A Sign of Acceptance for Litigation Financing
You might expect that a litigation financing agreement is something to be kept confidential. Indeed, many parties who have received litigation financing aggressively resist any attempts by opponents to discover if such financing even exists. But, in a recent case, there was no secret about one party’s need for litigation financing – and the case was even stayed so that party could find new financing. This accommodation of litigation financing is a sign that litigation financing is moving into the mainstream.
The case is a dispute between Telesocial, Inc., which makes apps, and Orange, which was formerly known as France Telecom. It is pending in the United States District Court for the Northern District of California, before the Hon. James Donato.
Telesocial developed a software application known as “Call Friends,” which allowed users to place phone calls through Facebook and other social networks. In 2012, Telesocial began discussing a partnership with Orange in 2012, and, during the negotiations, Telesocial provided Orange with a some limited access to its systems. The negotiations eventually fell through, and a few months later, Orange debuted a new app, which it named “Party Call” and which had many of the same features that Telesocial had developed for Call Friends.
Telesocial alleges that Orange used its temporary and limited access to hack into Telesocial’s servers and copy its technology. Telesocial also alleges that this hacking destroyed its business and destroyed its value. Orange denies any hacking, claiming that its employees used Facebook to gain access to Call Friends and learn about its features legitimately.
With its company assets decimated, Telesocial needed litigation funding to bring its case. But after getting an initial financing agreement, that financing fell through just before trial. Telesocial was relying on expert testimony for its case, but the experts would not testify without being paid first, and without financing, there was no money to pay them. Telesocial moved for a stay of three months, and Judge Donato granted the stay. The judge explained his decision by noting that his goal was to balance the inconvenience to Orange against “making sure the case can go forward after a considerable amount of work by the court and the parties.”
To be sure, this is just one case. But the court’s accommodation of litigation financing is a sign that litigation finance is becoming an inescapable part of the judicial system.
Topics: litigation finance, legal reform, third-party funding, litigation costs, commercial litigation, civil procedure, expert witness
Works Cited:
Scott Graham, Judge Allows 3-Month Trial Delay Over Litigation Funding Issues, Law.com (April 6, 2017) available at http://www.law.com/sites/almstaff/2017/04/06/judge-allows-3-month-trial-delay-over-litigation-funding-issues/
