The Snapchat Whistleblower Case: An Illustration of How Litigation Funding Works for Clients and Law Firms
A recent case against Snap, Inc., owner of the social media app Snapchat, shows how litigation financing can be mutually beneficial to both plaintiffs and law firms. In particular, the case demonstrates how litigation funding can sustain meritorious cases while also helping to develop a law firm’s business. Moreover, the case is unique because the role of the litigation funder is being fully disclosed from the outset.
Anthony Pompliano had been employed with Facebook when he was hired by Snap, Inc. to lead the user growth and engagement team at Snapchat. He alleges that, once he started working for Snap, he was asked to engage in wrongful conduct. Even though he was bound by a confidientiality and non-solicitation agreement with Facebook, he alleges that Snap tried to get him to disclose confidential information about Facebook’s operations. In addition, Pompliano alleges that Snap asked him to help company executives misrepresent the size of its user base and that he was fired when he refused. After he was fired, Pompliano alleges that Snap defamed him and tried to harm his reputation in the industry. According to Pompliano, all of this was motivated by Snap’s attempt to boost the share price for its recent initial public offering.
Pompliano filed his suit against Snap on May 16, 2017 in federal court, alleging whistleblower claims, among others. He is represented by Pierce Sergenian, a boutique start up firm. With the announcement of the filing of the case, the firm also announced that it had entered into a portfolio financing contract with a litigation funder, and that the Pompliano case would be one of the cases in the portfolio.
According to John Pierce, Pompliano’s lawyer, “I think we’re the first publicly announced portfolio litigation funding deal.” Pierce also noted that making use of portfolio funding “allows an elite start-up firm like us to grow more rapidly than we otherwise would to take on larger cases than we otherwise would.” Under the agreement with the funding company, the firm can draw on its funding “in slices, as we need it,” and the funder will be repaid with proceeds from the firm’s contingency.
It is noteworthy that Pierce’s firm is announcing the funding, given that most litigation funding agreements are kept private. But Pierce points out that the defendants in these cases should know that, even though his firm is a start-up, it has the resources to go the distance and pursue cases until there is a just result for the plaintiff.
Topics: litigation finance, legal reform, third-party funding, litigation costs, whistleblower cases, portfolio funding
Works Cited:
Gayle Cinquegrani, Litigation Funder Bankrolls Snapchat Whistleblower Suit, Bloomberg Law (May 17, 2017), available at https://bol.bna.com/litigation-funder-bankrolls-snapchat-whistle-blower-suit/
