Here's a cautionary tale for the burgeoning business of litigation finance: Betting on the outcome of federal litigation can be a costly endeavor.

Ever since a jury awarded Lucent a whopping $358 million on its infringement claims over a component in Microsoft's Outlook program, Microsoft's lawyers have systematically whittled away at their client's damages. They did it again on Friday, when a judge in San Diego reduced Alcatel-Lucent's award to just $41 million.

Four years after regulators began investigating alleged collusion by the banks controlling the CDS market, private antitrust litigation is finally starting to take shape.

Shearman & Sterling stood with embattled Puda Coal chairman Ming Zhao after a China stock-watcher accused him of enriching himself though an illicit deal, and the firm stuck around when the SEC and an internal audit committee began to investigate. But after Shearman learned that it had passed along a phony document on Zhao's behalf that was also given to the SEC, the firm bid its client goodbye.