February 13, 2024
As regular viewers of late-night television know, commercial breaks are filled with endless ads recruiting potential victims of some product or treatment. Although seemingly innocuous, these ads comprise the tip of a huge and costly legal iceberg that repeatedly finds its way onto the path of our economy.
The lawyers behind the ads claim they want to help people. In reality, the primary beneficiaries of these lawsuits are the mega-law firms and their deep-pocketed financiers.
Advertising is the bread and butter for attorneys specializing in mass tort litigation or class-action lawsuits. They spend enormous amounts of money on ads (almost $7 billion from 2017 to 2021), casting a wide net to maximize their catch of potential claimants against large corporations. The more people they sign up, regardless of whether those individuals have a valid grievance, the better their chances of gaining a lucrative judgment or, more likely, an enormously profitable settlement.
Companies receiving these schemes often conclude that defending a mass tort claim is too expensive and time-consuming. Accordingly, they choose to settle, even when they would likely prevail in court. Attorneys filing massive lawsuits leverage this advantage while stringing out the process, knowing that more protracted and complex litigation improves their odds of success.
An organization dedicated to reining in spurious mass tort litigation, the American Tort Reform Association, has done extensive research into what they call the “three pillars” of this ethically challenged industry. Those pillars are third-party litigation funding, trial-lawyer advertising, and the unsubstantiated scientific evidence upon which the lawsuits are frequently based.
Third-party financing of mass tort suits usually consists of hedge funds or private equity companies providing the initial financial backing, banking on a significant payday. Taking their cut off the top before the attorneys and individual plaintiffs, the investors are attracted by the idea of making money that isn’t contingent upon stock market trends or economic cycles.
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