How Law Firm Acquisition by Private Equity Firms Could Alter the Litigation Landscape – Ep 67

Welcome to Litigation Nation. I'm your host, Jack Sanker, along with my cohost, Danessa Watkins. This is the show where we cover the most important and interesting legal news over the past couple of weeks. Reminder, you can always find us on Apple Podcasts, Spotify, YouTube, wherever you get your podcasts. We publish every other week with the exception of our our summer hiatus that we're just coming out of here.

Danessa, what do we have up today?

Hey, Jack. Good to be back. So I am going to cover a recent opinion out of, Texas District Court, which is probably gonna go up to the Supreme Court at some point, and we may have new law on whether the 10 commandments can be posted in public schools.

And I'm gonna be talking about what I'll call the PE-ification of law firms, private equity's attempts to invest directly in the ownership of law firms, something that has been otherwise prohibited or illegal in in just about every instance, since, you know, the last hundred and fifty, two hundred years, and the way in which those rules may be changing and what to expect. All of that and more, here's what you need to know. So we're gonna be talking about, during my section, some news from this past week, that was released by an investment firm, which I can talk about, and I may have talked about in other episodes called Burford Capital. Burford Capital is a litigation third party litigation finance firm. They are the biggest, that operates in North America.

I think it's the biggest one in the world, and they are one of the few that are publicly traded. Third party litigation finance, we've talked about the show quite a bit, but it is the practice by which outside funders can take a financial stake in the outcome of a lawsuit typically in exchange for upfront capital. So an example of that would be someone wants to sue or person a wants to sue person b. It's usually by the way, it's usually companies here. But, person a wants to to sue person b, but can't afford to to pay the hourly fees to a lawyer, can't afford to pay for experts, things like that.

The lawyers are prohibited from lending money directly to their own clients under every ethical rule that I'm aware of. And so in that situation, typically, the litigant who can't afford to lit to hire an attorney is gonna be out of luck. In steps, these third party litigation funders in exchange for lending them money to pursue these cases, they will take a percentage of the outcome of the lawsuit. Lawsuit. So they may lend someone some money in exchange for, you know, 10% or 15% or whatever it is that's recovered in the lawsuit.

Right? That's a a very simplistic way of describing it, but that is, gives everyone a good sense of, you know, what these folks do. There are other lending arrangements too. There's, it gets as complicated as you want it to get, but that's by and large what you need to know for purposes of understanding who Burford Capital is. Burford is, I think, a market capitalization of about a billion dollars.

They've been in the news for lots of other things. For example, they, they are attempting to collect on, I think, a $300,000,000 verdict against the State Bank of Argentina, which is its own thing. But Burford's been around for ten or fifteen years. They're an established company, and they're the biggest player in this sandbox. This past week, Burford announced that they are looking to collaborate with law firms, none of which were named, nor would you expect them to be, but looking to collaborate to invest directly into law firms.

Meaning, they want to take an ownership stake of law firms themselves in America. Right away, that is you know, at the surface level, that's something that's generally not prohibited, and there's lot of reasons for them to get into later. But by and large, you can't have non attorney equity of law firms in the American system. You can't have non attorney fee sharing in the American system with few exceptions as well. And there's sort of public policy reasons for that, ethical reasons, and so on.

But whatever justification you wanna assign to it, that has been the case for as far back as I could find. In preparation for the story, I I was kind of looking into, some of the really, really, really old, ethical treatises that were published. And so I was able to find back as far as 1820 where they were discussing the the issues with having, non non attorney equity and non attorney fee sharing, in firms, things like that. So most states, at least with few exceptions in in, I think, Virginia, Utah, most recently in Arizona. But in most states, it's just this type of thing is just not allowed.

You you can't do it. Firms have to be owned by lawyers. Fees generated from providing legal services must be shared only among lawyers. They can't be shared among anyone else, and that includes, by the way, employees of the firm. So if you they're increasingly, we see things like, non attorney CEOs or non attorney, executives at law firms.

Those folks can't have equity in the law firm. They can be paid a salary. They can have bonus structures and things like that, but they can't literally own a part of the, profit or the revenue that comes into the firm. Can't own equity stakes in the firm. Burford wants to get involved.

Burford wants to, to buy into law firms. And in this sense, Burford is is operating as essentially like a private equity firm here. In their announcement from this week, Perverb alludes to the fact that, you know, law firms may be gun shy about working directly with PE firms, so they're they might be a little more comfortable working with a litigation funder, just because of the proximity to the practice of law that litigation funding has as opposed to, you know, a a normal private equity firm or something along those lines. But they are effectively you know, if they do this, they will be acting as a as a private equity company. So how are they gonna do it?

Why well, actually, you know what? I'll I'll back up from that for a moment. It's reasonable to ask, you know, if you're listening to this, why should anyone outside of investors or law firm owners, care who owns law firms in America? You know, why is this? Why who cares about this?

Right? It seems at surface level, just kind of protectionist. It seems at surface level, just a way for lawyers to protect their own margins and to keep outside investors out. And all that is, like, a fair critique and probably at least a little bit true. However, the there's a lot of other reasons that are kind of below the surface.

For example, in some of the treatises that I was looking back to of, you know, from a hundred and, years ago or whatever, they point out the natural conflicts that would arise in situations like this where, outside investors who are involved in with the firm, they're not bound by the ethical canon. They're not bound by the ethical rules that lawyers are.

That was the first thing that came to mind for me.

Yeah. Yeah. They're not they're not bound by those things. So, you know, they cannot be punished by the state ethics board. They cannot be disciplined by your state supreme court for violating different ethical issues that we all have to constantly be worrying about.

It's kind of our,

you know, our like money coming in and what what type of account can you put client money in and you can't commingle it and, like, just just the most basic stuff.

Yeah. It it's our, like, mental overhead for practicing law is the these ethical compliance things, you know, that make it more complicated to run a law firm than it does than it is to run other types of businesses. And and in certain instances, makes it less can make it less profitable. Not that lawyers don't make a lot of money. Don't get me wrong here.

But, you know, if you're just an outside investor who buys into something, know, all you care about is a return on your investment. That's it. And if you have a a stake in the company or maybe if you have a controlling stake in the company, right, you can leverage that through the fact that you own it to try to influence business practices towards, you know, getting greater returns, which can be in conflict with these ethics rules. If you have a client that you know? And and, again, not that law firms aren't businesses.

And we if we have nonpaying clients, you know, we don't like that. If we have you know, if there's a business aspect of representing someone that is not great for us, we're we try to get away from that type of thing. You know, we're not working for free for the most part outside of some pro bono work. However, I I if I have a client who I, for one reason or another, is difficult to deal with financially, I can't just drop them. It's it's not that simple.

And any lawyer has been in this position, by the way, knows exactly what I'm talking You have to, you kinda have to let them go in such a way that won't prejudice their rights as a litigant or as a client, which can mean you stick in the case for months while you try to

Yeah. If it's active litigation, you need court approval.

Yeah. If it's active litigation, you need court approval. But even beyond that, if it's if it's, which means, by the way, folks, you have to file a motion for, leave to withdraw and ask a judge if you can terminate your relationship with the client. And the judge can say no. And I've had this happen to me before.

And I've had the judge say no because my client was indigent, because my client could not pay, because that effectively, the court's saying, well, if they can't have you, then they're not gonna hire another lawyer, and they're gonna be screwed. And so you're gonna have to figure this out among yourselves. In the meantime, you have to proceed with the litigation. You have to proceed with representing them, and you have to do so in accordance with your ethical rules, which means you have to do a good job. So all these things, you know, you can imagine would come into conflict with someone who's just purely interested in in return on investment.

Right? That's that's kind of an easy one to point out.

Thinking too, and I don't know if you're gonna get to this, but discovery. So, you know, how many times have you had a case where, shoot, why did you send that email client? We have to turn that over. Like, I have zero basis to not turn this over. It hurts our case, but we gotta deal with it.

I I could see that being an issue if, you're not bound by those ethical obligations and you just dollar interest in the case outcome.

Yeah. And, I mean, there's a million things you could think about hypothetically too. Like, if, say, if, you know, if we open up our doors to outside investors and we were allowed to do so, and what if, you know, someone buys a controlling stake in Amundsen Davis and then says, you know what, guys? We actually own this other company over here, and we want you to sue all their competitors. You know?

We wanna weaponize your abilities as attorneys to just to just start, you know, increasing our market share in other things that we're invested in.

You mean what the White House, Just id? Sorry. I couldn't I was doing I'm glad I'm Sorry. Go. Get it.

Move on.

Yes. But, you know, like, say Amazon buys a controlling stake in Robinson Davis, and they says, hey. You know what, guys? We want you to just start suing, I don't know, Apple or whatever, all those things. And now they're directing lawsuits that could be frivolous or not based on like, you know, good faith claims or whatever, just solely to deplete the resources of their business competitors.

Also creates conflicts. Yeah. Conflicts aspects as well. You know, if PE firms are often invested in multiple enterprises, not just one at a time, you know, and you could structure this however you want, I suppose. But now all of a sudden, you can represent some people and not others based on the ownership structure of the PE firm.

It just like, it's a Pandora's box of of ethical concerns. And it also encourages some pretty nasty behavior on behalf of the individual attorneys who may be prioritizing the, you know, shareholder return above their ethical obligations to the clients and and all those things, which, again, let's not be naive. I mean, there is an aspect of it's a for profit business. There's an aspect of, you know, this where you do you must make money to survive. So there's but it's it's strictly confined within the each of your state's ethical rules.

And and then and then on top of that, whatever jurisdiction you're practicing in, the the local courts regulate this stuff. And then on top of that, state statutes, federal statutes, and so on. So you don't have a lot of leeway to just do what you wanna do just to make a profit here, in the way that you can and, you know, say finance or whatever. So that's one of the reasons why you should care about this if you're just a a normal person who's listening to this. The other thing I would say is, you know and and stay with me on this.

There are about 70,000,000 lawsuits filed in America every year of a country of, you know, 320,000,000 people. And so there's business disputes, payment disputes, landlord tenant issues, car accidents, marriage, dissolutions, or custody lawsuits for children, workplace safety, wage and hours, school and education, race, gender, sexual orientation, disability, privacy, intellectual property, and so on. Right? And then I'm talking about private lawsuits that are filed in this country, 70 something million of them every year. In America every year, there's about 10,000,000 arrests that take place.

Like, 10,000,000 people get arrested every year for violating crimes. And why does that matter, this conversation? I would argue private lawsuits, private litigation is a is law enforcement, and it is it is actually an extremely common and much more common form of law enforcement in a literal sense of, like, enforcing the law.

You can keep all within the bounds.

Yeah. Well, I mean, yeah, I mean, the there's most laws are on the books and are left up to private actors to enforce is what I'm getting

at. Mhmm.

Police enforce a a limited set of laws. Regulators promulgate laws. They they draft them, but, you know, regulators don't arrest people or whatever. Quite a bit of law enforcement is done by private actors, litigants who are enforcing their rights, protecting their rights, trying to get back something they believe was wrongfully taken from them to do one thing or another based on rights that are either granted to them by state or federal statute, the constitutions, or our system of common law. So in that context, 70,000,000 losses versus ten ten million arrests.

And there's all sorts of other not like, I understand, you know, criminal law enforcement is not just arrests. I understand. There's a lot more to it than that. My point is is that private lawsuits are a huge part of enforcing the law in this country and how your day to day life is governed. If law enforcement is a form of governance, which it is, then so is private lawsuits.

So if you're worried about that type of thing and if you're worried about who gets to decide how and when laws are enforced, in this country, I mean, you should care a lot about, your you local policing and how that works and rules around around policing and criminal statutes and everything else. You should also care about the statutes that authorize these types of lawsuits. You should care a lot about the people that are deciding and the motives of the people that are getting involved in private litigation. So which is why we have these ethical rules to begin with when it comes to attorneys because even prosecuting, private lawsuits, you know, suing someone for money or whatever, you as an you are considered an officer of the court as a as an attorney. And with that comes all these different responsibilities and everything else.

And if you outsource that to an unaccountable, you know, for profit, organization, now you have much less control over that system. And and I think that that is you know, I'm not saying that I'm not being doomy and gloomy over this, but I I that's enough. I hope I made the point that you have a stake in this, and it should matter that, who it is that's going to to decide the ebbs and flows of of private lawsuits in this country. It does affect, you know, an everyday person is kinda what I'm getting at.

So So the the three I think you mentioned three states where they do allow for this in in some form. There must obviously be some sort of checks and balances or limitations on how that works.

Well, not in Arizona. But Arizona's the Wild West right now, and that's a whole another episode someday. But Arizona in 2021 changed the rules around this stuff, and and they also changed the rules around fee sharing. So the one thing you can do in Arizona, for example, is if you wanna refer someone to a law firm for, like, car accident. Right?

You can ask for a referral fee from the lawyer. Very interesting in Arizona that if you are a physician who is you know, someone walks into your clinic and it's like, just got run over by a bus. You as a physician can take a referral fee on that. Yeah. So, like, you just like, it's That's messy.

Oh, yeah.

Then that's the physician that's gonna be testifying on your behalf as well. Yeah. I see where that's going.

And the physician is gonna be in charge of, you know, prescribing you whatever treatment you need and jacking up medical bills if any of this worked in injury stuff, know, jacking up the medical bills to the point where, you know, getting you a bunch of treatment you don't need because they have a financial stake in it. It's and so on. Like, it's you can really entertain yourself thinking about where this goes. But I'll set those three Sorry.

Just now I'm, like, stuck on that. Like, did we not learn from big pharma? Like, anyways, go.

Yep. Yep. Yep. Now proponents of this type of thing, I mean, they have arguments for it other than just, you know, we wanna get private shareholders access to this market. I mean, though, they correctly will argue that this type of arrangement can allow for greater access, to access to the attorneys.

It could by driving down cost. For example, if someone, it can, you know, be funded by private investors, then they can you know, maybe they don't have to charge so much from the individual clients. It also would, at least according to the to the proponents of this type of thing, increase competition. It's hard as an attorney to start a law firm because you and then what do you what do you need to go to a bank? You know, you can get you have options to get a small like, you you can get a a line of credit or a loan from a bank, and that's about it.

Whereas if you have another business idea that's and you wanna start a business or whatever, you can go to friends and family, business contacts, you know, institutionalize investors and say, I wanna start this business. I need operating capital. If I give you 5% equity, would you give me some startup money? Right? Everyone else can do that.

Lawyers can't. And so it arguably stifles competition. Entrenched actors have a lot more, power in local markets in particular because of this. It's very difficult to start from the ground up. People do it all the time, but it's it's, you know, it's difficult to do so.

So those are kind of both sides of the argument here as to, you know, why this should or shouldn't be the case. But what matters is it has not been the case for as far back as I could look in American history. And so what do how do investors such as Burford Capital and and I you would imagine PE firms that wanna get involved, how how are they planning to get around this? Burford plans on doing so in what's called a management service organization, MSO. And this is a model that's been commonplace in the health care services market, and it's kinda where it's become kind of famous now, where PE firms can acquire health practices, which are regulated kinda similarly, but not exactly, but similar restrictions on, you know, where money can go and who can own what and everything else.

And what they'll do effectively is create an MSO, management services organization, that attaches itself to, like, the law firm and can be paid a subscription fee or however you wanna structure it, in in return for providing management services. So, you know, accounting, finance, management, document, etcetera, things like that. At surface, it doesn't sound any different than just, you know, outsourcing this stuff to an accounting firm. Like, if you own a law firm, you can hire an accounting firm to run your books for you. There's nothing wrong with that.

But what the way that these MSOs are different, at least in health care, they take an ownership stake in the health care company. And in doing so, you know, they'll they they basically stuff the equity holders of the health care firm full money in exchange for selling some of their equity to the MSO who then owns the practice. And at that point, they have an ownership stake in the practice. However, it's organized whether it's a board or something else. They also get to start making management decisions about how the company gets run.

So you hear recorder stories about, you know, hospitals that get acquired by PE firms, and they cut the staff 30% and service goes way down and all this stuff because the investors just want the return. And they're like, hey. If we can squeeze the staff a little more and, you know, prop the margins up, that's more for us. So does this seem like it might be legal? Well, there is this MSO thing that Burford wants to try out.

There is a recent decision in Texas which discusses the potential for an MSO law firm model and effectively says, yeah. Why not? You know, it's it's, you know, you the attorneys are still gonna be regulated within these ethical confines. They still, are gonna have to be, you know Accountable? Yeah.

Maintain privilege with the client and confidentiality and all those things. And you have to structure it in such a way as to make sure that the MSOs, you know, aren't getting a peek behind the curtain as to legal decision making and so on. But if your compensation, either as a partial owner of the MSO, partial owner of the law firm, or as an attorney of the law firm whose compensation is now tied up in both of these structures one way or the other, You're gonna be asking you you're gonna be asking these people to act sometimes in their own in their own against their own interests by, you know, strictly adhering to the ethical rules at the expense of, say, profit or at the expense of investor return or all those things, which happens in law firms all the time because we have to because of the ethical rules already. But you're adding the added pressure of people that are not bound by the ethical rules to that consideration. And, you know, in my opinion, everyone is movable at some point or another.

And attorneys that, you know, maybe weren't likely to behave unethically before could be nudged towards that if they are tied up in one of these, you know, organizations.

Primarily for plaintiffs' firms, or is the model applicable to defense firms too?

I think it's it's applicable to both. I mean Okay. Litigation funding is more common on the plaintiff side of thing because you can it's

just payout.

Yeah. It's just a different it's just where it kind of more shows up. But there's absolutely nothing preventing it from, you know, from, attaching itself to a billable hour defense firm and effectively taking a chunk of every hour that gets billed. K. You know, that's that's how it will get set up.

And so Burford doesn't have a partner for this yet, but they announced that they're looking for partners to do this with. They announced that they're they wanna do this with firms. In Arizona, where the rules have been much relaxed on this type of thing, like I mentioned before, there have been instances of PE firms basically buying into law firms and and just saying we're owner we own you now. But now we're gonna pay you, you know, your salary and everything else, but we literally own the firm. I think that debate is still ongoing as to, you know, whether it was a mistake in Arizona to do this.

You know, I I think it's early. People are testing the waters on that structure as I understand it now. I'm not aware of any, like, huge glaring, you know, like really, really abusive setup that has resulted in people getting screwed or whatever. But it's like, it's right there. You know, you could do it.

You could see it. You could envision it happening. And if this type of thing catches off in say Texas next, and if it catches off elsewhere, I mean, it's going to be, I mean, the floodgates will open, the money will pour in, The margins in law practice are higher than they are for other types of most other types of businesses. Right? You you you can make a higher profit margin in law practice than you can running a supermarket, for example.

So the PE firms are gonna want that. And if you are, by the way, if you're an owner of a law firm, partial owner of a law firm or whatever, and you want, you know, an exit strategy for your ownership stake, You'd love to be able to sell to a PE firm, you know, and and retire, you know, or something like that. Right? So if you get rid of these rules, if you just tomorrow, we all we snap our fingers in all these prohibitions and all 50 states were gone, I think you would just see firms getting gobbled up Right. Immediately.

And because everyone would want in at that point. The money wants in, and the money would have been trying to get in for the last hundred and fifty years and just has not been able to. So that's why it's a little, you know, it's like tweaking the law here and changing things there. There is like a pent up demand for this type of investment opportunity that is just gonna be massive. And, you know, legal services industry in The United States is is billions and billions of dollars.

People are gonna want to wet their beak with that. So this announcement by Burford that they're openly looking to do this, and they're gonna test out this MSO model as soon as they get someone who was willing to do it, which someone will because the reasons I mentioned, people are I'm sure there's a lot of folks that are just looking for a buyout. It it could fundamentally change the way that the law is, you know, enforced. I I will stick to that thesis of, you know, private lawsuits being law enforcement. And, you know, I'm not here to, like, you know, to to be shrill about private private private equity firms ruin everything and so on.

You see those takes, you know, or whatever. But there's a lot of horror stories about PE firms acquiring companies and running them into the ground. Know, like, that that happens, because they extract whatever value they can, and then they, you know, they they toss it aside. I mean, I remember when I was a kid, I remember it was a big deal in the I wasn't, I wasn't a kid. I was a young person, I suppose.

But do you remember, the twenty twelve election, Mitt Romney, who worked for Bain Capital PE firm and was famously you know, Bain Capital was, I believe, the PE firm that, bought out, Toys R Us and and, like, stripped it down, loaded it up with debt, and then basically paid themselves management fees. And if you're listening, Bain Capital, I'm saying all this hypothetical. I've not fact checked this. I'm, speculating. This is all a joke.

But they, it eventually resulted in in Toys R Us going bankrupt while Bank Capital made money off their investment. So there's lot of horror stories about PE investment in private industry. Whether that would happen to law firms or not, it's hard to say. But the point is is this were this to catch on and it might catch on would be a pretty seismic change in the way that law firms are run and the incentive structures for pursuing litigation and filing claims and know, suing people or not suing people based on, you know, all these things. And it's it's been very interesting to see how the different states react to this.

Think it's gonna be a state by state thing and whether they can resist the, you know, tsunami of cash that will come pouring in if if it gets cracked open.

Mhmm. Yeah. Super interesting. Yeah. And there's definitely a lot of layers to it.

I can't imagine it's gonna be something that catches, like, wildfire. I think, obviously, each state is gonna have different concerns about it. You know? But I wonder so, of course, this is me as a defense attorney. I feel like it's too easy to file a lawsuit and, you know, we drag people through litigation on on meritless things, and it's just a drain on on

70,000,000. You know? I'm sorry? 70,000,000 lawsuits.

Right. Right. But so, yeah, my what I'm interested in is whether this would improve the quality of the lawsuits that get filed and, you know, cut out some of the BS ones or if it would do the opposite and we'd have more litigation filed because, you know, people who couldn't previously afford it or something. I don't know.

I think you're gonna see it improve. I think you're gonna see more. Yeah. I mean, this because the the you know, the one of the reasons why frivolous lawsuits get you know, truly frivolous lawsuits aren't brought is because the cost of doing it. And it's not a lot of money to file a complaint.

Filing a complaint is usually a couple $100. So anyone can do that. Right? But, you know, everything else associated with it, if you go far enough, discovery, etcetera, if you're paying for a lawyer. If you're pro se, it's cheaper, but it, it's your time that you're using there.

These bigger firms could talk themselves into or these bigger like, investment firms could talk themselves into, oh, let's just make every complaint AI generated. Let's automate just discovery. Let's just, like, ruthlessly enforce, like, efficiency and KPI metrics and all those things and, like, drive the cost down, which people will say is good for access. It allows people to get lawyers more cheaply. It also means more litigation.

It means more lawsuits are filed. So, you know, for every 71,000,000 of these lawsuits, some person is served with a, you know, a process summons and a complaint and says you've been named in a lawsuit for, and that's, like, not a great feeling, I would imagine. So, yeah, I mean, I I think you would see, if anything, more litigation.

Well, let's hope that maybe Arizona will be the guinea pig, and Illinois will hold off for a while and and see how that plays out.

Yeah. Yeah. Like I said, that's a whole another can of worms. Maybe we'll cover that in the future, but that's you know? Yeah.

Yeah. This will be interesting. We'll we'll circle back if if Burford ever announces a partnership and find someone to do this with, and we'll let everyone know.

I think the separation of church and state is one of those, you know, areas that we've just known exists, and it's it's a bedrock principle of our democracy, yada yada yada. Well, that's potentially about to be flipped on its head. We now have a third state in the last I think it's a year, year and a half that has tried to pass or has actually enacted bills that would not just allow but require publishing the 10 commandments in public schools. Now the latest one has come out of Texas. So on 06/20/2025, the governor, Greg Abbott, signed senate bill 10, which provides that every public elementary and secondary school in the state shall display in a conspicuous place in each classroom of the school, a durable poster or framed copy of the 10 commandments.

Shall display.

Very interesting.

Shall, Shall display

Not is permitted to display.

No. Shall display. I mean, the nuances of this bill are extensive, almost to the point of, like, why wouldn't you dial back a little bit, you know, and and maybe give a chance for this to to go through? But no. It's it's pretty extensive.

So they provide the size of the poster, has to be at least 16 inches by 20 inches in size, in a size and typeface that is legible to a person with average vision from anywhere in the classroom have to be up permanently all year round in every single classroom to account for, for example, high school students who may change rooms throughout the day. Boy. And they specify the exact version of the 10 commandments that have to be published, which I I guess, admittedly, I didn't realize that there were different iterations of it. So that tells you all you need to know about me. I

I was a religious studies major in college among I think I was a history major as well. So there's, like, the competing translations of

different parts of

the Old Testament is is, like, a very nerdy thing that I could talk about, but I won't.

Well, it's I mean, it's laid out in in this court case pretty detailed, so it's probably a refresher for you. But yeah. So this was and and it's full from as early as kindergarten all the way through high school. So any public school has to display this, and it was set to go into effect on September 1. But within, let's see, about two weeks of the bill being passed, there was a lawsuit filed in federal district court by a number of parents on behalf of their children suing various school districts seeking declaratory and injunctive relief.

Now their arguments here are that, well, their claims actually are brought under the free exercise clause and the First Amendment. So under the First Amendment, they're saying that this is an obvious rule that favors religious scripture. It's adopting an official position on religious matters, violating the establishment clauses prohibition against the government taking sides on theological doctrine. Government may not officially prefer one religious denomination over another. And then under the First Amendment violates the provision that congress shall make no law prohibiting the free exercise of religion.

I was gonna ask, is there any it's just the 10 commandments? There's no even, like, you know, and let's put the Quran up, and let's put the it's just 10 commandments.

Just the 10 commandments and just this specific version of them. So the the plaintiffs in this case are from all different religious backgrounds, including including certain Jewish and Catholics that are saying this these are not the 10 commandments that we that we practice. So, obviously, they brought some very interesting arguments in their complaints. And the judge who's overseeing this, let me give him some credit here. This is out of the Western District Of Texas, and it's judge Fred Beery, b I e r y.

He wrote a 55 page legal poetry opinion in response to motions to dismiss this case. And I say legal poetry because, Jack, you would appreciate this. He literally goes through, like, the history of

Oh, let's go. I gotta read this.

Great. Yeah. Of separating, you know, state and religion. And on one page, I just marked a couple pages that I was like, wow. On one page, he says, government and religion joining hands.

One picture from the modern era speaks silently and poignantly of the danger of majoritarian government and religion joining hands. Excuse me. And then it's a picture of Adolf Hitler greeting a bishop at one of the rallies in 1934. Goes through American history, specifically dating back as far as a speech that Ulysses S. Grant gave in 1875, where he says, leave the matter of religion to the family altar, the church and the private school supported entirely by private contribution, keep the church and stay forever separate.

Then fast forward to 1963, Reverend Billy Graham gave this quote, 80% of the American people want Bible readings and prayer in the schools. Why should the majority be so severely penalized by the protests of a handful? And then the judge puts in parentheses under it, with all due respect, Reverend Graham, it's the 20% who are protected by the Bill of Rights. Correct. Yep.

Yep. He goes into so the test for the establishment clause in particular, it's actually in flux right now. So the former test, which came down forty five years ago when the Supreme Court determined that this is Stone v. Graham, It was a five court opinion and they adopted the Lemon test where you look to whether a statute has a secular purpose, whether the statute could or could not promote or restrict religious beliefs or practices, and then whether it fosters excessive church state entanglement, which, you know, how complex of an inquiry is that. But that lemon test just recently was rejected by our current Supreme Court.

And it now looks like we're going to start going back to the, you know, what historically has been, yeah I know,

We covered that, I think in detail in a prior episode, I will check with my producer and let you all know at the end of this.

Yeah. So they're they're throwing out these, like, balancing interests, and now judges are instructed to consider history and the understanding of the founding fathers when dealing with the establishment clause. So the now that that decision was not specific to a 10 commandments case. So there is some question as to whether the the lower district courts, whether they need to follow precedent from,

you know, however long ago, which says, clearly, the the 10 commandments cannot be published in a public school. But now there's this question where and I think that's why these states are now three of them have passed these bills because they're like, let's test the waters. Yeah. You know? Maybe we can show that historically, the founding fathers didn't intend for the establishment clause to be read this way.

And maybe they wanted to leave it up to the states to make decisions. So that's why I think this judge took the time to go back through history and actually lay that foundation of, you know, let's see how this has been debated over the years.

Separation for the supreme court

Yeah. For sure.

Applying their nonsense history and tradition test to the ruling.

Right. So the other two states that have recently dealt with this issue, one of them was Louisiana, and that one, it was almost a similar similar statute to what Texas tried to pass. But the the Federal District Court in Louisiana said, you know, this violates the First Amendment. That went up to the Federal Appellate Court there, which is the Fifth Circuit, which is known for being one of the more conservative circuits. And they actually they upheld the the injunction on requiring schools to to post the 10 Commandments.

So this district judge in Texas kind of followed that lead and said, actually, I think he pulled from one of the historical experts that was presented in that case, who said, if we look back at what was going on in the founding, there were not public schools. So, you know, so this whole argument that, you know, that the founding fathers would have allowed this, well, we can't say that because there weren't even public schools at the time. And then when finally we have a public school and there was an attempt to to make this requirement that the 10 commandments be be posted, that was North Dakota in 1927, and the court, like, immediately struck struck it down under the establishment clause. So, you know, it's it wasn't that like what less than a hundred years ago was the first time that this issue arose, and it was a no questions asked. So then one part that I found really interesting about this decision is we have to, and we've talked about this before too, with the First Amendment, you have to look at the cohort, right?

Like what age group are we talking about? Because different rules may apply to different ages, especially when it comes to these issues of freedom of speech and freedom of religion. And this judge looked at the coercion tactics that can happen, especially when you're talking about like elementary school kids and you're talking about peer pressure. And maybe at home, parents are saying, you know, we follow this religion or we don't follow a religion and we don't believe in religion. And yet they come to school and they're forced to, you know, look at this poster every day.

Questions may come up during class. Well, what does that line mean, teacher? And, you know, it's just you're these kids Yeah. I mean, the kids are sponges at this age, and they're more likely to be afraid to go against the norm. And and, I mean, you're in school, but the majority of your day, you know, versus in your home.

So Yeah. I mean, there's and there's I'm sure that the lawsuit in particular was brought on. There's the free exercise element of it, and then there's the establishment clause element of it. So it's the individual rights of American citizens to have the right to freely exercise their religion, which may include not being instructed by another religion. In fact, I think that's most religions.

That's kind of the whole deal. And so, you know, if you send your, you know, Jewish or Muslim or Sikh child to school, they should not be instructed on, I would guess, some type of weird Protestantism, but yeah. Okay.

Anyways Yeah. And

then there's the establishment clause, which, you know, directly we think says the government shall establish no specific faith as, you know, official faith in the United States

Right, yeah. So, I mean, that yeah. That's and that's where the coercion comes in. Right? So so the the attorneys for these school districts, they tried to say, well, no.

Look. We're looking at the history. So, you know, Texas has a history of I don't even honestly, I can't even repeat their documents because it just didn't stick in my head. But

I hope the listeners feel me rolling my eyes through the audio.

Well, so yeah. So they're they're trying to say, look, this isn't about, yeah, this isn't about religion. This isn't about coercion. We're just trying to appreciate the traditions of our great state. And the judge then goes on for, I think, two, three pages quoting the the legislative hearings on this where, you know, you're introducing the bill and discussing the bill.

So before it got passed, and he quotes, so in support of senate bill 10, the lieutenant governor stated, quote, in every classroom in Texas, students are going to see the 10 commandments, and they are gonna know about god, end quote. Then in the next sentence, supervisor and author said, we want every kid kindergarten through 12, every day in every classroom they sit in to look on the wall and read those words that God says because we want them to understand how important those statements of God, those rules of God are, that they see them in their classroom every day of their public education. I mean, just like these these statements, it's like you're literally talking about the one god and that the students should appreciate the one like, I just, it blows my mind that they even tried to make that argument knowing the legislative history of this bill.

Yeah. I I mean yeah. And, you know, the this this argument's, like, as old as as you can as you wanna make it. I mean, it's people have been bickering about this for forever. The founding fathers, you know, they were religious or or at least, you know, the ones that you wanna pick out were religious.

Therefore, they obviously founded this nation as a, you know, religious nation in their image of their faith in particular particular or whatever. People have been saying that for I mean, I remember that we covered you cover this like your first year of law school, it's like, hey. You can't do this. I I would note that many of the founders would be rolling in their graves if they knew that Texas was publishing the King James version of the 10 commandments, which I did check. And if this

Oh, you got it? Okay. Yeah.

Yeah. This this Anglican nonsense is being forced on our young American children. Get out of here with this.

Right. Right. So funny. Yeah. Then, yeah, he just concludes with it's just saying, like, most people want their matters of faith.

They wanna be left alone when it comes to what their religious beliefs are. And he raises a good point. He says, even though the 10 commandments would not be affirmatively taught, the captive audience of students likely would have questions which teachers would feel compelled to answer. That is what they do. Teenage boys being the curious, hormonally driven creatures they are might ask, missus Walker, I know about lying and I love my parents, but how do I do adultery?

Truly an awkward moment for overworked and underpaid educators who already have to deal with sex education issues. And then he he says, you know, here's some here's some other ways we can try to, like, publish, like, alternatives to, you know, religious rancor, essentially, and then gives, like, percepts of Buddhism, abstain from killing, stealing, and engaging in sexual misconduct, or do unto others as you would have them do unto you. Be kind, be respectful. It's just showing, like, there are ways to, you know, teach kids how to be good humans without crossing the line into into religious territory. So I thought, I mean, if anyone's interested in this stuff, this opinion that came down yesterday, so 08/20/2025 in the Western District Of Texas is truly legal poetry.

It's a history lesson. It's just a great work of art and that he he knew this was gonna be, you know, something that's talked about and he the judge took the time to to really put out there, you know, what he thinks ultimately the Supreme Court should be considering when it decides this this issue.

Yeah. I mean, I'm willing to bet if you did a Venn diagram of people who, you know, want this bill and want the 10 commandments in the classroom, one circle. Then the other circle is people who are, you know, scared to death of people implementing Sharia law.

and you know, I think that's like the the boogeyman in politics or whatever. Sharila, if you the Venn diagram of those two things are is just one circle.

Yep. Yep. So not surprisingly, within 24 hours, this was appealed. So we'll see what the

Fifth Circuit.

Oh, fifth. Oh, okay. So they had to follow the the Fifth Circuit's decision in the Louisiana case. Okay. That makes sense why they relied on it so heavily.

So, yeah, I mean, at some point, this is gonna go up, I would say. And there's a lot of, you know, talk about, again, why would why would these states be be challenging? What's been such a clear ruling for decades? And and, you know, it's pretty obvious. Look at the court we have right now and the precedent that's being overturned session after session.

So if there was ever a time to to challenge what we've always known and accepted, you know, this is, I guess, the time to do it.

So I guess it, you know, remains to be seen. It's interesting. I mean, I you know, we're not, like, a court watching show. We don't, like, do supreme court predictions. That said, I don't expect that this would survive at this at SCOTUS, even, you know, with its political leanings and everything else, because it does seem I mean, it strikes me as such a slam dunk.

That's why I asked at the beginning if there were any other religious things that were also being included in this because if I remember, one of the ways that, you know, if you're gonna display the 10 commandments, then you can, like if you're also displaying, I don't know, some some equal representation of world religions or something like that, then at least you could argue it's, like, being neutrally presented without favoritism towards one side or the other. So you might get a ruling that, like, relaxes those standards. You might mean, the court thing the is even if the court rules against this, it could still say it could still weaken the free exercise jurisprudence by applying its history and tradition test. Right. Which I I honestly would expect is the point of this type of legislation, the folks that are involved in this from Texas ought to know that it's the the that the the the statute itself is gonna be unconstitutional.

However, they in that ruling, they could pry open the the rules around other things that they would wanna do and which would, you give them leeway to do something different just by virtue of the Supreme Court saying, hey. We're gonna overturn the the test that we apply to this type of thing. We're gonna still rule that it's unconstitutional, but for for these other reasons. And then Texas gets to do, you know, whatever it wants to do based on that.

Yeah. That's a good point. And I wouldn't be completely surprised if it if it did have something to do with the the, like, the the location, you know, the the government owned location of where religion can be displayed, I guess. Because I did find there was a concurring opinion by justice Breyer in a tenement was it 10 Commandments public school case that was up about ten years ago, and he did make mention that the display of the 10 Commandments in public schools must clear a higher legal bar giving the impressionability of the young. So that may be what, you know, they're trying to do.

Maybe, in fact, they're not looking to looking or or they knew, you know, that this was going to be struck down, but they're actually trying to have more ability to push religious ideology in other public spaces. This was just such an extreme that it'll I think, like you said, like, maybe it'll cause the judges to lessen the rules of the establishment clause, I guess, a little bit. But apparently, it's it's, you know, these sort of things are happening across the country. So I was just curious of what, if anything, was happening in Illinois. And I did find a recent situation in Jefferson County, Illinois from July of this year where a 10 commandments monument was displayed on the lawn of the county courthouse.

They keep doing this crap, man. It's it's I'm not, like, I'm not perspiring anyone who, like, wants to, like, be, you know, like, religion or not, whatever. It's just, that issue in particular, the the ten commandments on the steps of the courthouse, how you look into the ground in this country. It's, like, many, many, many cases of this. And so, like, if you're doing it, you either just you were born yesterday and didn't know anything about it, or you're deliberately trying to provoke a response.

And and that's, like, the frustrating thing is, like, this is settled law. Mhmm. You know? And and and, I guess until it's not.

Right. Well, I mean yeah. And that one in particular was a little bit silly and seemed like a waste of potentially taxpayer monies because, of course, it was a lawsuit immediately. And then the the county within, like, days said, alright, we're gonna remove it, and then they moved it to like a church location instead. So, you know, but again, I think this is just it's one of those times where the what we think are the bedrock principles and, you know, what we think is the sound law of the constitution and interpretation of the constitution is just being challenged and, you know, the needle is getting pushed.

So interesting slash scary time. But

It it will be yeah. I I again, not to get I'm not in the market of, like, predictions for this type of thing, but I would suspect that Supreme Court, if they take it and they may not. I they might just say you know, I might deny cert and just say, you know, we're gonna stick with the lower court's ruling. But if they did, it would be for the opportunity to do away with some of the more strenuous First Amendment jurisprudence as it relates to this type of thing while still finding this underlying statute is unconstitutional. That's how I would expect it to go.

Mhmm. Mhmm. Yep. Okay. Well, that is our show.

Thank you for tuning in. You can catch us hopefully every two weeks now that we're getting back into this. We'll get running again here, but Litigation Nation is on Apple, Spotify, YouTube, wherever you get your podcast. Thanks for tuning in. We'll see you next

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