Skip to main content

Lawsuit by Algorithm, the Latest Big Data Rage

Algorithms and bots run our lives; we just may not know it. They help choose our music, buy our diapers and tell us when it’s time to change the water filter.  Algorithms may someday determine when you or your company gets sued.

An article last month in the chronicled a new start-up company called Legalist, which uses algorithms to look for promising civil lawsuits to finance in exchange for a portion of any settlement or judgment — a derivative of the paradigm that helped Hulk Hogan body slam Gawker. From the little information available about this nascent concept, lawsuit by algorithm will only look to finance existing lawsuits.  The Legalist program examines a variety of factors to determine promising lawsuits to invest in: a favorable judge or a long-standing case just to name two.

Employment disputes represent a fertile ground for lawsuits in state and federal courts. High dollar matters, like certain wage and hour class action lawsuits, may soon find new sources of capital from Legalist and like-minded competitors.  This could breathe new life into a lawsuit dying on the vine because of litigation costs.  In addition, it may help bankroll lawsuits that simply need the dry powder to litigate a more fulsome case. 

Legalist, and companies like it, may have both short and long term implications for companies and individuals alike. First, in a very litigious society, this concept may spur even more litigation and fill already busy court dockets.  Second, lawsuit by algorithm could dis-incentivize settlement. Currently, many litigants, on both sides of the aisle, will lay down their arms in litigation because of litigation costs; the morass of discovery and other litigation expenses can bring blood-feuding parties to the peace table.  However, an infusion of fresh capital from funding sources like Legalist may motivate litigants to keep fighting.

And third, despite the fact that Legalist currently only looks to invest in promising existing civil lawsuits, it is not too much of a stretch to extend this idea to algorithms actually looking for companies to sue (i.e. help initiate lawsuits) based on the terabytes of data in the cosmos.  Someday soon, those bots may keep you (or your company’s risk department) up at night.  Big data ideas continue to make their way into the legal arena, and this latest notion could result in big money for proponents and even bigger legal defense budgets for those caught by the bots.

Subscribe To Viewpoints


Robert Sheridan