is an ancient doctrine describing an arrangement in
As a result, they do not have the historical relic of the common law doctrines of champerty
and maintenance which can prohibit the external financing of legal claims.
The doctrine of champerty
prohibits financial capitalization and commercialization of lawsuits.
frivolous litigation, the ancient champerty
doctrine prohibits third
The requirements of standing have safeguarded the court system from being subjected to unwarranted claims and unworthy parties, yet exceptions to standing have created the need to further expand these protections; while the doctrine of maintenance and champerty
pre-dates the standing requirements, it was adopted to prevent the courtroom from becoming a trading floor for claims and frivolous litigation by disinterested third parties.
11 (outlawing practice of champerty
during the reign of King Edward I); 32 Hen.
MRPC 1.8 (e) is the result of the common law rules against champerty
It then considers the more difficult issue of whether assignments of inheritance rights to firms are consistent with the champerty
Recent work includes acting for the wife in financial and divorce proceedings, which involved issues of champerty
and wasted costs.
, Maintenance, and the Rise of the Contingent Fee Model
As a longstanding element of English common law, the doctrine of champerty
forbids the acquisition of a debt solely for the purpose of bringing a lawsuit to collect the debt.
The deep enmity that large corporations have towards litigation finance stems from the historical prohibition of "champerty
" and "maintenance" -- legal terms used to describe the participation of a disinterested party in a lawsuit.
Thankfully, third party funding is no longer illegal -- prohibitions on champerty
and maintenance have fallen away in most US states.
The "evil" is often described, without further analysis, as purchasing stock "with litigious motives." (208) But after-purchasers of stock are not "strangers" to the dispute as under the old doctrines of champerty
or maintenance, in that the purchase of shares "necessarily gives the acquirer an equitable interest in the underlying corporation." (209) An after-purchaser has the same continuing interest in the corporation as any other shareholder.
Whereas the judicial, legislative, and scholarly treatment of litigation finance has regarded litigation finance first and foremost as a form of champerty
and sought to regulate it through rules of legal professional responsibility (hereinafter, the "legal ethics paradigm"), this Article suggests that the problems created by litigation finance are all facets of the classic problems created by "the separation of ownership and control" that have been a focus of business law since the advent of the corporate form.