of those firms spent their time suing us, and I would not have been keen to reward them with some new business. Instead, what I wanted was a way to use my relationship law firms–which did not work on contingency–in a way that met my budget and risk management needs. Burford–the world’s leader in litigation finance–was born from that need, and is staffed today by lawyers from Cravath, Latham, Debevoise, Cleary & Baker Botts and publicly traded in London. We have committed almost $400 million to litigation matters in the last three years, most of that to major US law firms and their corporate clients.
Why does the Chamber of Commerce continue to agitate about litigation finance, when an ever-increasing number of U.S. businesses and law firms are clearly happy to have a further financial option for the high costs of complex commercial litigation? Unfortunately, because the Chamber’s tort reform agenda has largely failed, and a new issue is needed to scare people and keep the money flowing in to employ Ms. Rickard and her colleagues–and because some of the Chamber’s large supporters don’t like the idea of a level playing field in litigation that might interfere with their usual tactic of steamrolling opposition through high spending and aggressive discovery litigation.
And why does Ms. Rickard need to stoop to the attack language of mainstream American politics, even when addressing an audience like this one? Sadly, because she doesn’t have anything better to say. None of her "arguments" on the merits survive any degree of scrutiny. The idea that Burford would deliberately invest in weak cases is simply daft–that is a recipe for business failure.
Surely the Chamber has better things to do.
Christopher Bogart
CEO, Burford Group LLC
