Small: Who’s funding lawsuits in Oklahoma?

Who’s funding lawsuits in Oklahoma?

by Jonathan Small

Everyone pays the cost of abusive tort lawsuits. The average cost of tort litigation to each Oklahoma family is $2,930, according to a report by the U.S. Chamber Institute for Legal Reform.

One rapidly growing kind of lawsuit is “mass torts,” where plaintiffs’ lawyers claim that thousands of customers have been harmed. The strategy is to file as many cases as possible and flood the zone against the defendant business—and to overwhelm the courts. This provides frivolous cases cover, and it creates abusive pressure on defendants to settle.

Bringing these lawsuits is expensive. They often involve national advertising campaigns hunting for plaintiffs. Some of the funding for these and other tort cases is coming from unrelated third parties: lawsuit investors.

Little is known about this outside funding, but it’s likely to proliferate expensive lawsuits. It may also have a perverse effect on settlement negotiations, if investors pressure the actual plaintiffs to hold out for more cash.

Lawsuit investors might also be business competitors, or even foreign governments. The purpose could be simply to make money at a competitor’s expense, or to tie them up in a mass torts tangle. But lawsuits might also be designed to seek sensitive business or national security information through discovery.

What is the answer? The first step is transparency for any litigation funded by foreign entities or entities they control or can steer. Judges, legislators, and the public need to know the scope of third-party litigation funding due to foreign influences.

Also, the judiciary must deter abusive lawsuits. In Oklahoma, a number of legal options provide the judiciary with the ability to dismiss abusive lawsuits. Unfortunately, the historical mindset of the Oklahoma Supreme Court, civil courts, and district courts has been deference to plaintiffs regardless of merit.

A culprit is the progressive training of law schools. Currently, many lawyers prefer the certainty provided by federal courts that generally apply the law over the activism of Oklahoma courts. To change that dynamic, Oklahoma needs strong tort reforms like caps on non-economic damages, requiring determination of fault before discovery expeditions are allowed, loser-pays provisions and other reforms that will deter abusive third-party litigation.

Civil courts are too important to be abused. The Legislature should pass legislation requiring transparency for third-party litigation funding by foreign entities and critical tort reforms.

Jonathan Small serves as president of the Oklahoma Council of Public Affairs.