• U.S.

The Law: Suits for Sale

2 minute read
TIME

“Can I show you something in a suit, sir?” the investment counselor might say unctuously. “A lawsuit I mean. A really blue-chip group of defendants and prospects for an impressive award of damages.” Buying snares in a lawsuit? Why not, asks Manhattan Attorney Carl E. Person, who has reason to believe that he is on his way to creating just such an investment possibility.

Person is currently representing a small group of auto brokers in a complex, $300 million antitrust suit against the big four automakers, many of their New York franchise owners, and some of the New York newspapers they advertise in. To help him match the resources available to such weighty opposition, Person asked.a federal judge to authorize two approaches guaranteed to horrify the bar: 1) the hiring of expert witnesses on a contingency basis under which they would be paid only if Person’s clients won, and 2) allowing Person’s clients to sell shares in the outcome of the suit to finance the costs (estimated at $1 million) of the action, which is already 5½ years old. While Federal Judge John F. Dooling Jr. did not rule directly on Person’s claim, he has issued an opinion strongly implying that the lawyer has a point.

New Market. The bar’s traditional ban on contingent fees for witnesses rests on the fear that they would hype their testimony—or worse—to increase the likelihood of victory and thus of getting paid. But Judge Dooling thinks the danger of distorted testimony is not significantly greater than in cases in which a witness is paid a straight fee for his presumably favorable expertise. As for the remarkable idea of selling shares in the ultimate damages, if any, the judge said that the law did not appear to prevent Person’s plaintiffs from selling such shares, so long as investors had no say in how the case was fought legally.

Person had already become something of a bar rattler as one of a handful of attorneys who pressed legal claims that helped force the American Bar Association to reconsider its ban on lawyer advertising. Now, armed with the Dooling ruling, Person has asked the New York City bar about the ethics of his share sale, and is talking about a whole new stock market for lawsuits.

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