Investor Financed Litigation and the Reptile Theory
In simple terms, Investor Financed Litigation consists of financial investors funding and supporting plaintiffs in legal cases in exchange for a portion of the case settlement. In cases related to transportation, investors are providing the plaintiff with financial relief so they may continue to apply pressure against the defendant in order to pursue a higher settlement.
I recently met with an individual out of Washington state who had a $1 million auto claim settle for $20 million because of this practice. Investors are targeting the auto/transportation industry because of:
- Likelihood that motor vehicle record checks aren’t up to date
- Lack of training
- Lack of pre-inspection/post-inspection documentation
- Vehicles not being equipped with the safest technology
Relation to the Reptile Theory
Humans and reptiles have a common anatomy structure in the brain (e.g. brainstem and cerebellum). These parts of the brain prioritize safety and survival. The reptile theory is the theory that lawyers can be successful in court by scaring the jury into believing their safety/survival is in jeopardy. In other words, the goal of the lawyer is to:
- Establish danger to the community
- Convince the jury that they have the power to improve the community’s safety
Co-authors, D. Keenan and D. Ball, published a book titled, Reptile: The 2009 Manual of the Plaintiff’s Revolution. In this book, Keenan and Ball recommend plaintiff attorneys demonstrate to jurors the immediate danger posed by the actions (or lack of actions) taken by the defendants because “when the reptile sees a survival danger, even a small one, she protects her genes by impelling the juror to protect herself and the community.”
Real World Example
For example, a lawyer might argue that an organization doesn’t keep their DOT logs, MVR checks and training up to the normal standard. It stands to reason that the company does not take safety seriously. The company is just interested in making money and doesn’t mind putting the general public at risk. Their money means more to them than your life does. To make the streets safer for everyone, we must hit them where it hurts…their wallet. (Insert high settlement demand amount here.)
If you can put up a strong defense that your organization is operating to all safety standards, then the reptile theory is less effective. If the reptile theory won’t work, then investors are less likely to invest in that lawsuit. Investors are seeking “easy” claims/lawsuits that will generate a greater ROI with less hassle.
Proper risk management and documentation are vitally important in minimizing the risk of Investor Financed Litigation. For more information or to review your risk management practices, contact a member of the ‘A’ Team today.
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