Trump’s New Metric: Lawsuits per Billion Ratio (June 1, 2016)

Trump’s hair-trigger lawsuit behavior has been much in the news this past week, It started with his intemperate and racist outburst about the San Diego based Trump University fraud case, and morphed into a more searching examination of his typical business practices for more than 30 years.

Trump Art: The Lawsuit Golden Abstract (Interactive Graphic) per Bloomberg

About a month ago, Bloomberg Politics (April 25) published an especially detailed exploration of his personal and business litigation record for the last 15 years. It is worth reading carefully, in its entirety. It includes a very sophisticated interactive graphics presentation, which can be a little distracting, or viewed as a malleable art technique. This new Art of Trump in Golden Squares (with Gray Highlights), shifting and dissolving, is almost hypnotic in effect. Rigid and regular, or delightfully mixed in.

203 Trump Lawsuits by Outcome and Category per Bloomberg

“Donald Trump Will See You in Court” was written and reported by Chris Dolmetsch, Sophia Pearson, Bob Van Voris, Dawn McCarty, Susannah Nesmith and Janan Hanna, and the graphics created by graphics wizards Alex Tribou, Blacki Migliozzi & Jeremy Scott Diamond.

Since 2000, Trump has been sued 72 times in federal court, more than some of his high-profile peers, in cases both serious and frivolous. Casino magnates Stephen Wynn and Sheldon Adelson have been named in 20 and 11 federal suits during that time, respectively. Real estate developer Richard LeFrak has been named in one case.

The 72 cases count only federal lawsuits against Trump himself, not those filed against his companies. Include them—along with the many lawsuits Trump and his businesses have filed against others—and altogether Trump and his companies have either sued or been sued at least 1,300 times since 2000, a Bloomberg analysis of state and federal court filings from around the country shows. (Even that total falls short: Court documents on scores more lawsuits against Trump dating back to the 1980s are no longer readily available.)

While I was scrolling around the Bloomberg webpage and watching the kaleidoscopic background flashing and reforming, it occurred to me to add a Forbes dimension for depth.

In this political era of extravagant attention to wealth, money, and net worth so inspired and driven lately by Trump’s own personal obsession, the always popular Forbes Richest lists have become essential analytical tools. What was a once-a-year opulence splash has now become almost an independent franchise of many lists, and now their database and methodology permits a kaleidoscopic real time ranking and reordering on a daily basis (trading days).

All the Forbes Rich Lists rankings and profiles are freely available for the public to see and drool over, but, no slouches they, it takes at least 5 clicks to get to the real-time good stuff. Anyway, it does for me, and I have spent some time trying to figure out an internet quick route. So far, I haven’t. I bet their web SEO analytics are top notch, eyeballs on diverting content and all that. I highly recommend a periodic visit anyway to keep an eye on the one percent of the one percent, and not just because Forbes’ objective economic evaluation of his assets rankles Trump nearly to distraction.

So, as of Wednesday, June1, 2016 the Forbes goodies on our four Bloomberg-named suspects, Sheldon Adelson, Richard LeFrak, Donald Trump, and Steve Wynn, in wealth order, are given below

(Worldwide Billionaire Rank, Name, Net Worth, Age, Source of Wealth, and Country)

#23 Sheldon Adelson $26.5 B 82 Casinos U.S.
#193 Richard LeFrak $6.9 B 70 Real Estate U.S.
#377 Donald Trump $4.5 B 69 TV, Real Estate U.S.
#691 Steve Wynn $2.8 B 74 Casinos, Hotels U.S.

Simple is good. A first-pass cut combines Bloomberg’s lawsuit data on personal Federal lawsuits with Forbes’ net worth data to establish a new summary metric, which we can call the Lawsuits per Billion Ratio (LBR). The object is to get a handle on whether Trump’s litigation dramas are wealth inherent, or a product of his own doings, business practices, personal quirks, and inner demons

LBR Chart Uses Combined Data from Bloomberg and Gorbes Billionaires List

There are some things in which Trump is manifestly a World Class Operator. No, not education, or charity, or family values. But he does have World Class status in Lawsuit Instigation and Attraction. He has by far the highest number and ratio of lawsuits (LBR) per billion dollars of net worth of all four prime examples provided in Bloomberg’s analysis.

Actual total asset value doesn’t raise the risk of federal lawsuits. In fact, Adelson and LeFrak have the lowest LBRs. Nor does the age of the billionaire (surrogate for length of business exposure) or the nature of the primary business activity (high risk luxury resorts, casinos, hotels, or real estate).

In a real-estate to real-estate straight-up comparison with his New York contemporary developer Lefrak, Trump’s LBR is more than 100 times higher. Compared to Adelson, the big financial dog in the pack, who should be the lawsuit honey magnet, Trump’s LBR is more than 40 times higher. Only casino and hotel owner Wynn is in the same zip code as Trump. Even here, Trump’s LBR is more than double.

In terms of absolute numbers of federal lawsuits, brought by and against the billionaire personally, in the 15 years from 2000 through 2015, Trump, alone, has more than twice as many as the other three combined. This despite the fact that Trump represents only 11% of the group’s combined net worth.

Perhaps the low rate of federal litigation among the truly wealthy is not such a surprise. In fact Adelson and LeFrak may define a ‘normal’ billionaire LBR of less than 0.5 lawsuits per billion of net worth per decade. Fabulously wealthy people tend to savor their personal privacy and avoid excessive legal public airing of their disagreements. Trump didn’t get that memo, and apparently proud of it.

Trump’s lawyer has a simple explanation for the facts.

Trump gets sued simply because “he’s a tremendously successful business person who speaks his mind and doesn’t easily cave to threats and litigation,” said Alan Garten, general counsel for the Trump Organization.

Based on the data from Bloomberg, attorney Garten is simply wrong. Tremendous business success and hard-nosed bargaining do not cause a cluttered litigation landscape, a la Trump.

All of Trump’s legal gun slinging rubs across the grain with his supporters, and Americans in general. There are too many lawsuits, and litigation is used too much as an intimidation tactic. To make America great again, if it no longer is, we need more leaders whose word is their bond, and more handshake deals that you can depend on, not phony smiles and empty boasts.

Here is the Wall Street Journal weighing in on a favorite subject and Trump.

Trump’s Long Trail of Litigation: The candidate and his companies have filed a multitude of lawsuits over the years by Brody Mullins and Jim Oberman (March 13, 2016)

The Republican Party has long argued that excessive litigation in the U.S. increases the costs of goods and services and limits job creation. The Republican Party has long favored overhauling the U.S. legal system to cut down on what it views as frivolous lawsuits. Nearly four of five Republican voters want Congress to approve a law to “reform” the legal system, according to a 2014 poll commissioned by the Chamber of Commerce’s Institute for Legal Reform.

The Trump Lawsuit Tower by Year, 2000-2015 per Bloomberg Analysis

Trump and His Lawsuit Proclivities: A Deeper Look

Bloomberg dives deeper into Trump’s most recent 15 year history of state and federal lawsuits, with facts and figures, not red herring misdirection and deflection. They examined more than 1,300 cases against Trump and his companies, and discarded the routine matters, suits without lawyers, and nuisance filings.

Who sues Trump, whom does Trump sue, and why? Of the 1,300 cases Bloomberg examined, most were over mundane complaints—a casino looking to recover a gambler’s debt, a patron at one of his businesses who slipped and fell. These certainly show that Trump is a grievance magnet, but they otherwise don’t lend much insight into his legal strategy. Set those aside and you’re left with 203 notable—if not always serious—cases involving Trump and his companies (collectively, we’ll refer to them as Trump’s cases).

Methodology: Bloomberg News reporters reviewed more than 1,300 lawsuits in state and federal courts across the country, focusing on locations where Trump does the majority of his business. The reporters relied on electronic databases of lawsuits and paper filings dating to 2000. Reporters narrowed the list by eliminating slip-and-fall suits, almost all cases filed without a lawyer, attempts to recover gambling debts and other such litigation. The reporters relied on filings to determine claims, defenses, and outcomes of cases.

Here is a summary of the 203 cases looked at in detail by Bloomberg, listed by outcome and whether Trump and his companies were the Plaintiff or Defendant in the action. The summary is useful, but of limited value in determining who really won of lost. We do see that Trump plays defense about 70% of the time

Here is an adjusted chart for what can roughly be called Defeats and Victories. This chart lists the 172 cases which have been resolved (excluding 27 which are still active, and 4 for which the result is unknown).

The Trump No-Win categories, Defeat and Victory, were chosen as follows. If Trump was the Defendant and settled, we will count that as a Trump loss. Trump likely (but not assuredly) paid some money or other consideration to the Plaintiff to walk away. Trump Wins, either as Plaintiff or Defendant, is a straight forward choice. For Both Parties Withdraw, when Trump is the Defendant, we will count that as a Trump loss. This may seem counterintuitive at first.* But when both parties withdraw and there is no recorded official settlement, that quite often means the parties have made a private deal. Where Trump is the Defendant, that could well mean dollars for silence or sealed records.

For Plaintiff Withdraws and Trump is the Plaintiff, we will count that as a Trump loss, since he was the aggressor and walked away without a legal validation. He may have partially succeeded, indirectly, by instigating a suit in some instances, but Trump will be out both his hefty legal fees and public bragging rights. When Trump loses as Plaintiff or Defendant, again that is a straight forward choice. For the Bankruptcy category, there are six instances where Trump was the Defendant These are complicated, but it appears Trump won 4 when claims were dismissed in bankruptcy, and lost 2 where his business ownership interest was reduced or eliminated.

These Defeat and Victory category designations are just approximations, but they provide a reasonable overview of Trump’s litigation results in state and federal courts during this period. The modified categories provide a more accurate and robust picture than the simple outright won-lost record. The total number of cases won or lost outright (61) is only 35% of all the 172 Trump cases resolved in the last 15 years.

Results? The modified Bloomberg analysis here shows Trump comes up a winner 51% of the time. For all cases in all courts during the last 15 years. Almost a fair coin toss. This is hardly the Stuff of Legend. And nothing whatever to write home to Mama about.

Maybe there is a bias because state court suits are included in these 172 cases. So, we have applied the same methods to only the federal court resolved cases. There is sufficient information to classify results for 58 of the 72 cases Bloomberg identifies (9 cases are pending, 5 others had no outcome data). Here they are.

Trump’s legal team does perform somewhat better in Federal Court. Their winning percentage is now 57%, an increase of 6 points from the overall case pattern. The actual number of assigned case Victories is 33 versus 25 Defeats. Over 15 years, that amounts to 2 Victories per year as opposed to 1.5 Defeats. Not too impressive.

To sum up Trump’s Legal Program, for himself and his companies for the last 15 years.

Promises: Trump is ready to sue and threaten to sue liberally and in public, repeatedly. His Legal Machine is ready to turn on a dime, sue anybody and anything for amounts large or small, to defend Trump’s property, reputation, profits, business interests, prerogatives, and personal peeves. He is not ready to settle, except in the rarest of instances.

Here is the Wall Street Journal on Trump’s empty threats. (march 13, 2016):

Mr. Trump sometimes threatens to file lawsuits but doesn’t follow through. In 2006, he threatened to sue Rosie O’Donnell after the television personality said he had gone bankrupt. In 2011, he said he would sue MSNBC’s Lawrence O’Donnell for saying he was worth less than $1 billion. Two years later, he threatened to sue an activist running a campaign to pressure Macy’s to stop selling products bearing Mr. Trump’s name. None of the lawsuits materialized.

Outcomes: Trump and his super-aggressive legal team win about half the time, and do somewhat better (less than 60%) in federal courts. He actually settles 34% of the cases, and probably settles an additional 17% (both parties withdraw, Trump (P) withdraws).

Here’s what the Trump campaign had to say about settling lawsuits.

“For the massive size of Mr. Trump’s many companies, he is not litigious at all,” Trump spokeswoman Hope Hicks said in an email. “When he is sued, however, he rarely settles the suit.”

He doesn’t like to settle, she said, “because if he did, he would be sued much more often. This is the kind of mentality our country needs—fight back and win.”

Really?

Final Trump Lawsuits Comments

Bloomberg has done an admirable job with this investigative piece. More real journalism for 2016, more please. Water the desert that has been the standard media coverage until recently.

As detailed as their work is, it is a 15 year snapshot of a nearly 50 year career. Trump started in 1968 when he graduated from college, and has never stopped. He did not spring fully formed for litigation in the year 2000. Court records from the 1970’s, 1980’s, and 1990’s are mostly in hard copy, or archived, and are difficult to search for online. If there are 1,300 cases recently, how many hundreds were there before.

A couple spring to mind. There was the Federal consent decree for racial discrimination in housing in 1973. There were two bankruptcies in Atlantic City in 1991 and 1992. There was the Trump Airlines default in 1992. We have seen only the most recent branches of the Trump litigation bush, thorny and densely packed as it is.

Prosecutors in Federal Court pride themselves on conviction rates exceeding 90% or more. A conviction rate of 60%-75% is likely to get someone fired, reassigned, or demoted. Of course, Trump’s attorneys are working in the civil litigation arena, but a 50% win rate for top notch name partners in corporate law firms would generally be a personal humiliation, and result in the loss of business (profit bonuses) and new clients when word got around.

Trump prides himself that everything he does is first-class, the best, the ultimate. Evidence from this Bloomberg review of his lawsuit results from the last 15 years paint a different picture. Are guilty heads to roll? Will Trump take a hard look at the Litigation Manager’s performance? Oh wait, that is himself.

Trump is ready to litigate at the drop of a hat, a dirty look directed his way, a perceived slight. He is a litigating maniac. His documented LBR puts him in the stratosphere, well beyond the norm for men of his purported wealth and stature.

It is hard to avoid the impression, not absolutely proven, that Trump uses litigation and the threat of litigation to intimidate, brow beat witnesses, grind down opponents, and pursue personal grievances, all less than honorable uses (though perfectly legal, when done skillfully) of the powerful instruments of American legal procedure.

Trump touts his mastery as a business negotiator. In general, big league litigation detracts from successful deal making. Litigation causes endless time delays, dissipates horrifying amounts of money, squanders opportunity costs, yields uncertain results, and creates residual bad will among business partners and adversaries, should you ever have to deal with them again (like say, Judges, Congressmen and women, Senators). It is a poor substitute for real negotiation skills.

In fact, most talented business leaders would say litigation is a last resort to force a deal, not a primary weapon, unless you are trying to dodge an obligation.

Americans don’t want ever more lawsuits. They object to frivolous litigation tactics. Are they ready for a President who is a litigating powerhouse with a 50% success rate?

We shall see.

Resources: Litigating Trump