Should The Government Allow a FUTURES mArket for Lawsuits?

[ralph124c]

We all know that the toprt system in the USA is out of hand-there is a considerable wait for trial dates (up to 5 years in NYC), and awards are often contested-such that a plaintiff can dies before receiving a penny of a judgement award. I think there is a good solution-allow a market for lawsuit futures to develop-exactly like options in stocks!
Here’s how it would work…plaintiff “A” burns himself with a cup of too-hot McD’s coffee…he files a lawsuit against Micky D, and goes to trial. he is awarded $5 million for pain and suffering (and for being a total idiot), which McD’s appeals. Years drag on…and poor Mr. A hasn’t got a penny yet…meanwhile he is racking up huge legal bills. Under a futures market system, he could sell his award to investors, and receive a discounted amount (the discount reflecting themarket uncertainty of the futre value of the award). So Mr. A pockets a fair amount (lets say $1 million), and lets the investors who furchased the future wrangle it out with the courts.
Sounds fair to me-I can forsee this sytem becoming huge-a lifesaver for plaintiffs, and a potential gold mine for risk-aware investors!

[SuaSponte]

Well, you can already assign causes of action.

Sua

[UDS]

This is already perfectly lawful, and in fact rights to sue are regularly traded - debt factoring, for instance, where a trading company sells its rights to recover from creditors at a discount to someone else, who then recovers the debts. Similarly a lot of insurance contracts work on the basis that the insurer compensates you for the loss you have suffered and in return is entitled to pursue whoever caused the loss and keep the damages (if they recover any).

There’s no active secondary market because of the difficulty in valuing suits for damages, and because the suit in many cases has no prospect of success without the continued active involvement of the original plaintiff (he may be an important witness, for example) who may lose all interest in pursuing the matter once he has his money.

[lucwarm]

It’s interesting to note that New York, of all places, still has an anti-champerty law.

Judiciary Law 489 provides:

S 489. Purchase of claims by corporations or collection agencies.
No person or co-partnership, engaged directly or indirectly in the business of collection and adjustment of claims, and no corporation or association, directly or indirectly, itself or by or through its officers, agents or employees, shall solicit, buy or take an assignment of, or be in any manner interested in buying or taking an assignment of a bond, promissory note, bill of exchange, book debt, or other thing in action, or any claim or demand, with the intent and for the purpose of bringing an action or proceeding thereon; provided however, that bills receivable, notes receivable, bills of exchange, judgments or other things in action may be solicited, bought, or assignment thereof taken, from any executor, administrator, assignee for the benefit of creditors, trustee or receiver in bankruptcy, or any other person or persons in charge of the administration, settlement or compromise of any estate, through court actions, proceedings or otherwise. Nothing herein contained shall affect any assignment heretofore or hereafter taken by any moneyed corporation authorized to do business in the state of New York or its nominee pursuant to a subrogation agreement or a salvage operation, or by any corporation organized for religious, benevolent or charitable purposes.

There has been a decent amount of litigation in New York state and federal courts over the extent to which this statute can get a defendant off the hook. Also, there was a move afoot a few years ago to repeal the statute - I’m not sure what happened with that.