Litigation Funder Bankrolls Snapchat Whistle-Blower Suit

By Gayle Cinquegrani, Bloomberg BNA

A federal whistle-blower lawsuit filed May 16 against Snap Inc. by a former employee is being financed by Pravati Capital in what may be the first case where the role of a litigation funding company is acknowledged publicly.

“I think we’re the first publicly announced portfolio litigation funding deal,” John Pierce, a Los Angeles lawyer who represents whistleblower Anthony Pompliano, told Bloomberg BNA May 16.

The deal with Pravati Capital involves the entire portfolio of contingency fee cases that Pierce’s firm, Pierce Sergenian, is handling, he said. “That allows an elite start-up firm like us to grow more rapidly than we otherwise would to take on larger cases than we otherwise would,” Pierce said.

In litigation finance, a company provides money to fund a lawsuit in exchange for a percentage of the recovery the litigant receives if he wins the case. Most litigation funding deals occur quietly, Pierce said, but he wants the opposing side to know he has deep resources to take his cases “to the finish line.”

Whistle-Blower Allegations

Anthony Pompliano, who led the user growth and engagement team at Snapchat for three weeks, claims the social media company fired him when he refused to help company executives misrepresent the size of its user base. Pompliano alleges the company hurt his chances for future employment by smearing his reputation while trying to debunk his allegations as it prepared for Snap Inc.’s recent initial public stock offering.

Pompliano alleges Snap Inc. hired him away from his previous job at Facebook to pump him for confidential information about Facebook’s operations, even though it knew he was bound by confidentiality and non-solicitation agreements he signed with Facebook.

The ousted employee is seeking a minimum of $10 million in compensatory damages as well as punitive damages and an injunction ordering Snap Inc. to stop maligning his reputation.

Details of the Funding Deal

Under the deal between Pravati and Pierce Sergenian, the law firm is receiving funding from Pravati “in slices, as we need it,” and Pravati “will get paid from the proceeds from our contingency,” Pierce said. “The funding can be used for all purposes,” whether for expenses directly related to a case or for general office expenses, he said.

Pravati CEO Alex Chucri did not return messages left by Bloomberg BNA May 15. In a May 2 statement, he said, “We expect the return on investment will be very strong.”

Snap Inc. did not respond to a message left by Bloomberg BNA May 15.

Baldwin Lee, a lawyer at Allen Matkins in San Francisco who represents Snap Inc., declined to comment May 15.

To contact the reporter on this story: Gayle Cinquegrani in Washington at gcinquegrani@bna.com

To contact the editors responsible for this story: Tony Harris in Washington at tharris@bna.com

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