A historic number of possible claimants and a new era in legal marketing have turned the Camp Lejeune tainted water litigation into a potential record-setter for the amount invested and spent on advertising.
More than $145 million had been spent on television and social media advertising by year’s end, according to ad data reviewed by Bloomberg Law.
Insiders predict that number could easily double, in part because as many as 500,000 veterans or their relatives who lived at the North Carolina base between the 1950s and 1980s could be eligible to file a claim—and because Congress has already authorized a payout of more than $6 billion.
That claims total would easily eclipse the previous high-water mark, set by the nearly 300,000 lawsuits brought in a case against a 3M subsidiary that manufactured allegedly defective earplugs for US soldiers.
Both the 3M and Camp Lejeune cases have been turbocharged by a mass tort marketing industry that has evolved in recent years from the door-knocking of Erin Brockovich types into a high-tech, targeted operation on social media and TV.
One prominent player in the field referred to the industry last fall as the “wild west,” but said it was maturing at remarkable speed. Its ability to flood the airwaves has been financed by large investors who view mass torts as an increasingly lucrative asset class, and are likely to bet even more money on similar cases to diversify their holdings.
Hedge funds or litigation finance companies provide capital to purchase the ad time—with hopes of significant returns based on how well the lawsuits perform. Lawyers take the cases on a contingency fee, typically a percentage of any settlement or damages award.
“Camp Lejeune was the hook to get these institutional asset managers into the asset class,” Luke Darkow, a principal at Chicago-based Victory Park Capital Advisors, which has made such investments, said in an interview. “But I think the money is here to stay.”
The drive to compensate Camp Lejeune victims dates to the 1980s, when water systems at the Marine base and training ground were found to contain cancer-causing chemicals—the result of fuels and other contaminants seeping into the water supplies.
Lawsuits over the contamination languished for years.
In 2016, a federal judge dismissed a consolidated case brought against the government by 900 former base residents, ruling that their suits were filed too late under North Carolina law.
But in August, Congress passed the Promise to Address Comprehensive Toxics Act. The law lets veterans seek damages if they were exposed for at least 30 days to the toxic water between August 1953 and December 1987.
About 15,000 Camp Lejeune disability claims had been filed with the Department of Navy as of late December, according to a department spokesperson. The Navy has six months to adjudicate each claim; applicants unsatisfied with the decision can then sue.
Given the timing of the law’s passage, a new tide of lawsuits is expected to hit in March. The window to file claims closes in August 2024.
Advertising is the main method to find claimants, and it’s handled by an ecosystem of lawyer-specific ad agencies known as lead generators. They find clients, and some sign them up through their own call centers. Some even retrieve client medical records.
Then they sell the cases to law firms at a price that adjusts based on how many lawyers are advertising for the case and what’s going on in the litigation.
“As the mass tort progresses, more and more lawyers get involved, there’s more advertising, and the cost goes way up,” said Ed Lott, who runs lead generator Zero Risk Cases, which he said helped identify about 5,000 3M clients.
Before the law was passed, Camp Lejeune claims could be purchased by law firms for about $1,000, Darkow said. That has since increased to $5,000 or more, driven up by the high demand and increasing costs of ads.
Nearly $112 million was spent on TV ads seeking Camp Lejeune victims in 2022. That equals more than double the spending on the next closest mass tort, asbestos, according to X Ante, which tracks ad spending using Kantar CMAG data.
Bigger Cases More Common
Some plaintiffs’ lawyers say mass tort cases are growing larger because of better ways to target potential victims through social media.
“Five or seven years ago, a tort like 3M would have been 50,000 claimants,” Adam Gerchen, CEO of Keller Postman LLC, a mass tort law firm battling 3M and representing more than a thousand Camp Lejeune clients, said at a New York litigation finance conference in September. “Now it’s [more than] 275,000 claimants because of innovations around digital marketing and origination, the technology to absorb that type of volume, and capital.”
In the Camp Lejeune case, thousands of former residents of the base and their families have congregated on Facebook groups, which made targeting them relatively easy. Through early December, more than $32 million had been spent on social media and web ads seeking Camp Lejeune claimants, according to Pathmatics, an advertising research agency.
The biggest spender on social media and web-based ads was Lacuna Ventures, a subsidiary of publicly traded Troika Media Group, a New Jersey-based advertising firm. It spent nearly $17 million directing potential clients to a website, camplejeunevictims.com. That was more than seven times the next biggest spender, according to data from Pathmatics.
Troika Media Group did not respond to requests for comment for this story.
Steve Nober, who runs one of the country’s largest legal marketing agencies, said the rush of advertisers and law firms to get in on the case was unlike anything he had ever seen.
“It’s a land grab,” Nober told attendees at the conference last fall.
In an interview with Bloomberg Law, Nober said he started his California-based company, Consumer Attorney Marketing Group, 12 years ago because legal marketers weren’t tracking what portion of their spending was successful. He’s since expanded his firm to include a call center for client intake, a public relations function, and a medical records division.
“Nobody in the legal space was doing direct-response marketing, measuring response and being smart about letting money only run where you’re seeing response,” he said. “I call it Moneyball for legal marketing.”
The company now has 400 employees, and makes TV ads and 30-minute infomercials for lawyers out of a Los Angeles studio. But impressive returns are drawing more and more serious investors to the marketing space, he said.
“I refer to the mass tort industry as the wild, wild West,” Nober said at the conference. “It’s maturing very quickly. It seems like it’s slow motion, but we’re going to look back at this period of time and see how fast the finance world caught up to what’s happening in mass torts.”
He also predicted more innovations to come.
One could be fueled by a new business model created in Arizona after that state’s Supreme Court changed regulations to allow outside investors to own portions of law firms. Previously, like in virtually every other state, only lawyers were allowed to own law firms and receive portions of legal fees.
That had limited marketing firms’ returns to an upfront payment in exchange for finding mass tort clients. Now, marketing firms and litigation funders established in Arizona will be able to share in the actual verdicts or settlements from cases.
Those groups have been interested in the new structure to earn higher returns, said Lynda Shely, an ethics lawyer in Arizona who’s helped firms navigate the new structures. “We have had a lot of interest in this from both marketing companies as well as litigation funders,” she said.
Two executives from Nober’s firm filed paperwork last year to form a new law firm business there that would be co-owned by Richard Meadow, who runs the mass torts practice at New York-based Lanier Law Firm, one of the most prominent mass torts law firms in the country.
Neither Nober nor Meadow returned messages seeking comment on the new firm.
Elizabeth Chamblee Burch, a University of Georgia School of Law professor who’s researching a book on the lead-generation business, questioned whether allowing law firms to directly partner with financial investors could lead to conflicts.
Lawyers in that arrangement would have a fiduciary duty both to their clients and their investors, and Burch said it’s unclear how to resolve disputes between those two. An investor, for instance, may want to settle a case but a plaintiff may want to take it to trial.
“It muddies the water for the lawyer’s incentives too much,” Burch said. “I love to see legal innovation. I want plaintiffs to have access to justice and I want them to know they have a claim. It’s all important, but I don’t know that this is going to be a net good, and I have serious doubts that it is.”
Mass tort marketers have been dogged in the past by criticisms, including for selling the same client to multiple law firms. In one infamous case, two people hired to procure clients for a lawsuit seeking compensation from BP’s 2010 Gulf Coast oil spill were sentenced to prison after submitting 40,000 false names.
There are still many individual mass tort lawyers who work in traditional ways—finding clients, verifying their claims, and working their cases to a settlement or trial all in-house.
Morris Bart has been advertising on TV in the deep South since the 1980s. His 100-lawyer firm spends around $25 million on marketing a year, only running ads where his offices are based—Louisiana, Mississippi, and Alabama. Bart’s 3M earplug TV campaign ran between January and March of 2019 and garnered roughly 1,500 clients. A team of 20 of the firm’s lawyers are responsible for handling the cases to their end, he said.
“We like to do it the old school way,” Bart said in an interview, “so that clients can come to our physical offices and see us.”
Still, it can be a high-risk venture. The average mass tort case lasts more than five years, Bart said, and even then it’s a coin toss if plaintiffs will win their case or have to accept a settlement that won’t even recoup investment costs.
There’s also much to be gained. The payout that Congress authorized has no caps on fees that lawyers can charge for their work in Camp Lejeune cases—despite a year-end effort by some lawmakers to impose them.
Already, there have been reports of some lawyers demanding 40 percent or more of any payout. And the disputes are likely to be easier to resolve because the law restricts the government from mounting a traditional defense in court.
The US Chamber of Commerce, a longstanding critic of the mass tort bar, says the lack of caps gives lawyers a financial incentive to file as many Camp Lejeune claims as possible.
The big-business lobbying group is also warning veterans that filing a lawsuit could leave them worse-off financially. That’s because a provision in the law requires veterans who got compensation for their medical problems from other government healthcare programs to repay it if they receive a Camp Lejeune settlement.
Lott, a longtime lead generator, said the key to being successful in his industry is simple: Be honest in your advertising. For Camp Lejeune victims, the takeaway is to view all the pricey ads with a grain of salt.
“Don’t lie to lawyers, and don’t lie to the consumer, the potential client. That goes on all the time,” Lott said. “They’ll say you can make $10 million on your case, that sort of advertising, and that’s just not true.”
—With reporting by Tiana Headley
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