Just in case you are wondering how I manage to come across such things. And frankly, this one is quite interesting. It comes from a venerable legal news service called The Los Angeles Journal (link), which apparently has been around from way back in the 1800s. It is a subscription only site, so I am not able to provide you with a direct link to this particular article. But as a service to you, the concerned Sierra Madre resident who needs to know, I am reproducing it here.
All of which sounds somewhat good. After all, who could ever have a problem with helping out po' bucker litigants with potential $100 million dollar lawsuits on their hands? Legal counsel does not come cheap, after all, and you will always need money to make money.
However, and as any close follower of the governmental and legal affairs of this portion of God's greatest land is likely to tell you, larding something over with the familiar language of social concern does not necessary mean that this interesting legal service will limit itself to just the downtrodden and oppressed. Not when there is some of that long green to be made.
After all, isn't it true that when you want to sell people on something in California, the proven way of doing so is to claim it will help make the world a better place? Investors take note.
I was fortunate enough to be able to discuss today's news with someone who knows a lot about this expanding niche legal field, and he enlightened me about some of the claims our guy John Harabedian makes for himself in the above article. The obvious undertone being that he is taking a very lucrative position and spinning it as the embodiment of advanced legal social responsibility.
Here are a few points.
- Harabedian will be salaried and highly paid, but Bentham, the company, operates on the premise that they’re “evening the playing field.” They find cases likely to win, that normally would take too much money and time to litigate, and fund the attorneys working on them, knowing that they, the investment company, will get a cut of the ultimate award.
- It’s very hush hush, you rarely find out which cases they are even involved in, but this company will at least tell you they have a 90% success rate of winning cases, so far they have put money into 180 lawsuits and have gotten back $1.7 billion from their investments.
- The red herring Harabedian flies is that they’re helping fund the cases of average joe’s who have been wronged and can’t afford to litigate their cases. The reality is they only really pick large commercial litigation where the payout is big enough to be worth their while. So two big companies fighting over trade secrets or breach of contract would be an obvious example. Opponents of the practice say it’s flooding the system with frivolous lawsuits.
- Harabedian will decide quietly, confidentially, to back this company or that company in its suit, because even if the business in legal trouble is rich and powerful, it can’t put so much of its capital at risk litigating. So he gets big business connections by deciding which corporation gets to have their bill footed in the short term, based on strength of case and wealth of opponent. Part of it is the merits, but who wouldn’t get a better chance at winning with unlimited funds to litigate and appeal? It’s a blank legal check and he’s the new gateway.
- Even if everything stays above board, the more believable story is he’s taking the revolving door special interest business route up the ladder, so it is a time-honored political path. Harabedian is just trying to spin it as something less sinister than what it is.
A press release from Bentham IMF is available on-line and you can link to it here. Note this line: "Clients utilizing Bentham’s funding have retained an average of 63% of all case proceeds."
I guess that leaves 37% for the investors. Operators are now standing by to take your call.