Two of Ten -- Justice Served
As I wrote yesterday, when Brian Willingham cites your blog, you better get a-bloggin’. And I’ve been meaning to blog this particular blog every since I wrapped up that project. It is a case of the value of litigation records, an illustration of the process of fomenting a theory and going with it, and an example that findings are not always what you think that may be. Too much for one blog?
In this post from a few weeks ago, I noted that it was vital that research be done in a proper order. I said get the names right first. Then, I said, go look at public records, especially litigation records. The reason we look at litigation records in business background research is two-fold. First, the existence of litigation records, any records, tell us all sorts of things. Perhaps your prospective partner is prone to suing. Good to know. We surely look hard for collection matters and other evidence of financial issues. With public companies, we always look for “850”, federal securities fraud actions. The other thing about litigation, though, number two, is that they are tremendous sources of information. From where a person lived to, who owns a company, all sorts of nuggets are buried in the documents filed in association with lawsuits, and we’re talking the public docket filings not depositions or transcripts or other items that may or may not be available to researchers. Take one project, a qui tam whistleblower complaint where we were working for the claimant. Through previous litigation records, we were able to put together an incredibly detailed picture of the target company for our client and her lawyer. You do not know what will be there until you find the records.
This was a standard transaction due diligence case. Client was investing money in targets health tech co. Our initial checks found that while target co was based on the left side of the map, the client resided on the right side. We looked in both places for litigation records, and we searched the target as well as his company. Company clean. Target not so. We starting seeing a pile of litigation, both historical and pending. Then, we started reading documents associated with said lawsuits. In like the first case we looked at, we saw page after page of filings related to the fact that the guy, our subject, had not been served and was making a Howard Hughes level effort to avoid service of process. This piqued our interest. We found more.
In our summary memorandum on this research, we wrote, “What is especially interesting when we looked at documents related to litigation involving [TARGET] was a history of, well, hostility to the civil justice system.” As I said above, this case also illustrates the process of research. Within looking at a few lawsuits, we had a thesis: target no like to play nice with others in litigation. This gave us something to look for as we perused other filings. Being attuned like this, I believe, makes it more likely you will find what needs finding. Besides avoiding service of process, we found:
Issues with him filling out a corporate disclosure form
Refusal to name an arbitrator when the contract stipulated he had to
When a case was settled, the other party later alleged that he then repudiate the Settlement Agreement
I’ve shown you how we were able to dig into litigation records to extract fun facts; I told you how once we had our theory, we were then more likely to find more examples. Finally, I said, I would I say that findings, especially litigation findings are not always what they appear to be. In this case, the lawsuits were mostly of routine business nature. In fact in many, including the matter where he tried to get out of the settlement, things went in favor of the target. A superficial review of said lawsuits or a failure to follow on our thesis could have missed the big picture. The guy was an asshole.