DealBook: Gawker Founder Suspects a Common Financer Behind Lawsuits

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Hulk Hogan, center, won a $140 million jury award in his defamation case against Gawker over the publication of a sex tape. Credit Eve Edelheit/Tampa Bay Times, via Associated Press

At first, Nick Denton, the founder of Gawker Media, thought it an unlikely conspiracy theory.

Now, he’s starting to believe it himself.

For the last several years, Mr. Denton has been the target of a lawsuit brought by the wrestler Hulk Hogan in the now-infamous defamation case over Gawker’s publication of a sex tape — an editorial choice that recently resulted in a $140 million jury award to Mr. Hogan. The appeals process is likely to drag on for years, and some legal experts predict that the judgment will ultimately be overturned or the award greatly reduced.

During the trial, a low hum of speculation emerged within the legal community that Mr. Hogan’s legal case, which dragged on for more than three years, might be funded by someone other than Mr. Hogan — and for reasons other than simply inflicting financial pain on Gawker. At the time, the questions were provoked by several strategic decisions on Mr. Hogan’s side that didn’t appear economically rational. More on that in a moment. Back then, Mr. Denton dismissed the idea of a third party secretly underwriting Mr. Hogan’s case as “rather conspiracy-theorylike.”

But in recent weeks, in the face of several new lawsuits brought against Gawker that are unrelated to Mr. Hogan’s case and seem to personally attack certain Gawker writers, Mr. Denton is having second thoughts. All of the new cases, like Mr. Hogan’s, were brought by Charles J. Harder, a Los Angeles-based litigator, working on a contingency basis, who has most likely run up huge legal bills and expenses. Gawker has said it has already spent as much as $10 million on its side of the case.

Mr. Denton has begun to question whether Mr. Harder has a benefactor, perhaps one of the many subjects of Gawker’s skewering coverage.

“My own personal hunch is that it’s linked to Silicon Valley, but that’s nothing really more than a hunch,” Mr. Denton told me. “If you’re a billionaire and you don’t like the coverage of you, and you don’t particularly want to embroil yourself any further in a public scandal, it’s a pretty smart, rational thing to fund other legal cases.”

Mr. Denton’s view is based on the huge expenses of legal cases and settlements, the fact that Mr. Hogan’s financial health has been erratic — and on the rich history of lawsuits in which lawyers make money only if they win the case. There is an entire industry that exists to provide lines of credit to lawyers working on contingency. There is also a small netherworld of investors who back certain lawsuits.

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