Hit Scan – The Litigation Hammer
I recently read an article over at The Escapist which talks about Activision’s trend for attracting “a$$hole points” (their words, not mine) in the form of lawsuits, ill-will and everything in between.
What is painfully obvious is the notion that every one of us in the glorious U. S of A knows:
You can sue anyone, at any time, for any reason – as long as you’ve got the money.
That got me thinking about our recent situation and how you can always have so much more perspective when you’re on the receiving end than not. But no sooner had I read it, that was I sent a post from the Alganon forums.
Apparently, David Allen who was kicked out of yet another venture that he started – and then sued – has been sending out legally toothless and baseless letters to some websites (e.g. MMO Fallout and others).
I know that most of you who are in receipt of that letter – and who know how the law actually works – probably took one look at it, laughed and went right back to filing your nails, shaving your back, shining your Gold teeth, feeding your pet pig or whatever activity it was you were joyfully engaged in at the time.
But here’s the thing, they’re apparently going after the smaller sites (oh look! the original interview is over here) it seems since, those guys either have no idea how the law actually works or because they’d rather not spend* money finding out.
***EDIT (08-09-2010 @ 11:59AM EST) : According to Alex at MMORPGATE, that is exactly what happened. They pulled the interview because of the letter from Allen’s attorneys.
***
What is equally ludicrous is the notion that me, as a apparent public figure and media magnet, would go out and say things in an interview that were either not true, which cannot be verified, which cannot pass the legal muster or which I cannot stand by. Seriously.
So since he has escalated from frivolous lawsuit to harrassment, despite the discussions that are currently on going behind the scenes, let me nip this one in the bud and set the record straight and from my perspective:
Fact is, during settlement discussions a few weeks back – which they initiated btw right after we filed our extensive counter-suit – they had asked us to remove all the interviews and such, as well as postings related to this matter, from the web. Yeah, seriously. Of course we said no. Not only because everything in those interviews was 100% factually correct and can be proven in a court of law to be so, but because you can’t go back and re-write history.
When you’re in a much stronger position than your adversary, you can send them F.U letters all day long. Even if they bitch about it, that’s between them and their attorney – you don’t get to hear it.
Well, I said F.U – the attorneys transcribed that to something nicer and sent it off to his attorney. They dropped that particular pointless excercise – among others.
His frivolous lawsuit – which he used company funds to initiate is just that: frivoluous. It has no merit nor any basis in reality. Which is why, after doing all our own research and weighing of the facts, we all counter-sued sued him for fraud, embezzlement and everything in between.
As with most frivolous lawsuits in this country, if you have the money to do it, you can pretty much force the other side to either settle or ride the wave all the way to court, where most frivolous suits usually get the smackdown from a competent judge and jury.
Running win/loss financials and probabilities is something that all good attorneys do. When you weigh the odds of paying someone $100K vs paying $150K+ in attorney fees, common economic sense usually prevails. This is why most frivolous lawsuits, or even suits which have merit, tend to be settled out of court and with confidentiality agreements in place.
Decent and honest attorneys will advise their clients about the merits of settling a case, rather than going to trial. At the end of the day, if you are in the right, have a solid case etc the decision has more to do with economics than with what is right. In most cases, it is better to go to trial on principle alone, than to pay some thief or extortionist asshole to go away. This is why most people and companies – who can afford it – would rather spend $300K in legal bills to fight a case to the end, than to pay $100K to settle it prior to trial.
And of course, once you settle, more often than not, the terms are confidential and the public never really knows what happened, who was at fault, why it was settled, for how much etc. What that does is give the thief and extortionist bragging rights – even if such only happens behind closed doors. Even so, it does leave the public pondering the shadow of doubt premise of it all. e.g. Did he have a case or not?
Allen [foolishly] bet that after running the win/loss scenario and financials, that we’d settle (read: give him money) with him rather than go to trial.
In our case, we knew all along that Allen, never had a case to begin with. He just assumed that between myself and the investors, that we’d pay him to go away – because it would probably be cheaper. What he didn’t bargain for, was me. Then again, as egotistical and incompetent as he is, my guess is that something like suing a bunch of investors (including his own partner who seeded the venture four years ago) and a developer who can actually afford to defend themselves, seemed like a good idea at the time. But once your attorney finds out that you’ve been flat out stretching the facts and the people you’re trying to sue aren’t likely to budge nor cave in, then you have a serious problem.
So what happened seemingly right after we filed our lawsuit? Allen decided that he wanted to settle. We got a nice letter from his attorney.
My first response – in discussions with our attorneys – was to send him a nice F.U. letter. Instead, we sent them a nice laundry list of terms and conditions. Primary to that was financials which would explain what exactly happened to the investor’s money and for which they – the investors whose money it was – had zero accounting for.
When someone who blew through almost $4M of investor money without a single penny from his own pocket, ships a product he knew to be incomplete, allegedly breaches (in more ways than you can shake a stick at) his fiduciary duties to a company that investors were paying for, allegedly embezzles company funds – THEN – has the guts to file a frivolous lawsuit against everyone when he is fired, you’re not going to settle a darn thing because doing that pretty much gives the accused a “Get out of jail free” card. And money – which just adds insult to injury.
My guess is that, as the lawsuit allegations (see p31) go, the company money he used to pay his personal attorney’s original retainer while selling him a useless bill of goods in the form of a lucrative lawsuit, has probably run out. And unless his attorneys have taken leave of their senses, taking a case like this on a contingency when you look at the allegations in the counter-suit, is what separates the men from the boys and what makes good and bad attorneys. Unless the case settles (since Allen still has equity interests in the company), they don’t get paid a penny since Allen no longer has access to the Quest Online bank accounts from which he can take money – again – to pay personal attorneys.
If you’re not paying them, attorneys only tend to stick around if there are possibilities of a settlement. Why? Well because that’s how they get paid. So the longer it takes, the more the attorneys cost and the less money you (the idiot who is filing a friolous suit) get in the end. So the percentage split ratio starts to tilt heavily in the favor of the attorneys given how long a case takes to resolve and settle.
It’s like a personal injury case. You file a suit for $100K. Your attorney takes maybe 30% of the proceeds (no costs to you) and you start dreaming about getting $70K. But hold on! What happens if the other side only offers $50K? Better yet, what if you’re not even on a contingency but rather it is based on actual fees due. So now you’re getting $50K and have racked up $40K in attorney fees. So by the time the dust settles, the attorneys end up getting more money because the longer it takes, the more fees you have to pay.
So – if you have bills to pay – you start doing stupid and desperate things to get the other side to settle quickly. The attorneys tend to do the same thing because after all if things go sideways, they don’t make a dime since there won’t be any settlement money forthcoming.
Even if an attorney takes your frivolous case on contingency, they too have to do a win/loss analysis. After all, what is the point of spending years and over $500K in billable hours if you’re not bloody likely to see $50K?
And if the other side can actually afford to ride the wave – worse for you if they have liability insurance – then you’re pretty much up a creek with your frivolous lawsuit. Especially since loser gets to pay the costs.
Between all of them- and we’re not talking straight out of lawschool ambulance chasing dweebs here – our attorneys cost an average of $500 an hour and worth every penny. As I had said when this whole thing started back in March, I’d rather pay attorney’s $500K than settle a frivolous suit for $50K. At some point, I think Allen got the memo.
When you’re prepped for a legal battle against a frivolous lawsuit, your best ally is the law. But if you throw in the almighty power of the U.S govt. in the form of the IRS (apparently Allen does not believe in paying taxes), the SEC and the FTC into the mix, things can get interesting rather quickly.
The fact is this: we’re not paying him a single dime to settle his frivolous suit. And I for one (he named me personally in his suit – hence this and my other personal blog posts about this farce), am going to keep going for as long as it takes. And he probably knows this by now. If he had a case worth settling, we would have paid him what we’ve spent on attorney fees since March rather than continue this farce. But we’re just not going to do it. Period.
If the investors see it fit to reward him for failure and buy out his minority economic interest in the LLC, that’s up to them; even though they can’t do it without approval from Greg and I – the only two LLC managers. But even so, my guess is that the U.S govt. has other ideas about that once the dust on the civil side settles. Right now, it’s just a waiting game and very soon all the other pieces will fall into place. The wheels of justice – though expensive – do turn, albeit slowly.
At the end of the day, Allen is trying to re-write history and to squelch any/all mentions of this farce. Why? My guess is that – since he is currently unemployed, has no money to burn etc he’s out looking for new investors (or employer) to play rope-a-dope with. Don’t take my word for it; go ahead and look at the latest version of his resume – which he probably revised by now, as per the lawsuit.
Considering that – according to the Alganon team and the SVN logs – he didn’t write a single line of code for Alganon, let alone design the systems that he claimed that he did, he has seemingly gone beyond ludicrousness; but now with a padded resume to boot.
From Sun Tzu’s Art of War:
“In order to cause the enemy to come of their own volition, extend some [apparent] profit. In order to prevent the enemy from coming forth, show them [the potential] harm.
…
Thus critically analyze them [the enemy] to know the estimations for gain and loss. Stimulate them to know the patterns of their movement and stopping. Determine their disposition of force to know the tenable and fatal terrain. Probe them to know where they have an excess, where an insufficiency.
…
Then hit them with a really big stick.”
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