This is the third post in a series. To view the first, click here.
SimmonsCooper, a legal firm specialising in law suits on behalf of asbestos victims, may seem an unlikely financier for the hedge fund owned by Vice President Joe Biden’s brother and younger son. That hedge fund, Paradigm, is now in the spotlight for its links to another fund being investigated by the SEC for fraud.
Based in Madison County Illinois, SimmonsCooper describes itself as “Mesothelioma & Asbestos Nationwide Attorneys”, and boasts on its website of having represented more than 10,000 clients in lawsuits related to the respiratory illnesses since 1999. Madison County itself has a population of about 270,000 but has become famed for its liberal attitude towards tort law, attracting a host of class action law suits and personal injury claims.
The American Tort Reform Association, which campaigns for legal system reform, went so far as to name Madison County the USA’s No. 1 “judicial hellhole” between 2002 and 2004, blaming freehanded judges for turning the area into a hotspot for so-called “legal tourism” by allowing out-of-state plaintiffs to bring cases against out-of-state defendants. The county has attracted a host of consumer law suits including a landmark decision against cigarette-maker Philip Morris.
“It is difficult to overstate the anti-business litigation climate that suffocates Madison County,” the Tort Reform Association wrote in 2004. “It is a place where eating a bad piece of chicken in a local restaurant leads to a lawsuit for thousands of dollars against Cracker Barrel and Tyson Foods.”
The legal environment proved perfect for law suits brought by asbestos victims, allowing them to sue major and minor US corporations for millions in compensation for their illnesses. Asbestos suits numbered about six to eight a week between 2006 to 2008, according to ATRA. SimmonsCooper itself benefited greatly from the legal largesse, netting at least $1bn in verdicts and settlements for their clients, according to their website.
But that largesse was in danger of coming to a sudden end in 2004.
Two developments were threatening the law firm’s revenue stream: A bipartisan bill aimed at curbing asbestos law suits was quickly making its way through Congress, and conservative judges, newly-elected to the Illinois courts, were starting to dismiss out-of-state asbestos claims.
Vice president Joe Biden, then a Democratic Senator for Delaware, could help SimmonsCooper shake off both developments.
To start with, SimmonsCooper began searching for a new place from which to file its asbestos suits. Delaware, where 50 per cent of the US’s publicly-traded companies are incorporated, and where legal counsel would be unable to dispute jurisdiction, seemed a logical choice. Beginning in 2005, SimmonsCooper began transferring its asbestos-related suits to the Eastern seaboard state.
SimmonsCooper chose local law firm Bifferato, Gentilotti and Biden, where Joe Biden’s older son, Beau, was partner, to help file the suits. Beau received political donations from SimmonsCooper for his 2006 state attorney general campaign, and shared in the asbestos-suit revenue stream, for his troubles.
At the same time, Senator Biden was also netting political donations from SimmonsCooper. Employees at the firm were collectively the top donor to Biden’s political campaigns between 2003 and 2008, according to opensecrets.org. In 2006 Biden worked to defeat the bipartisan bill, which would have replaced the thousands of individual asbestos law suits with a trust fund for victims.
When Joe Biden’s brother and younger son decided to enter the hedge fund business that year they also turned to SimmonsCooper’s generosity.
The firm pledged $2m to help the Bidens, in conjunction with business partner Anthony Lotito, buy Paradigm, and quickly delivered half of it.
Though the deal eventually fell through, leaving the Bidens owing SimmonsCooper $1m, the relationship between the law firm and the Bidens raised eyebrows in the States. USA Today, for instance, ran a 2008 story titled “Biden move had ‘intersection of interests’ “:
… Biden spokesman David Wade said the senator “consistently opposed the asbestos bill because it was unfair. He thought it was dead wrong that if the trust fund ran out of money for the victims, they couldn’t even get their rights back.”
There is nothing illegal about a U.S. senator acting in a way that helps campaign contributors or relatives, and Biden has a history of supporting the right to sue in civil court. But the “intersection of interests” among Biden, his son, his ex-aide and his contributors “all steer the senator toward one perspective,” said Sheila Krumholz, executive director of the non-partisan Center for Responsive Politics. …
————–
First published at 20:30 BST, April 30, 2009
