As to point 3, your question is still too narrow. We should ask if even self funding of legal matters should be allowed. Even if we say this case should have happened because of funding, we are left with two major issues.
First, we are left saying that this outcome would have been fine if Hulk had the money to do scorched earth. Second, we directly admit that the outcome of this case is the result of the money spent. Both of these, especially when taken together, are a death blow to any notion of justice in regards to law. And I don't even see this as a question, but a reality that we seem unable to admit to ourselves.
Taking this question seriously, is there any legal system that has ever operated like that? What would it entail?
A state monopoly on legal services where lawyers are assigned by lot? A system of "loser pays legal costs" where lawyers bid for likely wins/profitable cases?
I think "loser pays" is a pretty good equalizer. It actually would protect companies like Gawker from frivolous lawsuits, or merely just the threat of those lawsuits. The savings could be used for legit cases such as this, without having a settlement bankrupt the company. And attorney fees are high in the first place because of the the demand frivolous lawsuits put on the system, so there's an additional source of savings from Loser Pays.
If a case depends on the quality of the legal council, rather than the facts of the case, haven't we already lost? We live in a market based economy, and better lawyers get more money, so this is the same problem. I'm not sure how to fix this though. Any ideas?
It is made all the harder by the "American Association for Justice"[0], a lobbying group made up of trial lawyers. They really don't want any sort of tort reform, which might be able to fix this problem.
Can you imagine the outcry if we had a system where lawyers were randomly assigned to cases, and paid according to some fixed schedule (eg seniority)?
Yet wouldn't you want a world like that? Where whenever some matter arose, it wouldn't matter whether you were rich or poor, you would get some random lawyer, as would your opponent?
As to whether better lawyers get paid more, I need evidence to believe that. I'm no expert, but it seems to me the quality of legal work has a lot to do with how much time is available to do it, which pretty much depends on budget.
Whenever I've dealt with a certain class of (suited) professional, I've never gotten the sense that one guy would come up with something that another guy wouldn't, given the time. If there was doubt on an issue (typically tax related) both accountants would say so, and suggest spending time on research. If there was something aggressive (again tax deals) evert accountant seemed to think so. Same with lawyers, I've never come across some line of reasoning that seemed like it wouldn't have been uncovered by every lawyer, given enough time. And also they tend to defer to specialty experts whenever they are at the end of their knowledge, so it all feels pretty standard.
All adversarial cases heavily depend on the quality of legal council. Law is not some deterministic mechanism where you insert the facts in one end, pull a lever, and it spits out a judgement in the other.
If you'd like an alternative, you could consider inquisitorial law - but barring a revolution, that will be a pipe dream.
First, we are left saying that this outcome would have been fine if Hulk had the money to do scorched earth. Second, we directly admit that the outcome of this case is the result of the money spent. Both of these, especially when taken together, are a death blow to any notion of justice in regards to law. And I don't even see this as a question, but a reality that we seem unable to admit to ourselves.