The Client’s Perspective on Litigating High-Stakes Cases

John is joined by David Proman, Co-Founder and Managing Partner of Atlas Grove Partners and long-time Quinn Emanuel client. They discuss David’s extensive experience working with elite law firms, including Quinn Emanuel, on high stakes matters involving structured finance, digital assets, and complex bankruptcies. At Atlas Grove and its subsidiary, GXD Labs, David has built an investment platform that identifies legal claims as investment opportunities. 

One example of such an opportunity was David’s early and aggressive pursuit of RMBS claims. In 2010, David was at a fund called Fir Tree Partners that was the most activist fund manager in the RMBS space. They pursued cases against the world's largest banks for breaches of warranties, which led to recovering almost $4 billion for Fir Tree Partners’ investors. David worked with Quinn Emanuel partner Sascha Rand on many of these cases, adding “we have great thanks and gratitude to Quinn Emanuel for working on this with us for over a decade against some of the world's most significant counterparties". 

Another example was the Celsius bankruptcy. Celsius was a crypto lending platform with 600,000 customers. At its peak, it had almost $20 billion in liabilities. Celsius’s customers stored their Bitcoin, their Ethereum, or their digital tokens using deposits, similar to bank deposits. When Bitcoin dropped dramatically in 2022, the company became insolvent and filed for bankruptcy. Bankruptcy proceedings revealed numerous legal issues, including fraud.

David’s Blockchain Recovery Investment Consortium (BRIC) won the role of litigation administrator and crafted a plan focused on returning value to defrauded customers. Working closely with Quinn Emanuel partner Ben Finestone, BRIC’s strategy involved bringing claims against counterparties across the world who had harmed Celsius before it went bankrupt. One of BRIC’s biggest recoveries resulted from a $300 million settlement with Tether. David credits Ben with bringing strong legal claims and strategies to defeat “issues that I don't think have ever been litigated before in crypto.”

When working with law firms, success depends on aligning the incentives of the firm and the client, maintaining open communication, and active client involvement in developing legal strategies, especially in complex or novel sectors like cryptocurrencies. Counsel should be both strategically creative and brutally honest about risks. As David said, “that's part of the reason why I love you guys: because you always give me honest feedback.” David also believes that fee structures should prioritize results over billable hours. After the case, all parties should reflect on both wins and losses to continuously improve decision-making.

Finally, David and John discuss the evolving legal risk in AI infrastructure, where opaque contracts and fast-changing technology may spark future waves of litigation.

Podcast Link: Law-disrupted.fm
Host: John B. Quinn
Producer: Alexis Hyde
Music and Editing by: Alexander Rossi

Transcript

Note: This transcript is generated from a recorded conversation and may contain errors or omissions. It has been edited for clarity but may not fully capture the original intent or context. For accurate interpretation, please refer to the original audio. 

JOHN QUINN: This is John Quinn and this is Law, disrupted and today we're doing something, I'm kind of amazed that we've never done this before. We've done hundreds of these podcasts and we're gonna be talking to a client - somebody who's on the receiving end of what we do. His name is David Proman. He's a client, and I count him also as a good friend.

And in his present incarnation, he has a fund called Atlas Grove. But he's been involved in a lot of interesting, legal-risk intensive businesses over the years. God bless him, he's had need for the services of people like us. So we're gonna talk to Dave a little bit about what it's like to be a client.

And I told Dave, I really don't want this just to be a puff piece, Dave. Okay? It's okay to say nice things, but I mean, I think it'll be interesting for people to hear about the client's perspective in dealing with people like us and with us in particular. So, David, why don't we start out by introducing yourself and your present fund, Atlas Grove - what it is, what do you do?

DAVID PROMAN: Awesome. John, thank you so much for having me on the show. It's an honor. I love spending time with you and I'm looking forward to the next 30 minutes or an hour of this podcast. I'm David Proman, recently I realized I've had a 15-year history as a client of Quinn Emanuel through a multitude of matters across many parts of the legal spectrum across the world. I'm currently the co-founder and managing partner of Atlas Grove Partners and the subsidiary GXD Labs. In addition, my partner and I founded the Blockchain Recovery Investment Consortium (BRIC), which won the role of litigation administrator in the $5 billion Celsius Networks bankruptcy.

Much thanks to Ben Finestone and team at Quinn Emanuel. So, Atlas Grove Partners is an investment manager. We sit at the nexus of finance, technology, and law. We consider ourselves an organisation of subject-matter experts, whether we're plaintiffs representing claimants. We use detailed research processes over two decades to become subject matter experts, and we work hand in hand with QE to put together litigation strategies and legal processes together, and we cover many different realms. We cover structured products and asset-based finance. We deal with a lot of very complex breaches of contract. We're neck deep in the world of digital assets and we deal with a lot of different lending structures. 

And we actually formed our own law firm in Arizona, which is something new that became law in January of 2021, allowing non-natural persons or non-lawyers to own law firms. So, whatever it is, we become experts to use research processes and legal strategy and execution with the best litigators in the world.

JOHN QUINN: Well, that's kind of a mouthful. David, I didn't know about that. Maybe you told me, and I just forgot that you had formed an alternative business structure or something, I guess they call it in Arizona, where you can have non-lawyer own law firms. I don't think that's caught on anywhere else in the U.S. although I understand the legislature in Utah has been considering it. Interestingly, there was a bill introduced in Sacramento, in California, to say that any such firm could not practice, you know, even in some type of partnership with a California-based firm. 

I mean, now that was defeated. It didn't get out of the assembly, but a completely different attitude surfaced in California. But, I mean, what do you think about legal risk? I mean, there are some funds that have, as part of their DNA and as part of their whole business strategy, to identify potential legal claims rights, used litigation, and enforcement, as a way to create value? I mean, is that how you've looked at things in your various businesses you've been in, or does trouble just come your way?

DAVID PROMAN: That's funny - more of the former, maybe some of the latter. We, as a business and myself personally, my partner Christian, who I've had the opportunity of working with for the last 15 years as well, we pride ourselves on taking a giant step back when a matter comes to us or an investment comes to us. And we really wanna feel morally and ethically good about the opportunity to provide a recovery or assist in the recovery effort for a business or a large group of people where they otherwise would have not received that recovery if not for our capital, our expertise and our resources. A lot of times working with Quinn Emanuel - and so, most of the time we are the direct plaintiff in a case, we're the claim holder -  and that's how we came into this. We were investors. I was at a fund called Fir Tree Partners for 11 years and that's actually how I met in 2010, we were the most activist fund manager in the RMBs space, pursuing recoveries against the world's largest banks for breaches actions warranties. 

JOHN QUINN: That's a big statement because there were so many funds that were pursuing RMBs claims. 

DAVID PROMAN: Yes. And I would challenge you and anyone else to quiz.

My name is heard a lot, Fir Tree’s name a lot. You probably hear Varde and Canyon a lot. And I think that the universe evolved a lot after the statute limitations ruling had passed in ACE 2006, SL2, which was our case. I think there were a lot of other claimants that came in from different parts of the capital structure, and they started bringing claims against mortgage servicers and trustees.

But we really went hard at this starting in 2010. We had invested over a billion dollars into mortgage bonds because we specifically believed that there were large bank counterparties on the other end, who would be responsible for breaches, reps and warranties. And we believed in our ability to direct and indemnify trustees to bring those claims against the banks, which was a Herculean effort.

And we have great thanks and gratitude to Quinn Emanuel for working on this with us for over a decade against some of the world's most significant counterparties. Specifically, QE was very helpful to us in leading the charge against JP Morgan, represented by Cromwell and against credit in many billions of billions.

I think we returned almost $4 billion to our LPs through this effort. It was very exciting and it's really how I got involved in the legal process, how I learned about litigation, and how it sort of segued me into oil and gas restructuring, legal lending, and all sorts of other parts of the legal world, where I'd not prior had experience. I had the best lawyers in the world working with me as a partner, collegially to marry my interest and sort of strategic expertise in an industry with strategy and legal strategy to get to very good outcomes. 

And so the RBS recovery effort was a great effort, and I had the privilege of working with QE on that.

JOHN QUINN: Well, we very much appreciate those kinds of words, David, but again, we don't want this to be a testimonial to Quinn Emanuel. We wanna learn about, from the client's perspective, what it's like to work with litigators and how you think about that. How does an engagement like this, or like the ones we've referred to that we worked on together, initially start?

Does it begin with you reading a bond indenture or some instrument and sort of scratching your head and saying, “the way I understand this, I think there's some potential upside here”? And then you call us - or, heaven forbid, some other law firm - and ask the lawyers, “do you also read it the same way I do?” Or how does it start? 

DAVID PROMAN: So, it really varies depending on what the asset class is. And I'll get to Celsius - we had a herculean effort together, but in the RBS effort, to your point, there were trust indentures or pool and servicing agreements, and they were very complex. They were very difficult to read. Some of them were cookie-cutter across different shelves of sponsor banks and some of them differed greatly in an investor's ability to actually pursue claims. The banks who sponsored these deals and who issued these bonds made it extremely difficult for investors to bring claims. You had to have 25% of a trust, or 25% of a class of bonds, to actually go to a trustee and ask them to send a demand letter to a bank to ask them to actually get ahold of the mortgage files - which many of them didn't have, or to actually get them to file a claim against the bank, which was near impossible.

We found a way to do that. And so I would call, you know, Sasha Rand and say, “Hey, can you please review this PSA? Do you believe that we have the ability to direct and indemnify the trustee to act on our behalf? And, what will we need to do? And so we would have memos drafted, and we would really understand how to send a demand letter or how I get a trustee to send a demand letter.

We would draft complaints and you know, in the beginning, we would draft a complaint and call the trustee and say, “Hey, this complaint needs to be filed tomorrow. We're very worried about a potential statute of limitations. We really want you to file it. And I'm sorry to say this, but your name's gonna be in the caption”.

You just have to decide the plaintiff for the defendant. So after a few, they started to decide plaintiffs pretty quickly, and we got on our way of filing, you know, complaints or sending demand letters to, you know, more than a dozen of the world's largest banks across, you know, probably 75 or so trusts.

JOHN QUINN: You mentioned Sascha Rand, who for folks who don’t know is a partner in our New York office. I hope there were occasions, please tell me that there were occasions when you called and we said, David, we just don't think that's a righteous claim. You know, you're out over your skis here. I mean, we're not, I hope we're not always just encouraging you to file claims.

DAVID PROMAN: No, and again, this is not a puff piece, but I would pride you guys on actually doing very deep research with very knowledgeable and well-experienced lawyers in any given industry to get to the bottom of whether or not we have a potential claim or not, and whether or not we should file claims. There were many instances where you all looked at it and said, “Hey, this claim is not gonna survive motion to dismiss. You're not gonna have standing, you're not gonna be able to beat the statute of limitations issues” and so on and so forth. 

So, I can think of a number of instances where you all said “there's no merit to these claims” or “it doesn't really make sense”. And that's part of the reason why I love you guys: because you always gimme honest feedback, and I can count on you to tell me whether or not you think there's merit, or there's a very successful path to doing something or not. 

That kind of brings me to Celsius Networks. 

JOHN QUINN: Tell us about that. What is Celsius? 

DAVID PROMAN: Celsius was a gigantic crypto lending platform/bank with 600,000 customers. At its filing, at its petition date in June, I believe, by 2022, there were $5 billion in liabilities. At its peak, it had almost $20 billion in liabilities. And this was a platform where customers were marketed to store their Bitcoin, their Ethereum, or their digital tokens on deposits, similar to a bank depositor. If you go to a bank and open a checking account, you put your money there and they owe it back to you. These customers went to Celsius and put their Bitcoin or their Ethereum there because they thought they were gonna earn certain yields that the company would be able to provide.

And lo and behold, when Bitcoin dropped from, you know, 50,000 to 17,000 in 2022, the tide went out. We realized that the emperor had no clothes, and there was a lot of money being spent in various ways. And there were a lot of investments being made by the company, which were, you know, poor at best.

They weren't structured very well, and  the company was insolvent and so they filed for bankruptcy and, you know, there was fraud and a whole host of other issues, which came along with it. And we were brought into this because we, my partner Christian and I actually built a large-scale Bitcoin miner in Oklahoma with some of the founders of a very large real estate facility there that had a lot of power.

And through that, our banker actually became a banker of Celsius on the secure creditors committee and said, you guys should take a look at this. You may wanna merge with the mining assets or you should take a look at it as a whole. And we became very interested in this bankruptcy because they were pursuing a plan, a bankruptcy plan to become a public company and to provide all of the customers back shares in this public, you know, NewCo, they called it.

But my partner Christian, and I said, hey, that doesn't really make sense. This is sort of a company that needs to land the plane safely. All the customers are all over Twitter and they just want their Bitcoins back. Like if a small bank went bankrupt and you had your money there, you'd probably just want your money back.

You wouldn't want stock in some post-reorganized company, managed by people that you don't really know with some strategy that you never signed up for. And so, I would say it was a very highly contentious bankruptcy matter. There were a lot of very large law firms involved: Kirkland & Ellis was the debtor's council and White & Case was the unsecured creditors council.

We ended up working throughout the process with Brian Lennon at Willkie Farr who was fantastic. He was our council at Global X Digital, and so he became our council through Celsius. But when things got extremely complicated, you know, we ended up working with Ben Finestone in the background on strategy across the way. 

Another one of the partners in our New York office is the greatest attorney I've ever worked with in the history of time. I mean, he's the greatest actor I've ever seen. I fell in love with him in 2016. He was on the other side of me in a restructuring called Ultra Petroleum. He was representing the equity holders and he deemed his clients to be the “great unwashed”. 

And he showed up to court and he kept using sayings like “mother's milk” and other things. And the judge fell in love with him, and I was just like, I need to hire this guy quickly. I was already working with Quinn on other matters on RBS and other things, met Ben and I just fell in love with him. He's provided me advice on several matters and has been our litigation counsel on several matters. 

JOHN QUINN: Over the last, you know, nine or 10 years, what were the big challenges you faced in this Celsius bankruptcy?

DAVID PROMAN: Sure. So my partner, Christian likes to say it was kind of like in the Avengers. I didn't watch that movie, but I watched the scene many times after Christian said it.

Ben was like Doctor Strange. Dr. Strange says to Ironman, “I went forward in time to review alternative futures to see all the possible outcomes of the coming conflict”, and Ironman says, “well, how many did you see?” and Dr. Strange says, “14,000,605” and Ironman says, “how many did we win?” And Dr. Strange says “one”.

So Ben was like, “there's a way. It's basically impossible, but there's a way.”  And so he advised us on how to get standing in this matter, and effectively how to win, because we strongly believed in the plan that we were putting forth to basically give all the customers their money back. We did not believe that there was either the court allowing or the SEC allowing, the sort of uplifting of a new public company with Ethereum staking and mainly litigation as its business model for Celsius. We didn't think customers would want that, we didn't think that it would be approved by the SEC (this was in the previous administration, not to say that it would be approved now). And so Ben advised us, “you should send in your plan and force an auction” and we did just that. And we weren't named the stalking horse, but when we showed up to the auction, this was when we formed the Blockchain Recovery Investment Consortium or “the BRIC” we showed up to the auction, it was deemed the BRIC had the best plan. And we were like, “Oh my God, that's amazing! Why weren't we the stalking horse?” 

Then, you know, the process sort of ensued and the other counterparties started bidding against each other, which was sort of the purpose of the debtors at the time, to get them to improve the offers, which was good for everybody. But we stuck to our guns and we were, you know, we were asked to sort of put forth this NewCo idea and we didn't wanna do that, so we ended up being the backup plan,the toggle or the pivot plan. If the judge or the SEC didn't allow this NewCo to happen, we would pivot or toggle to the BRIC plan, which effectively gives everyone their money back.  

We got paid our legal fees and we got paid a working fee to effectively work with the debtors and the UCC for the next, you know, six or seven months to prepare for the outcome where the toggle happened. It was very challenging. We had to object to many of the actions taken during the pendency of the bankruptcy.

And then lo and behold, the judge, you know, ended up confirming the bankruptcy plan because he loved the fact that there was a plan B because the SEC wouldn't sort of comment.

They were waiting to see, you know, what happened, they were kind of playing Mexican chicken with each other. Basically, the next day, or you know, that week, the next week after plan confirmation, the SEC came in and said, “No way. We're not gonna do this.”

And we started sending letters like, “Hey, we're here to pivot. We've been working, we're ready. We know everyone at the estate, we know all the assets, we know all the liabilities, we have a plan to distribute.”

The debtors end up canceling our contract, determining our contract to sort of a strategy to renegotiate. And bankruptcy, you can always renegotiate if you know, you’re acting as a fiduciary.

We didn't have to argue. The judge, I think, didn't want an argument and we ended up settling with the debtors. And we won the role of Litigation Administrator and Complex Asset Recovery Manager of this giant estate, which afforded us the opportunity to work through a lot of very interesting assets in the digital asset industry.

And to sort of bring claims against many counterparties across the world who had harmed Celsius debtors before they went bankrupt. 

JOHN QUINN: Give us an idea who some of those counterparties were where you were involved with assets 

DAVID PROMAN: The largest one to date, we chased a guy through France. You know, he had 33,000 Celsius Ethereum tokens. We got him to pay. 

We've settled a whole host of matters and recovered a significant amount of money, which I can't disclose to you right now. But one that's public, which Ben Finestone led with the team - Armand, Mario and a whole host of folks were involved - was USDT Tether, which is the U.S. dollar stablecoin.

And so Tether was a lender to Celsius, also an investor in Celsius. They lent 850 million USDT to Celsius and it was a collateralized loan where Celsius pledged collateral to Tether. 

And so, as you know, and maybe some of the listeners don't, there's something called a preference action in bankruptcy, where a company that goes bankrupt has a preference claim and some avoidance actions against every party that money went to prior, 90 days prior to the bankruptcy, and sometimes a year prior if you're an insider. So Tether may have been an insider; we weren't sure, but we made a claim against Tether for 40,000 Bitcoins. 

And they're like, “Whoa, whoa, whoa, whoa. The value of Bitcoin at petition date was $20,000. We owe you this dollar amount.”

And we said, “No, you, you took our property. You owe 40,000 Bitcoins”  and today Bitcoin's at the time were $20,000, so this was like a $4 billion claim. 

Now there were a lot of defenses to this claim, and there were a lot of people who told us that we couldn't bring this claim, or it was very difficult. You know, you can't establish preferences on secured loans.

Ben came up with some very, very strong and creative legal theories on topping up collateral and antecedent debt, which, you know, I think was unique at the time. There were inter territoriality issues, and all sorts of issues that we were facing, and he won every single claim on motion to dismiss. I think there were nine different claims.

We ended up settling the matter in 14 months for $300 million. And it was a hard-fought battle, and I would say that Ben and the team did an excellent job throughout the course of litigation, and coming up with valid, strong legal claims and strategies to defeat, you know, issues that I don't think have ever been litigated before in crypto.

I think he set the path for how things will work in the future with regards to a lot of these crypto claims, as it pertains to preferences and other issues in both unsecured loans. I was very thankful to the team at Quinn. This was extremely unique and we worked hand in hand with my team at GXD Labs - Christian Wyatt, Jeff Hendell, Jordan Peach, Sam Hendell and the team, they were involved in a tremendous amount of research in diligence to understand how these claims could work.

We were in uncharted waters here, and it was fun. It was a fun process and we got it done well. 

JOHN QUINN: I mean, one would think that you've almost a law degree, or should have a law degree, for all the legal battles that you've been through. In California, you don't have to graduate from law school by clerking and working with someone. I mean, I don't think you can do that in New York, but maybe if you had done that like five years ago, you could sit for the bar and become a lawyer - although I'm not sure you'd wanna do that. 

DAVID PROMAN: I would love to be a lawyer. You know, my mom always wanted me to be a lawyer, if Quinn has any openings. 

JOHN QUINN: I'm sure David is proud of using litigation. You've worked so much with litigators, and it's such a key part of your business. What have you learned? Sort of maybe give the audience some dos and don'ts, what's worked, maybe you've had some missteps along the way. You've learned where to push or not push. What are some insights that you could share?

DAVID PROMAN: It's funny, my partner Jeff, he tells me that I'm a very difficult consumer of legal services and I argue with him over that. But I think it's maybe because we've worked with so many different law firms over the past 15 or 20 years. I think aligning incentives is very important and there's a lot of large law firms that won't take incentive litigation.

A lot of law firms, if you sign up for an hourly rate, you get hours, and it's very hard to review these hours, because a lot of the bills that you receive have, you know, hundreds if not thousands of line items, many times from lawyers you didn't even know existed.

The cases get staffed with your partners and your junior partners, who you speak to on a daily or weekly basis about the matters. But then there's so many people working in the background to help draft briefs and do research, and it's a very difficult process. Some folks might sign up for their, you know, first or second or third litigation with a large law firm and have sticker shock at some of the bills if they're on an hourly rate.

Typically, a lot of firms won't even consider a hybrid or incentive fee rate until you get past motion to dismiss. And so I think sort of structuring how matters are billed at the outset, and continuing to reevaluate that with the law firm, is essential. I'd much rather pay a law firm to incentivize, you know, a very good outcome in a very short period of time, if possible.

So I know we're all working for the same thing. I'm not deeming any lawyers or anyone else to be unethical in any way, but you know, things take time and I think it's very good just sort of spiritually and emotionally to know that we're all sort of wanting the shortest outcome, the best possible outcome.

So I think that that's a big part of it. Look, there's very few firms with extremely talented partners who have extremely talented counsel and extremely talented associates beneath them - people that they can manage appropriately to get things done. And I know this isn't a puff piece, but I would say that your teams that you've built, and whatever you've done to hire your folks at QE have been incredible, to say the least. I mean, I've worked with some very, very large law firms that we haven't been happy with. I've worked with a lot of larger law firms that we have been very happy with. I love the team we've worked with recently at Akin Gump, I love Markowitz. So you know, it just sort of depends on what the matter is and who you're working with.

But I would say you guys are by far, best in class, across the world, I mean, I've worked with your folks in Germany, I've worked with your folks in Portugal, worked with folks in Mexico. I mean, we've been all over the world together and I can't remember an outcome that hasn't gone our way, and I appreciate that.

JOHN QUINN: Well that's very kind, David. That's an interesting insight and one that’s not a surprise, aligning the interests of the client and the lawyer, that makes total sense. Any other things that you've learned about working with lawyers and litigators in particular to make sure it's good for both sides?

DAVID PROMAN: I think you have to be involved. If you're a principal or an investor or even just a plaintiff, you can't just sit back, and let the thing ride. I mean, typically what you're litigating is something that you've been intimately involved in for a long period of time, where you've been wronged. And if you're not involved the whole time explaining the history of something that happened on a specific day that you can remember or how an industry works, you know, a lot of these law firms, including Quinn Emanuel, have very deep subject matter expertise, but they're from matters that were different than your matter.

And so there might be nuances that could win your case, that might have lost another case. And I think it's important to stay in touch with counsel and to review everything. I mean, we review every single brief; we spend a tremendous amount of time on every word and every sentence that's drafted, to make sure that we're doing our best job from our standpoint as principals, to work collegially with your attorneys, to make sure that we're putting forth our best effort to get the right outcome.

So I think it's aligning outcomes and I think it's also working hand in hand with counsel to get those best outcomes. 

JOHN QUINN: Yeah, there's some things that you've experienced, whether at Quinn Emanuel or other firms, that have been learning lessons in the sense that it just didn't work and you realized, in the future, I gotta make sure that I avoid this? Or criticisms you've had with firms that you've worked with, including ours? There must be things we can do better. 

DAVID PROMAN: Yeah, look, I mean, I'm not gonna name names, but I would say that we try to be very careful about the scope of work and what we're trying to achieve at the outset.

And we try to document that very, you know, intimately and in detail in our engagement letters. And we will even, you know, revise those things as we move forward, cause sometimes cases change, sometimes claims change, and I would say that there's been moments with probably a handful of very large firms where we've received very large bills where they've sort of gone off on a tangent without direction, or they've went way ahead of where we wanna be on a billing matter.

And we received bills for very large amounts of money that we weren't expecting, and no one ever wants to argue with our law firm, we typically find a way to work it out. You know, but it's, it's difficult because at the end of the day, we're a client and we're being provided a service from a law firm, and it's a partnership.

I mean, when you're in litigation, I mean, you're in the trenches together. It could be for a decade, it could be for a year or two years, it's typically for two or three years at a minimum in the matters that we're dealing with. And these matters cost millions of dollars, if not tens of millions of dollars.

We're seeking hundreds of millions of dollars and billion dollar recoveries. So I think it's just communication that is key, transparency is key and not being afraid to speak your mind if you feel like something's not going the way you want. Both sides need to be very transparent and communicative about the process, how it works and the risks. I think a lot of times people aren't exactly transparent about the risks. It's very, very rare that you find a law firm, take the other and really dig in and explain to you what you're facing, how it could go wrong, probability-weight things. No lawyer ever wants to probability-weigh anything.

But you guys do a very good job of that. The folks do a very good job of that. And I think it's important because clients don't like to be surprised. No one wants something to happen, “we lost emotion to dismiss because we didn't have standing and we couldn't argue derivative standing and no one told you”, or, “we didn't have jurisdiction, or something happened where we weren't able to pierce the corporate veil on some entity and no one told you that that was a possibility yet”, you know, you spend a half a million dollars, you know, briefing the discovery matter. And so, I think it's about understanding the possible outcomes and making decisions in real-time. There's many paths that you can take in these lawsuits.

There's many things that you could challenge, there's many objections, and I think just having a sense of, is this a coin flip? Are we like 90% to win this thing? Are we likely to lose it? But we wanna take a shot because if we win this thing, we could, you know, the farm is gonna come our way. And so I think just understanding, you know, process versus outcome is important.

A lot of times people equate the outcome to whether it was a successful process or not, and that's a lot of times not the case. A lot of times, you know, you could have a bad process and a good outcome because you're lucky, and luck is very underrated. You could have an amazing process and a horrible outcome.

Maybe you had a judge that woke up on the wrong side of the bed or didn't like you guys, or maybe, you know, something just didn't go your way. And you gotta really think through why this happens on the wins and the losses. We tend to really analyze the losses because we like to know what we did wrong, but it's also important to look at the wins and say, what happened here? What did we do right? Where did we get lucky and sort of go from there. And we do a tremendous amount of time reflecting on our processes to make sure that we can teach our team because, you know, history doesn't repeat, but it rhymes. 

We work across a lot of different industries and litigation processes similar in a lot of things, right? I mean, you get through sort of motion to dismiss, you get into discovery, you get into summary judgment and so on and so forth. And so understanding the process and understanding how to figure out what buttons to push to find the outcome that you need is important.

And so we spend a tremendous amount of time on the process. 

JOHN QUINN: Yeah. So I mean, nobody bats a thousand, the best litigators don't bat a thousand. But what I hear you saying is it's a fair expectation for the client to know what are the range of possibilities that something can go south, there's no guarantees.

And as best you can litigation counsel, how do you size up the probabilities here of one outcome versus another? I mean, those sound like fair asks. You say that no litigator wants to give advice in terms of probabilities, every client wants that, we're asked that all the time. And you know, I for one, don't mind doing that as long as people understand, as you say, there's an element of luck, there's things, there's the unknown. And often the best you can do is, you know, bracket it. You know this, most litigation is a gray area. I mean, the ones that aren't in gray areas don't end up in litigation or they shouldn't. That's right, clear winner, clear loser.

So we're dealing in gray areas. So what's the probabilities in a gray area? It can be tough, but I think it's a fair expectation on the part of the client, the client will be fleshed out with some explanation about what are the factors that are going to tilt this one way or another. 

DAVID PROMAN: Yeah. I think that's the key, is just understanding what could go our way and what couldn't.

A coin flip or not, are we more likely to win or are we less likely to win based on the facts that we have? Are we on the right side of the marriage or the wrong side? And saying, I don't know, is fair also right? But at least laying out the risks and talking through what could happen and what would cause each of those risks to go our way, or not our way, I think is important, 'cause again, no one loves to be surprised. And I've really enjoyed working with the team of QE, it's just been amazing the things that we've been able to accomplish together.  I'm hopeful that, you know, we can continue this relationship for the next, you know, 50 plus years as we build Atlas Grove into hopefully a much larger investment manager.

JOHN QUINN: I mean, usually at this point, I say to the client, well, “I hope you won't need us.” You know, we don't wish litigation problems on you, but you run to them. 

DAVID PROMAN: We run into burning buildings, we like to figure out extremely complex issues when things are falling apart.

An entity or a group of entities that's been harmed, figure out a way to recover when they've been wrong. If they haven't been wrong, then it is what it is. But a lot of time, contracts are deemed to be ambiguous, but you can look at the situation and say, hey, this doesn't really seem fair, or this wasn't drafted in a way that sort of made sense based on the spirit of the agreement.

And I think understanding what the spirit of agreements are is important and talking to the people that sign those agreements and looking through the records of when they were signed is very important. But typically when things go horribly wrong, someone's at hundreds of millions of dollars, there was a problem at the outset.

And so we like to look at those things and we like to dive in and figure out if there's, if there's something to do. 

JOHN QUINN: So, David, this has been a really interesting conversation. Anything else for our audience that you had top of mind that you wanted to share?

DAVID PROMAN: No. I love spending time with you. I love figuring out solutions to complex problems.

We're spending a tremendous amount of time now, sort of figuring out how to convert Bitcoin mining assets, which, you know, hoovered up all the power from, you know, 2020 to 2023 into high performance computer infrastructure facilities to support artificial intelligence and all these large language models that are buying up all these graphic processing units, GPUs, from the manufacturers.

There's a ton of contracts being drafted right now for big, big, big, big dollars and we're very curious to see how this plays out because, I mean, there's many out there at some point, because no one really understands what this stuff is at this point, and there's a lot of dollars being put to use on things that are evolving very quickly.

And there's a very high probability that you're gonna have chips and collateral for these loans that, you know, new technology comes out very quickly and technology becomes obsolete. So what happens to the loans that went against the value of that collateral? Where's the collateral even going? I mean, you have chip manufacturers who are basically giving money and lending money to users who then are giving money and lending money to the infrastructure builders. And it's like this circle. 

And I saw a very funny meme the other day of an extension cord that was plugged into itself. And so I don't know what's gonna happen. It's impossible to predict the future, but I would say there's a significant probability that some of these loans and structures are gonna go very bad because you are signing up for these contracts. I believe based on, you know, sort of my history with them, they have no ability to build the infrastructure, who have, you know, defrauded people in the past and you know, we'll see what happens. But, we like to be ready for things we love to study, we love to learn. It's our favorite thing. We have, you know, brown bag lunches every Friday where one of our analysts or partners presents a new topic and we dig into it and we read a lot of memos, we write a lot, we read a lot of books. And I get the very good privilege, amazing privilege of spending time with you and folks like you too, to understand what's going on in the legal department.

And I love the memos that I received from you, I got one today and you know, I appreciate the relationship very much, I love our partnership, I appreciate you. 

JOHN QUINN: Thank you David, we appreciate you as well. You've been a great client, a challenging client that consistently serves up super interesting problems and we appreciate that.So thank you for appearing on the podcast, David. 

DAVID PROMAN: You are welcome, John, and thank you for having me, and I hope to see you in Japan at some point.

JOHN QUINN: This is John Quinn. This is Law, disrupted. We've been talking to David Proman. For the first time ever, a client has appeared on our podcast.

Thank you very much.

Thank you for listening to Law, disrupted with me, John Quinn. If you enjoyed the show, please subscribe and leave a rating and review on your chosen podcast app. To stay up to date with the latest episodes, you can sign up for email alerts at our website, law-disrupted fm, or follow me on X at JBQ Law or at Quinn Emanuel.

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