Litigation Inc. V. Corporate America

Article excerpt

Tired of investing in the usual stocks, bonds, and mutual

funds? How about investing in suing a competitor or any other company? In a 1992 article in

The Brief magazine entitled, "Investing in Justice: How plaintiffs are selling shares to finance their commercial lawsuits," two Michigan-based attorneys wrote, "One of the most significant recent innovations in the pursuit of a commercial claim is now reaching the courtrooms of America to determine its validity. This innovation is the syndication of commercial claims."

Although in 1996, there are still no publicly traded lawsuit shares, this soon

may change. There is at least one Web page dedicated to developing such a market. Included in the listed virtues of investing in lawsuits is the fact that unlike a wealth-producing business corporation, which has capital equipment and personnel to worry about, even a billion dollar lawsuit is simply a folder, with no management issues or tangible assets.

"What you are seeing is a nascent financial-services industry based on lawsuits," notes a Washington consultant who wishes to remain anony

mous for fear of reprisal. "I think that is antithetical not only to the average person's view of law, but also to the spirit of the law. The law is the base on which the market rests; it shouldn't be in the market itself."

Nevertheless, a quick search of the World Wide Web reveals a page devoted to potential lawsuit investments with the market lines segmented under the heading "Product Liability," much the same way GM has its product lines of Corsicas, Camaros, and Blazers. The product lines listed include, "Mass Torts," "Asbestos," "Silicone Breast Implants," "Dalkon Shield," "Tobacco," and "Medical Malpractice." This and other developments have prompted Richard A. Hazleton, chairman and CEO of Dow Corning, to label the exploding lawsuit obses

sion, "Litigation Inc." "Litigation is a business predicated on economic incentives," says Hazleton, whose company was forced into bankruptcy as a result of spending more than $200 million over two years fighting 19,000 breast implant lawsuits. "It is just another business seeking the richest market offering the greatest returns."

To illustrate the parasitic nature of the plaintiffs' bar, Hazleton explains the product-development process for Litigation Inc. "R&D for Litigation Inc. includes deposing

hundreds of people, reviewing millions of documents, and using the latest information processing technology, just as any forwardlooking business would," Hazleton says. …