Litigation funders demand personal collateral as a case’s claimed value inflates.

Evidence

Gordon had gone to Uncle Pete for more money, and this time Pete had said he would need collateral. Gordon had pledged Schlichtmann’s condominium and the houses of both Conway and Crowley. … What about what they had told Pete four months ago? Conway wanted to know. They’d said the case was worth twenty-four million dollars then. Now they were at a hundred and seventy-five million. “It’s crazy, Jan,” said Conway. — , Harr Jonathan - A Civil Action, 1564

Categorization

• XREF: Connects to the diamond-bourse and law-merchant material: reputation and credit signaling stand in for institutional lending when formal options are closed. — connects to: Personal financial ruin drives plaintiffs’ lawyers toward settlement more than legal merit does. — , Harr Jonathan - A Civil Action , 2739; Larger transactions worsen the liquidity trap of litigation. — Lisa Bernestein, Opting out of the Legal System, 214; Contingent fees can create attorney-client conflicts over settlement versus trial. — G. Alan Tarr, Judicial Process and Judicial…, 744 (+7 more)
• SEED: An essay on contingency-fee litigation as a shadow credit market: who really finances a lawsuit, and what they take as security.

Broader Connections

• Personal financial ruin drives plaintiffs’ lawyers toward settlement more than legal merit does. #complicates (0.95) — , Harr Jonathan - A Civil Action, 2739
• Litigation costs drove the lawyers to genuine personal financial ruin #contradicts (0.90) — Jonathan Harr, A Civil Action, 2717
• Larger transactions worsen the liquidity trap of litigation. #corroborates (0.85) — Lisa Bernestein, Opting out of the Legal System, 214
• Contingency fees make personal injury the main exception to one-shotters avoiding litigation #complicates (0.80) — G. Alan Tarr, Judicial Process and Judicial…, 1114
• Contingent fees can create attorney-client conflicts over settlement versus trial. #complicates (0.75) — G. Alan Tarr, Judicial Process and Judicial…, 744
• Credible settlement leverage requires genuine willingness to proceed to trial #complicates (0.75) — Jonathan Harr, A Civil Action, 2447
• Detachment from victims lets lawyers judge a case’s true cost #complicates (0.75) — , Harr Jonathan - A Civil Action, 305
• Mutual distrust in a transaction generates demand for a third-party guarantor #exemplifies (0.75) — Diego Gambetta, The Sicilian Mafia The Business of…, 35
• A surplus of cheap lawyers increases litigation and legal uncertainty #complicates (0.70) — Diego Gambetta, Trust - Making and Breaking Cooperative…, 1840
• Beneficiaries of unfair gains face reputational pressure to conceal them, with discovery risking blackmail. #complicates (0.70) — Nicolas Baumard, A mutualistic approach to morality, 296