Regardless of what you think of the business of litigation funding, it’s here to stay. There are now hundreds of millions, if not billions, of dollars of capital invested in commercial litigation and arbitration in the United States, Britain and Australia, and some of the biggest litigation funding firms in the United States have begun to show a good enough return for their investors to justify the risk of taking sides in inherently lengthy and uncertain cases. Business groups that oppose investment in litigation tried mightily, but they simply haven’t managed to stem the industry’s steady spread, either through legislation or regulation.
For leading litigation financiers, the most significant impediment to growth is probably vestigial suspicion of their business by the big companies and major law firms they want to partner with. That’s why a newly released unredacted version of a filing by Patton Boggs in Chevron’s Manhattan federal court fraud litigation against the onetime lawyer for Ecuadorians with a $19 billion judgment against the oil company is so interesting. (Ted Folkman at Letters Blogatory was the first to spot the unredacted filing.)
The Patton Boggs brief addresses the relationship between the law firm, which is counsel to the Ecuadorian claimants in some of the multipronged litigation between them and Chevron, and Burford Capital, which once invested in the Ecuadorians’ case but has since alleged that it was deceived into taking part in the litigation. Precisely what Burford knew, and when it knew it, is yet another treacherous cul de sac on the long and ugly road of the Chevron litigation; Burford principal Christopher Bogart and Chevron itself present an abundance of contemporaneous evidence to rebut Patton Boggs’s premise that Burford knew more about flaws in the Ecuadorians’ case than Bogart said in a declaration to U.S. District Judge Lewis Kaplan in April. But the newly released brief quotes internal Burford communications showing the funder’s fear that the taint of its investment in the Chevron litigation would hurt not only its prospects but those of the entire litigation finance industry.
In case you don’t recall, Burford co-founder Bogart made a splash this spring when he filed his declaration, which described how Patton Boggs and Steven Donziger – the New York lawyer who championed the Ecuadorians’ environmental claims against Chevron for years, until Chevron lawyers at Gibson, Dunn & Crutcher revealed such allegedly illicit tactics as bribing Ecuadorian judges – had falsely assured Burford about the legitimacy of the case in Ecuador. Bogart’s declaration was rightly regarded as a boon to Chevron, a repudiation of the Ecuadorians and their advisers by another of their onetime supporters.
Patton Boggs was, of course, infuriated by Bogart’s assertions, which it considered a betrayal. Patton Boggs partner James Tyrrell had been a big supporter of Burford in its early days. He is a personal friend and former law firm partner of Burford co-founder Selvyn Seidel; Patton Boggs even provided office space to Burford when the funder launched. Burford and the law firm worked hand-in-glove in the early days of the funder’s investment in the Ecuadorian case. But Patton Boggs contended in a motion to strike Bogart’s declaration from the record in the case before Kaplan that everything changed when Seidel left Burford and former Latham & Watkins partner Ernest Getto – a onetime outside counsel for Chevron – joined Burford’s board. According to Patton Boggs, after Getto’s arrival, Burford schemed with Chevron to renounce the Ecuadorians and exit a messy case.