Hulk Hogan’s litigation funding isn’t Burford-style litigation funding

The recent furor around Peter Thiel’s reported backing of Hulk Hogan’s lawsuit against Gawker has caused some media outlets to talk about “litigation funding” as though it comes in only one flavor, with Thiel being a public example. That isn’t so.

There is an extraordinary amount of litigation funding going on in our justice system, and has been for a long time. Indeed, the litigation system is designed expressly to permit such funding (and not to require its disclosure, for sound policy reasons), and it would grind to a halt without it. What Burford and other commercial litigation financiers do is part of a large and pretty boring business around commercial litigation – businesses suing each other. Other players in that world include insurers (the largest litigation funders around), banks, creditors, investors and corporate affiliates. Burford exists because there is significant demand from corporate clients for financial solutions to ever-rising litigation costs and capital, and Burford leads the way in meeting that demand in a professional and responsible manner.

That world is miles away from professional wrestling, sex tapes and “revenge litigation”. We don’t have anything to do with that other, more salacious world. But Professor Eugene Kontorovich of Northwestern’s School of Law makes some important points today in The Washington Post:

Critics of Thiel’s role in the Gawker case argue that it is particularly inappropriate because they think he is motivated by “revenge” over the gossip site’s earlier publication of stories about his private life. But if the lawsuit is not frivolous, it is hard to see how the motivations of funders are relevant (or discernible). One would not say a civil rights organization could not accept donations from philanthropists angered by a personal experience with discrimination. All Thiel has done is cut out the middleman.

Indeed, Thiel’s conduct fits into the “public interest” or “ideological” litigation paradigm. The writer of the Gawker story about Thiel specifically described his decision to publish the story as an ideological one. In an interview with the New York Times, he said he wrote about Thiel not simply because he thought it would be of public interest, but rather he thought that Thiel’s “attitude” that his private life should remain so was “retrograde … and that informed my reporting.”

Thus the controversy is one about principles and policy. Gawker is institutionally committed to revealing the private lives of public people. The question of how far the privacy rights of celebrities go is a legitimate one, and Gawker’s anything-goes position is not without merit. But it is a legal and policy question. Thiel was in essence financing what he understood as public interest litigation on an issue of public concern. That he also may or may not have had feelings about it does not change that. Litigation funding is not reserved to Mr. Spock.

Bollea v. Gawker is a titillating story. What litigation financiers like Burford do is by any definition comparatively uninteresting. We are, in Professor Kontorovich’s formulation, Mr. Spock – here to provide much-needed capital to the business of law, and to deliver value to our shareholders. We haven’t seen the last headline about this case, but we resist any attempt to conflate what we do with the something entirely different.

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