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PaperclipPerfector  1d ago (text post)   1246 thread views

Small-Scale Question Sunday for April 27, 2025

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I was having a conversation with someone about how rich people or large corporations being able to afford the best lawyers gives them a massive advantage in leveraging the legal system as a weapon against smaller actors. My instinctive naive solution was to enact a rule that any legal expenses must be matched by an equal donation to the opponent’s legal fund. The idea being that if you genuinely believe the law is on your side, you shouldn’t have to outspent the opposing side by X million dollars to prove it. Supposing this rule magically came to be, would this actually solve the issue and are there any major flaws/unintended consequences I've overlooked?

Alternatively, suppose the US had a true two-party state (instead of just a de facto one, since it gets more complicated with more than two opposing factions). Would an analogous rule for campaign contributions (any contribution to Democrats must be matched by an equal donation to Republicans and vice versa) work to reduce big-money influence in politics?

The side that believes more strongly in its case will pay all the legal fees.

It's a much bigger problem than this: Most laws favor the entrenched & powerful by default unless very carefully designed not to. This is one reason why large companies often are neutral or even actively lobby for extra regulation. THEY can afford a large legal department for compliance. Smaller competitors, not so much. This is completely independent of whether a law is also deliberately designed to boost specific actors.

And it gets worse once you consider politically entrenched powers. A new law to limit political donations to specific parties in the vein you are considering? Well, WE are only unaffiliated NGOs defending democracy, YOU are obviously a thinly veiled campaign contribution, so all money spent on you needs to be added to the fund of our the other side!

Turns out, helping the genuinely weak compete is pretty hard. Usually you just end up helping a different faction of elite. And even if you design a law that helps bring down a powerful actor, the same law can often be used to bring down anyone, which means it destabilises the entire system.

If you subsidize lawyers, you'll get more of them. There are already way too many lawyers in Anglosphere countries.

https://www.americanbar.org/news/profile-legal-profession/demographics/

The largest increase in lawyers occurred in the 1970s, when the number of lawyers jumped 76% — from 326,000 in 1970 to 574,000 in 1980.

WTH happened in 1971 may well have something to do with lawyers.

What’s the advantage of this over ‘loser pays’?

Personal injury lawyers would take a haircut, but I think that’s a good thing. The ghetto lottery should be harder to get.

To the extent that more expensive lawyers are actually better at winning cases, it reduces the role of raw monetary advantage in deciding who wins.

To the extent that the costs of defending a suit are comparable to the costs of prosecuting one, it reduces the effectiveness of intimidation suits.

A 'loser pays' system still allows the rich to apply significant stress simply by suing someone without the resources to mount a proper defense and in some situations would even doubly screw over the defense if they lose more due to weaker representation rather than by the merits of the case.

Supposing this rule magically came to be, would this actually solve the issue and are there any major flaws/unintended consequences I've overlooked?

If you get sued, does this rule still apply? In other words, does the defendant have to supply money to the plaintiff's legal fund? Because if so I think patent trolls get 100x worse with this proposal.

Doesn't the plaintiff need to hire lawyers to draw up and file the case? I fully admit to ignorance here, but I imagined the plaintiff as first-mover, so they would pay an amount for a legal team to create a suit and deposit the equivalent amount for the defendant to hire a team an create a response? Any extra the defendant spends must be declared and must be matched for the plaintiff to spend, then this repeats iteratively?

Yeah. Patent trolls acquire portfolios of vague patents, and then mass-file suits against companies that might plausibly be argued to be infringing those patents, in the hopes that the company settles to make them go away. Filing is cheap for the plaintiff (patent troll).

If the defendant (the company accuded of infringement) fights the case, they have to spend a ton of money on expert witnesses, discovery, etc.

Under this proposal, the defendant would, in addition to the usual expenses, also have to contribute to the patent troll's war chest.

If the patent troll and the legal firm representing them, you could end up with the following situation

  1. Patent troll cheaply files hard-to-defend suit, contributes $500 to defendant's legal fund
  2. Defendant decides to fight case, spends $100,000 on expert witnesses and discovery, then contributes $99,500 to plaintiff's legal fund
  3. Plaintiff spends $99,500 on the firm they hired to drag the case out as much as possible and otherwise do whatever they want at astronomical rates
  4. Plaintiff loses their meritless case
  5. Situation is
    • Plaintiff has lost $1,000 ($500 on filing fees, $500 on defendant'slegal fund)
    • Defendant has lost $199,000 ($100,000 on expenses, $99,500 on plaintiff's defense fund, minus the $500 received from plaintiff)
    • Plaintiff's legal team has made $99,500 doing a few hours of easy work
  6. Plaintiff's legal firm kicks back $50,000 to plaintiff under the table.

The plaintiff gains $50,000 every time they file and lose a case in this system.

Is the burden of proof not on the plaintiff? I thought it was almost always intrinsically harder to prosecute a patent case than to defend. Broadly, aren't differences usually easier to spot than similarities?

Of course, kick-backs of any sort would have to be heavily regulated and harshly punished.

Is the burden of proof not on the plaintiff? I thought it was almost always intrinsically harder to prosecute a patent case than to defend

It is fairly hard to prosecute a patent case and win if the defendant fights you. But if the defendant doesn't defend themselves pretty easy to win, it's a civil case so the standard is preponderance of evidence not beyond a reasonable doubt (disclaimer: ianal).

Of course, kick-backs of any sort would have to be heavily regulated and harshly punished.

Why don't we start with getting this proposal implemented robustly since it seems to be a hard prerequisite, and see where we end up at that point?

are there any major flaws/unintended consequences I've overlooked?

Define "legal expenses".

The first thing I'd do if faced with those rules is outsource everything from the law office. Instead of the lawyers hiring a forensic accountant to review the accounts, the accounting department would hire them and provide the report to the lawyers for free. Instead of lawyers hiring a mock jury, the marketing department would hire a research panel. If you allow splitting hairs enough, then the compliance team does legal research and provides it for free to the litigation team.

Even without deliberate dodging, large corporations simply have a lot of those resources available from other departments, and the incremental cost to get the lawyers that information is near-zero.

You'd need a set of ancillary rules for these kinds of loopholes with additional regulations on lawyers to maintain papertrail records "showing their work" and some sort of audit system in place. Indeed it may be that no effective system to prevent this kind of activity exists, but I'd hope the core rule at least makes it marginally more difficult to just overwhelm someone by outspending?

The danger with that is that the line is blurry. If you're too strict, then Joe Random gets gifted ten million dollars just for filing a lawsuit against Google, because they have corporate-standard recordkeeping, auditing, and accounting which is helpful to lawyers.

How about as long as materials are shared in full (i.e., not cherry picked) to the opposing party, the relevant expenses do not need to be matched? Seems about as enforceable as insider trading rules?

Then all that information is practically public. I don't think that's a very palatable solution.

Supposing this rule magically came to be, would this actually solve the issue and are there any major flaws/unintended consequences I've overlooked?

Even more incentive for lawyers to drag everything out forever.

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