Those businesses operate in a fashion similar to lenders or investors, with eyes on the bottom line. "If anyone thinks there’s a problem with Peter Thiel, the first thing to blame is the American civil justice system, where a relatively straightforward lawsuit about a sex tape can cost ten million dollars" to fight, Kontorovich told BuzzFeed News.Įxpensive litigation is a cost of doing business for big companies, and paying for it has become an industry of its own, with litigation financing companies specialized in putting up the money to help customers make it through a lawsuit. In the case of Gawker, Thiel's bottomless pockets have helped create a lawsuit that was impossible to resolve out of court - Hogan reportedly turned down a $10 million settlement offer - and brutally expensive to fight. Such public interest litigation has become a central pillar of efforts by groups like the American Civil Liberties Union, which identify areas of concern and then search for the ideal lawsuit that will help them test or overturn laws. That he also may or may not have had feelings about it does not change that.” “Thiel was in essence financing what he understood as public interest litigation on an issue of public concern. “Thiel’s conduct fits into the ‘public interest’ or ‘ideological’ litigation paradigm,” Kontorovich wrote in the Washington Post. But such laws had mostly fallen by the wayside by then, according to Eugene Kontorovich, a Northwestern University law professor. The court ruled they violated the First and Fourteenth amendments. In 1963 the Supreme Court overturned Virginia laws, enacted the year after Brown was decided, that restricted the role of outside parties in lawsuits. Board of Education decision, where the NAACP famously directed and represented the plaintiffs throughout the entire legal process "seven southern states suddenly discovered a need to reinvigorate" laws against outsiders supporting lawsuits, the Yale Law Journal wrote in 1963.
They didn't always change them for the noblest of reasons. Such rules restricting outside involvement in lawsuits faded away in the 20th century, thanks to Supreme Court decisions, the rise of class-action lawsuits, and states changing their own laws. Or consider how the English philosopher Jeremy Bentham, the intellectual grandfather of allowing outsiders to fund litigation, described the origins of champerty laws in a 1788 tract: "A man would buy a weak claim, in hopes that power might convert it into a strong one, and that the sword of a baron, stalking into court with a rabble of retainers at his heels, might strike terror into the eyes of a judge." The descriptions of what motivated the original rules against funding other people's lawsuits may sound strikingly familiar to those following news of Thiel's extended campaign against Gawker.Ī Colorado judge explained it in 1900: wealthy nobles would "buy up claims, and, by means of their exalted and influential positions, overawe the courts, secure unjust and unmerited judgments, and oppress those against whom their anger might be directed." "In feudal days, there was the risk that the powerful could abuse the litigation process to steal land from those less powerful by manufacturing lawsuits in which they otherwise had no interest," the commercial litigation finance firm Burford Capital said in a letter to two Republican senators looking into their industry.
For hundreds of years, there were rules against third parties financing or speculating in civil claims in American courts.
Prohibitions against what's called champerty, barratry, and maintenance - all relating to people involving themselves in legal disputes they aren't directly connected to - have precedents that date back to ancient Rome. But his strategy of quietly financing other people's lawsuits to weaken an enemy was once a well-known tactic of aristocrats and land barons, and led to longstanding legal principles that outlawed it. Peter Thiel is not a feudal lord in an sovereign maritime colony - at least not yet.
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