Champerty and Maintenance

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Champerty and Maintenance

Champerty is the process whereby one person bargains with a party to a lawsuit to obtain a share in the proceeds of the suit. Maintenance is the support or promotion of another person's suit initiated by intermeddling for personal gain.

Both champerty and maintenance have been illegal for two basic public policy reasons since early Common Law: (1) It is considered desirable to curb excess litigation for the operation of an efficient judicial system. The reasons for this are numerous and include problems of over-crowding on court calendars, economic considerations, and the desirability of promoting a society that is not excessively litigious. Champerty and maintenance work contrary to this societal goal by stirring up litigation. (2) Champerty and maintenance bring money to an individual who was not personally harmed by the defendant. An attorney found guilty of either champerty or maintenance will be subject to the payment of any damages that may have been incurred by the parties to the lawsuit and to disciplinary proceedings, which can result in his or her disbarment.

Whether or not champerty and maintenance exist in a particular instance depends upon the facts and circumstances of the case. They apply specifically to cases wherein one person profits from another person's recovery in a lawsuit. If a licensed collection agency purchases a group of bad accounts from a store, the agency is buying the right to collect on the accounts rather than on a particular lawsuit and is therefore not guilty of champerty. An attorney who buys a chose in action with the sole, Specific Intent to initiate an action for his or her own benefit would be guilty of champerty provided the purchase was made with that intent.

To lend money to an individual who would not otherwise be able to afford to bring a lawsuit is not maintenance unless the lender intends to gain substantially from his loan by being compensated with a portion of the recovery.

Today, some states still recognize champerty and maintenance as offenses but in most states they have been replaced with the civil actions of Abuse of Process and Malicious Prosecution, both of which deal with the wrongful initiation of litigation and perversion of legal process.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
MRPC 1.8 (e) is the result of the common law rules against champerty and maintenance. Champerty is an investment in the cause of action of another by purchasing a percentage of any recovery.
The concerns raised by Rule 4-1.8(e) are that of the common law doctrines of champerty and maintenance, as well as the conflict of interest created when an attorney has a personal economic interest in the outcome of the matter.
1944) (noting that the California statute was designed to compensate for the fact that the state had "never adopted the common law doctrines of champerty and maintenance"); In re Devlin, 588 N.Y.S.2d at 319 (explaining that the New York law "was intended to protect distributees in the Surrogate's Court from practices which unduly diminish their undistributed interests in estates").
Thankfully, third party funding is no longer illegal - prohibitions on champerty and maintenance have fallen away in most US states.
Thankfully, third party funding is no longer illegal -- prohibitions on champerty and maintenance have fallen away in most US states.
Under common law dating back centuries to England, it was viewed as contrary to public policy under legal doctrines known as champerty and maintenance. William Blackstone, whose treatise on English common law became an authority for the development of American law, referred to those who became financially involved in litigation that did not concern them as "pests of civil society," who were "officiously interfering in other men's quarrels."
While the practice of litigation financing has grown, and while courts in some states have essentially approved of the practice by abandoning the doctrines of champerty and maintenance, the practice operates in many states under a cloud of uncertainty regarding its legality.
Interim Settlement Funding Corp., 789 N.E.2d 217, 221 (Ohio 2003) (holding contracts "making the repayment of funds advanced to a party to a pending case contingent upon the outcome of that case" void as champerty and maintenance); infra notes 34-37 and accompanying text (providing further discussion of the doctrine of champerty).
(46) See, e.g., Dobner, supra note 35, at 1545 (discussing changes that render "[t]he contemporary justification for laws against champerty and maintenance ...
While Idaho law does not recognize champerty and maintenance, Idaho law is in accord with the many states which continue to recognize that the goals of champerty and maintenance provisions are still around and well, both defensively and offensively, in the form of actions or defenses based on abuse of process or malicious prosecution of civil actions.
Calvin: A federal district court sitting in Colorado denied certification of a class action which had "the taint of collusion, champerty and maintenance." No.
Nevertheless, where champerty and maintenance are not criminally prohibited, the only effect of champerty laws is to make champertous agreements unenforceable.