I read the article in today’s New York Times, front page of Metro above the fold, about New York State Assembly Leader Sheldon Silver and his loans to a company that finances personal injury attorneys. I kept looking for the meat — that part where an impropriety occurs — but found nothing out of the ordinary. It appeared to be muckraking without the muck.
The article discusses his $50,000 in loans to Counsel Financial, one of several companies that make high risk, high interest loans to lawyers so that folks like me can fund our cases (Full disclosure: I’ve never used one of those companies). This is, after all, a business with a particularly brutal business model: The attorney funds cases for years on a contingency, any one of which can run to tens of thousands of dollars, with the prospect of getting paid back when the case concludes. If it is successful. Cash flow is a huge problem from the business perspective. Getting started in a personal injury practice is particularly difficult for a lawyer without means. A certain ruthlessness is needed for case selection, to make sure you don’t get stuck with bad cases. I’ve discussed this concept before: See, Medical Malpractice Economics.
The gist of the article is that Silver is not just the Assembly Speaker, but of counsel to Weitz & Luxenberg, a prominent New York firm whose principles are actively involved with Counsel Financial. But why would his investment in a firm that makes high risk loans be any more of a conflict of interest than his activities with the law firm itself?
Tort “reformers” such as Jim Copland at the Manhattan Institute (quoted in the article, commentary on it by Walter Olson at Point of Law), argue that his investment in the company encourages him to put the brakes on protectionist “reform” like damage caps on pain and suffering. After all, the bigger the business for the funding company, the more likely he is to have a profitable investment instead of a loss.
But that conflict already exists with his activities as a personal injury lawyer. In fact, that conflict exists with every single legislator regardless of whether they are lawyers or have businesses, whether they have interests are in Apple, GE, or some private concern. Our legislators are part-time, and are permitted to have other jobs. So conflicts are bound to exist, but since the one the Times highlights is no different than any other I find it odd to see it highlighted in such a fashion.
Now I am sensitive to conflicts of interest. In fact, conflicts were the source of my April Fool’s Day hoax on whether Supreme Court justices should recuse themselves from a fantasy baseball case due to their involvement in a fantasy league. There clearly must be rules to deal with conflicts in legislatures. But in this case, we seem to be missing some actual muck that is needed to give a story such prominent placement.
A final note. The article first identifies Silver, at the outset of the article, as a trial lawyer:
Since early last year, Mr. Silver, himself a trial lawyer, made two separate loans to the company, Counsel Financial.
But then later on, the author concedes that he really doesn’t know what the heck Silver does:
And it is not known what he actually does at Weitz & Luxenberg.
“The speaker voluntarily limits his legal work to serve only individuals and personal injury cases and does not represent lobbyists or clients who have business before the state,” said his spokesman, Mr. Weiller.
He would not say whether the speaker ever appears in court to represent clients or describe his legal work in more detail.
That’s just shoddy reporting.