Virage Capital Management, which invests in lawsuits hoping for a return, is being sued over funds the firm claims it is owed from a now-disbarred attorney who represented former NFL players in a class action over concussions.
Attorney J.B. Harris sued Virage, alleging the company is wrongly holding up settlement money in a tobacco case because the disbarred attorney, who also worked on the tobacco matter, owes the funder money from the NFL litigation.
The tobacco settlement funds were frozen after Virage asserted a lien on the proceeds. The firm claimed it is entitled to a 40% interest in legal fees because of an agreement it entered into with Harris after he stopped receiving payments from the disbarred attorney.
The lawsuit shows the challenge Houston-based Virage faces in collecting the proceeds of legal cases it backed. A spokesperson for Virage declined to comment.
The disbarred attorney, Tim Howard, represented the former NFL players in a class-action lawsuit and improperly enticed his clients to invest their retirement funds with his investment companies, the US Attorney’s Office for the Northern District of Florida said in an Aug. 3 statement.
Howard pleaded guilty to racketeering and is scheduled to be sentenced Nov. 6. The Florida Supreme Court last year banned him from practicing law in the state.
Virage provided $30 million to Howard to pursue the concussion cases. Harris claims that without his knowledge, Howard used proceeds from the tobacco case to secure his debt with Virage.
The tobacco case involved 96 claims against Philip Morris, now known as Altria Group Inc., and RJ Reynolds, now part of British American Tobacco Plc. Plaintiffs alleged ill health from smoking and from second-hand smoke on airplanes in the 1990s.
Both sides came to an agreement this year, though Harris said the amount of the settlement is confidential.
A Houston judge last year ruled that Virage is entitled to 40% of gross fees across all cases due to a previous agreement it had with Harris. Harris is appealing the verdict.
Harris alleges in his suit against Virage that the company doesn’t have the right to tobacco settlement money because Howard’s disbarment and guilty plea act as a forfeiture to any claim for fees.
The case is Harris v. Virage Capital Management, Fla. Cir. Ct., 2023-021459-CA-01, 8/16/23
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