Pierce Bainbridge Litigation Finance Plays: The $1 Billion Lie And The $65 Million Debt

“If used responsibly, which was not the case at my former firm, litigation financing is a fantastic tool to increase access to justice.” Ex-Pierce Bainbridge Partner Don Lewis, Forbes, August 2, 2019.

(This is the second installment of what LawFuel intends to be an ongoing series on the seeming financial dealings at Pierce Bainbridge. The first installment was “The $65 Million Debacle – Pierce Bainbridge Meets American Greed”.)

Dan Garner* The story of the unravelling law firm Pierce Bainbridge Beck Price & Hecht LLP appears to be one of suggesting serious misdealings and greed. The firm and many of its former and current partners are in dire straits. A seasoned New York City attorney warned Pierce Bainbridge founder John Mark Pierce in September 2018: “[John] you have an unsustainable business model. . .Trying to do what you are doing – build a major NYC firm overnight is hugely risky . . .The last person who tried it in NY was Mark Dreier. He ended up in jail.” With each passing day, that attorney’s warning increasingly appears to be prophetic.

While Pierce Bainbridge has boasted high-profile clientele such as Rudy Giuliani, Tulsi Gabbard, a Russian Oligarch, Michael Avenatti, Carter Page, George Papadopoulos, Joan Dangerfield (Rodney Dangerfield’s wife) and CNN’s Don Lemon, the firm has proven to be unsustainable; it is imploding in spectacular and catastrophic fashion.

The bombastic and hyperbolic Pierce declared to a client in March 2019 that the firm consisted of “70 of the most elite litigators on the planet.” A little over a year later, the number of Pierce Bainbridge attorneys is in the single digits, Pierce Bainbridge is a defendant in at least six lawsuits, three of them brought by cash advance lenders. Law360 says Pierce Bainbridge owes litigation funder Virage Capital Management an “estimated $65 million.”

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The previously mentioned NYC attorney was not the only one with apparent foresight. In May 2019, ex-partner Don Lewis filed a complaint against the firm and his former partners – a draft was provided on March 26, 2019. Lewis says he blew the whistle on financial misconduct and Pierce Bainbridge retaliated by weaponizing #MeToo. The ex-partner has insisted for over a year that it was an orchestrated ambush to cover-up financial malfeasance. Littler Mendelson (S. Jeanine Conley) and Putney Twombly Hall & Hirson LLP (Michael D. Yim) are alleged to have joined in the attack and are also defendants in lawsuits brought by Lewis.

Among the serious allegations from Lewis a year ago -.

“The opening of the PB’s books, would very likely reveal that Pierce is a fraud and a con man, lying to his partners, lying to the press, lying to his clients and lying to investors; it would also very likely crater a firm built on smoke and mirrors.” ~ Don Lewis Complaint, May 16, 2019.

“[John] Pierce. . .has scammed the litigation finance industry through massive deceit. ~ Don Lewis Complaint, May 16, 2019.

The problems for Pierce Bainbridge began in earnest on May 6, 2018; Lewis has stated: “The Pierce Bainbridge law firm was built on a lie.”

The $1,000,000,000.00 Lie to Pravati Capital LLC

According to Lewis, a memo provided to litigation funder Pravati Capital LLC by name-partners claimed a case against Microsoft had “prospective damages of up to $1 Billion.” The case was related to the Gears of War video game; it was dated May 6, 2018. Pierce apparently failed to disclose to Pravati the analysis of a Philadelphia lawyer who had handled the case for the prior sixteen months.

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According to a recently filed complaint, on March 26, 2018 – over a month before the May 6 memo – the Philly lawyer shared a remarkable letter with Pierce, in which the lawyer advised the client of his view that the Gears of War case had a value of less than $900,000. Pierce Bainbridge allegedly failed to disclose the letter to Pravati.

The “Billion Dollar Lie” appears to have served as the lighter fuel for Pierce Bainbridge’s “explosive growth.” While Pravati had previously provided modest sums, on the heels of the advance Pravati proceeded to send in bushels of cash in the millions.

This is apparent from recently leaked documents concerning a Pierce Bainbridge-related litigation fund, Talon LF, in which Pierce, ex-United States Managing Partner Douglas Curran (BraunHagey & Borden) and ex-partner Thomas D. Warren (Warren Terzian) are listed as affiliated individuals. As LawFuel has previously reported, the accompanying investor solicitation materials seem to contain statements about the Pierce Bainbridge litigation track record that are not entirely accurate.

The Pravati millions were then used to commence a massive hiring spree; just two months after the advance, on July 10, 2018, Pierce Bainbridge issued a press release touting the firm’s “explosive growth.” In September 2018, the presiding Honorable Anita B. Brody of the United States District Court for the Eastern District of Pennsylvania, stated during a hearing that she “hadn’t seen anything” indicating the Pierce Bainbridge had a “scintilla of a case.” A year later, in September 2019, the “Billion Dollar Lie” case was thrown out before trial. Zero monetary recovery; Pierce Bainbridge has appealed.

The $9.1 Million Pravati Default

According to the Talon materials, Pravati made a $8,250,000 investment over around sixteen months. During that time, the litigation-only firm had only one trial victory. The net verdict was $500,000, divided three ways – Pravati, Pierce Bainbridge, clients. In March 2019, Pravati declared a $9,157,072.95 default. The individuals pictured below appear on UCC filings as “individual” debtors “liable for the full balance due to Pravati” for the $9.1 million default on the “funding agreement between Pierce Bainbridge Beck Price & Hecht LLP and Pravati Capital.”

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The debt was apparently eventually paid off; it remains unclear how this was accomplished. It may have been with funds from Virage Capital or, as alleged by a former client of Pierce Bainbridge, the money may have come from bribes from unsavory characters.

The client, the President of Greenway Nutrients, reported Pierce and Pierce Bainbridge to the California State Bar; the complaint was recently bounced but the accompanying letter from the California Bar states: “With respect to the additional allegation that the attorney has taken bribes or is engaged in criminal activity, you may contact law enforcement.” The underlying matter was handled by Pierce and ex-firm partner Jonathan Sorkowitz.

Whatever the case may be, while Pravati appears to have been made financially whole, it apparently was not done so in the “ordinary course” of business as Pierce stated in Bloomberg Big Business Law at the time.

It appears, however, that Pravati did not escape the Pierce Bainbridge vortex unscathed. As the result of the litigation funder’s apparent trust in John Pierce – who e-mailed Pravati CEO Alexander Chucri in 2018 “I’m more loyal than a Navy Seal” – Pravati finds itself as a defendant in a lawsuit. Law360 covered the complaint in an article titled “With Pierce Chief on Leave, New Suit Claims Funding Antics”.

Pravati has also suffered the misfortune of the public disclosure of a funding agreement with Pierce Bainbridge; the agreement is attached as an exhibit to the lawsuit. Pierce apparently eviscerated any confidentiality during his dealings with the Philly lawyer. This resulted in additional embarrassment for Pravati, as a subsequent Law 360 article analyzing the agreement is titled: “Pierce Bainbridge Funding Deal Raises Ethical Red Flags.”

The $65 Million Debt to Virage Capital

The situation with Pravati pales in comparison to what appears to be the decision of Virage Capital to get in bed with Pierce Bainbridge. As reported by Law360 – “Pierce Bainbridge Funder Targets Ex-Partners in Debt Chase” – after getting involved with Pierce Bainbridge for just around one year, Virage is owed an “estimated $65 million.” During the course of the year, Pierce Bainbridge (i) won zero trials; (ii) was found by two judges to have violated the ethical Rules of Professional Conduct; (iii) lost around 60 attorneys with only a few remaining; (iv) became a defendant in at least six lawsuits involving allegations of financial foul play; (v) secured three cash advances which each resulted in a lawsuit and (vi) according to the American Lawyer – “Pierce Bainbridge Leader John Pierce Is On Leave Amid Financing Questions” – Pierce was placed on a forced leave of absence by his partners for securing a pay day loan.

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Indeed, three glaring questions come to mind. The first, what could have possessed Virage to sink a $65 million interest into a firm with virtually no track record of success and a prior $9.1 million declared default? The second, what became of the massive Virage investment; stated differently, where is the money? The third, with the attorney ranks of Pierce Bainbridge having been gutted, and Pierce claiming to be the sole equity partner, does Virage have any chance of ever being made whole?

Is a Massive Virage Lawsuit in the Cards?

As noted, Pravati has been sued, a slew of John Pierce’s former partners have been sued, John Pierce and the firm have been sued at least six times, and now the historically litigious Virage has reportedly starting “chasing” ex-Pierce Bainbridge partners at their new firms.

Furthermore, the financial and general mess has already caused apparent severe issues for Bathaee Dunne and a proposed class of plaintiffs. A Law360 report last week – “Southwest, Boeing Fight Pierce Bainbridge Withdrawal Bid” – as well as related “must read” motions filed by Bathaee Dunne and Southwest, capture the disturbing and dysfunctional scene.

Quinn Emmanuel or Dreier LLP?

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Pierce made the above proclamation in 2018. Like clockwork, the facts illustrate that Pierce was once again spouting, in his own words to the American Lawyer, “total fake news.”

The shadow of other cases relating to John Pierce’s involvement in the litigation finance industry operators is concerned continue to develop. Civil lawsuits continue.