february 2018 judge carlos r. moreno, judge … · judge carlos r. moreno, judge robert s. smith,...
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JUDGE CARLOS R. MORENO, JUDGE ROBERT S. SMITH, AND JUDGE RICARDO M. URBINA
FEBRUARY 2018
In this edition of Vannin Capital’s In Conversation series, New York Managing Director, Michael German, speaks with three former senior United States judges who were appointed to Vannin’s Funding Committee in 2017. These three highly-respected jurists – Judge Carlos Moreno, Judge Robert Smith and Judge Ricardo Urbina – have all spent decades working in the United States court system and provide an unparalleled view from the bench. Here they provide insight into the growing appetite for third party funding in the United States market.
Michael German: In your many years working in the United States disputes market, how have you seen the appetite for litigation funding change over time?
Judge Ricardo Urbina: Prior to recent research on the topic, I was relatively unaware of the practice of litigation funding. I learned that at a few years ago an institutional proposal to require claimants to disclose arrangements with third party funders failed. Informed by that decision, it is apparent to me that federal and states stakeholders are becoming more receptive to the notion of third party funding, and I can understand why.
Judge Carlos Moreno: I was on the Bench for more than 25 years in California and was not aware of litigation funding until recently. In the past few years I have come across several litigation funding firms and there is certainly a lot more appetite among attorneys for their services.
When I left the California Supreme Court in 2011, I worked with the highly-regarded intellectual property law firm, Irell & Manella LLP. While there, I was engaged on an appellate matter in which a solo practitioner obtained a $42 million verdict against a major pharmaceutical company. Given the imbalance in capitalization and size, it was apparent to me that the smaller party had some kind of litigation funding in place. And it allowed that party to seek a resolution on the merits of the issues presented instead of one based on the relative resources of the competing entities.
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Judge Robert Smith: I can remember the day when litigation funding was unheard of – I guess it was a creature of the Eighties and Nineties. For law firms, it provides a lot more flexibility than the traditional contingency model which was, by its very definition, incredibly risky. Now a firm might say it does not want to take on all of the financial risk of a case, but it is happy to take some, and it can choose to share that risk with a funder. The bottom line is always going to be about how good the case is, but with the maturing of the funding market, much more complex arrangements can be entered into, and law firms and plaintiffs simply have far more funding options.
Michael German: Agreed. Vannin’s flexibility allows it to craft simple yet comprehensive solutions to complex funding requirements, be it for law firms, large corporation looking to shift risk, or smaller plaintiffs seeking to level the playing field. What do you think is currently driving the growth of the litigation funding industry in the United States? Why are litigants increasingly choosing to work with third party funders?
Judge Carlos Moreno: The prospect of enormous verdicts is driving an increase in litigation in the United States. We are seeing hundreds of millions of dollars being awarded, if not billions, and as we become used to that, and the appellate courts are not reducing those verdicts, it justifies
claimants pursuing the case. If they can use litigation finance to offset their own cost risk, it becomes a no-brainer to pursue the case.
Judge Ricardo Urbina: Furthermore, I think that years ago society as a whole, and jurors as the arbiters of outcomes, were less inclined to rule against large corporations and other organizations that wielded power with the aid of well-funded, high-power lawyers equipped to present their positions persuasively. Nowadays society is more suspicious of corporate and governmental conduct, and has become more receptive to the plight of the persons who claim damages inflicted by conduct of governing or corporate entities.
LITIGATION FUNDING ALLOWED THAT PARTY TO SEEK A RESOLUTION ON THE MERITS OF THE ISSUES PRESENTED INSTEAD OF ONE BASED ON THE RELATIVE RESOURCES OF THE COMPETING ENTITIES.
JUDGE CARLOS MORENO
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IT IS CERTAINLY TRUE THAT THE LITIGATION BUSINESS AS A WHOLE HAS BECOME A MUCH BIGGER PART OF OUR ECONOMY THAN IT WAS 50 YEARS AGO.JUDGE ROBERT SMITH
During my 31 years on the bench in the District of Columbia’s local and federal courts, I have noted how large companies and government actors routinely overpower lesser entities trying to litigate meritorious claims. Frequently this was due to the disparity in claimants’ ability to fund prosecution of their claims. If litigation funding can assist individuals whose claims might not otherwise be able to proceed due to lack of resources, and thus enable a more level playing field, I believe that the interests of justice might well be served. We could then see more settlements, as well as more frequent resolutions of disputes on the merits, once big enterprises realize they are not up against plaintiffs without money, but rather are opposing a person or entity with adversarial parity.
Judge Robert Smith: In the Sixties and Seventies, there was a great explosion of class actions, which the Supreme Court then began to cut back on in the Seventies. Back then there was the same belief as there is now that corporations were getting away with murder and needed to be brought to heel. Then came a view that some lawyers were getting enormously rich on the back of some pretty silly cases, and the pendulum swung back.
It is certainly true that the litigation business as a whole has become a much bigger part of our economy than it was 50 years ago. When I started practicing, the litigation department was a little like the trusts and estates department – just there for when a corporate client needed a particular kind of help. For most firms today, the litigation team is a major money-maker.
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Judge Carlos Moreno: The explosion in class actions and corporate mistrust goes back to the strength of big tobacco and big pharma, and high-profile cases like that of Erin Brockovich (who successfully sued Pacific Gas and Electric in the mid-Nineties for contamination of drinking water, winning the largest settlement ever paid in a direct-action lawsuit in United States history). It really shows very little sign of abating.
Michael German: Liberal damages standards, greater comfort with large awards and a reliable and intelligent judiciary is increasingly making the United States an attractive venue for the resolution of disputes. What types of cases do you see now that might be particularly appropriate for litigation funding, where firms like Vannin can add value?
Judge Carlos Moreno: Another huge area at the moment is equal pay litigation, particularly in California. It is now the law here that an employer cannot use the salary history of an employee to determine current pay, because that was judged to penalize women who were consistently underpaid based on their previous pay. Many large companies have conducted internal investigations on this point, or been sued, and I imagine we will see many more of these cases going forward.
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The other cases I think will be amenable to litigation funding are whistle-blower actions. These are cases where whistle-blowers file a complaint, which is confidential, and that becomes part of a court filing that is submitted to the United States Attorney. In some instances, the action will go forward, with the United States Attorney taking the lead and the whistle-blower getting a percentage of any recovery. But in many cases the United States Attorney declines to take on the whistle-blower’s case, for a variety of reasons, and yet the case represents the potential for a large recovery. In cases where the whistle-blower sues on behalf of the government and takes on the expense, litigation funding could provide real access to justice.
Michael German: The expansion of types of cases ripe for funding continues to present new markets and opportunities for Vannin, and we are prepared to evaluate and fund meritorious cases of all types, be they litigation or arbitration. Given that, how do you see the industry developing going forward, and what are your predictions about the use of litigation funding 10 years from now?
Judge Carlos Moreno: I think it depends on what types of cases get funded, but if it becomes clear that people with just cases, who could not otherwise afford to pursue them, are able to correct and discipline industries that have appeared to be above the law, then the trend will surely be an extremely positive one.
Judge Ricardo Urbina: The potential for growth of litigation funding in the United States is considerable. The issues that we will be dealing with in future, as members of the Vannin Funding Committee, will be extremely interesting and will certainly have the potential to influence how the industry grows and develops in the United States.
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Judge MorenoFunding [email protected]
Judge UrbinaFunding [email protected]
Judge SmithFunding [email protected]
Michael GermanManaging [email protected]
Judge Moreno is a former jurist in California with over 25 years of experience at all levels of the state and federal judiciary, including four years as a federal district court judge and ten years as a judge on the California Supreme Court. Prior to his appointment to the bench, he practiced in the private sector for over ten years with the law firms Kelley Drye & Warren LLP and Irell & Manella LLP.
Judge Urbina has 31 years of service on the District of Columbia federal and superior courts. He served 18 years as a United States District Court Judge for the District of Columbia and issued well over one thousand memorandum opinions. In April 1981, Judge Urbina became the first Latino ever appointed to the bench in the District of Columbia.
Judge Smith is a partner at Friedman Kaplan Seiler & Adelman LLP in New York, where he heads the firm’s appellate practice. Before joining Friedman Kaplan, Judge Smith was an Associate Judge of New York’s highest court – the New York State Court of Appeals – where he served for more than a decade. Since joining Friedman Kaplan, Judge Smith has been active primarily in appeals, trial-level commercial litigation, expert witness testimony, and alternative dispute resolution. He is a fellow of the American College of Trial Lawyers.
Michael German works with law firms and claimants to utilize third party funding across a broad range of high-value commercial litigation and arbitration disputes. Based in New York, he focuses on identifying and providing a full appraisal of disputes that Vannin will consider for funding, as well as monitoring disputes that Vannin has committed to fund. He is an attorney with significant experience in all phases of litigation in both state and federal court.
BIOGRAPHIES
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