Update: Litigation Funder Sinks News Organisation


Nick Denton, Gawker Media’s founder and CEO, announced that the company has reached a settlement with Hulk Hogan as part of an insolvency arrangement to settle Hogan’s jury award against the company.

It has been reported that the settlement is in the amount of $31m plus a percentage of the proceeds of the sale of Gawker Media.

The initial jury award was for an amount of $140m plus further monetary awards against Denton personally however, Gawker media had initiated the appeal of both the main award and its quantum.

The settlement now ends the legal process and demonstrates the value of a litigation funder in Hogan’s case.

A few days before the settlement Hogan’s funder, Peter Thiel, made an intriguing statement regarding access to justice and the cost of litigation in America:-

“If you’re a single-digit millionaire like Hulk Hogan, you have no effective access to our legal system. It costs too much”.

The statement no doubt pertains to an all out war between two litigious litigants for dizzying amounts of damages and involving several costly, concurrent, strategic stages of litigation in the American legal system. The statement seems sensational at first but it is actually a sobering truth.

Ultimately Thiel was successful in executing his plan to sink Gawker Media. The company was sold to Univision for $135m.

A few months after the jury award Thiel justified his strategy to The New York Times:-

“It’s less about revenge and more about specific deterrence,”…”I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest.”
Thiel said that Gawker published articles that were “very painful and paralyzing for people who were targeted.” He said, “I thought it was worth fighting back.”

Thiel added: “I can defend myself. Most of the people they attack are not people in my category. They usually attack less prominent, far less wealthy people that simply can’t defend themselves.” He said that “even someone like Terry Bollea who is a millionaire and famous and a successful person didn’t quite have the resources to do this alone.”

The value of Thiel as a litigation funder to Hogan was that it enabled him to proceed with a claim he would have been unable to prosecute properly on his own. It also enabled him to achieve a significantly higher settlement than was possible without funding. Ultimately, it was the claim and not Thiel that brought the company down.

Regarding the ethical question of a private individual funding litigation on behalf of a wronged victim, I can’t help but reference Denton’s own words in his recent blog post on the settlement:-

“All-out legal war with Thiel would have cost too much, and hurt too many people, and there was no end in sight, Gawker’s nemesis was not going away.”

The comment leaves one pondering the question of: whether, if not for a funder in Thiel, Hogan would have been the person uttering very similar words if he was forced to abandon his claim due to funding…

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