February 14, 2012

Contingency Fees Agreements, Lawsuit Lending and Enforcement of Foreign Judgments Among Top Lawsuits Trends for 2012

The trial bar is always looking for new ways to sue – and new ways to fund potentially lucrative lawsuits.   We  asked four key practitioners to identify the trends in litigation which should be of concern to the business community in 2012.  Their answers – shown in this video – include the use of contingency fee counsel by state attorneys general, the rise of third-party litigation financing, the expansion of liability through novel theories, the application of the Alien Tort Statute (which is headed for the Supreme Court), and litigation over the commonality standard in class action cases. 

John Beisner starts with a discussion on broader use of contingency fee arrangements between state attorneys general and private lawyers, pointing out that AGs have started handing penalties cases (what he calls ‘quasi-criminal’) over to contingency fee counsel.  The outside lawyers are trying to impose penalties, as opposed to trying to recover money lost by the state, which raises major due process concerns.  Beisner isn’t the only one uncomfortable with the relationship between AGs and the plaintiffs bar: Katherine Adams asks if the contracts awarded to donors are legitimate or are they influenced by the political process?

Adams goes on to say that plaintiffs’ lawyers are advancing numerous novel theories of liability that try to bring multiple defendants into cases even when they did not have any direct connection to the alleged injury.  The trial bar’s attempts to broaden the scope of liability through asbestos conspiracy and public nuisance have so far been unsuccessful, but that won’t stop them from trying again.

Thurbert Baker focuses on the hazards that come with 3rd party lending for lawsuits, where a large investor, such as a hedge fund, purchases a stake in a class action.  The practice prolongs litigation and drives up the costs.

A court case that was decided by the U.S. Supreme Court last year could revolutionize the way class actions are litigated according to Lisa Blatt.  In June, the court dismissed a potentially huge class action against Wal-Mart, writing that the plaintiffs had too little in common to form a single class.  In the future, courts will ask if the commonality standard has been met before moving the case forward.  Another case of interest to the business community is scheduled to go before the Supreme Court in 2012.  Kiobel vs. Royal Dutch Petroleum will decide whethercompanies can be held liable for human rights violations committed by governments overseas under the Alien Tort Statute, a 200-year-old law that has traditionally been applied to individuals, not companies.

The business community should be aware of these emerging trends.  Counteracting these troubling developments is critical to keeping time and resources focused on creating jobs instead of fending off dubious suits.

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