champerty

It has been suggested that Champertor be merged into this article or section. (Discuss)

In common law jurisdictions, maintenance is the intermeddling of an uninterested party to encourage a lawsuit.^[1] It is "A taking in hand, a bearing up or upholding of quarrels or sides, to the disturbance of the common right."^[2]

Champerty is the maintenance of a person in a lawsuit on condition that the subject matter of the action is to be shared with the maintainer.^[3] Among laypersons, this is known as "buying into someone else's lawsuit."^[4]

In modern idiom maintenance is the support of litigation by a stranger without just cause. Champerty is an aggravated form of maintenance. The distinguishing feature of champerty is the support of litigation by a stranger in return for a share of the proceeds.

– Lord Justice Steyn , Giles v Thompson^[5]

At common law, maintenance and champerty were both crimes and torts, as was barratry, the bringing of vexatious litigation. This is generally no longer so as during the nineteenth century, the development of legal ethics tended to obviate the risks to the public, particularly after the scandal of the Swynfen will case (1856-1864).^[6] However, the principles are relevant to modern contingent fee agreements between a lawyer and a client and to the assignment by a plaintiff of his rights in a lawsuit to someone with no connection to the case. Champertous contracts can still, depending on jurisdiction, be void for public policy or attract liability for costs.

History

The restrictions arose to combat abuses in medieval England. Unscrupulous nobles and royal officials would lend their names to bolster the credibility of doubtful and fraudulent claims in return for a share of the property recovered.^[7] Gradually, judicial independence was established and by the early nineteenth century Jeremy Bentham wrote:^[8]

A mischief, in those times it seems but too common, though a mischief not to be cured by such laws, was, that a man would buy a weak claim, in hopes that power might convert it into a strong one, and that the sword of a baron, stalking into court with a rabble of retainers at his heels, might strike terror into the eyes of a judge upon the bench. At present, what cares an English judge for the swords of a hundred barons? Neither fearing nor hoping, hating nor loving, the judge of our days is ready with equal phlegm to administer, upon all occasions, that system, whatever it be, of justice or injustice, which the law has put into his hands.

By jurisdiction

Australia

In Australia, champerty and maintenance as common law causes of action (as either a crime or a tort) have mostly been abolished by statute.

New South Wales

In New South Wales, champerty and maintenance were abolished by the Maintenance, Champerty and Barratry Abolition Act 1993.^[9]

Victoria

In Victoria, champerty and maintenance was abolished as a tort by section 32 of the Wrongs Act 1958.^[10] and as a crime by section 332A of the Crimes Act 1958^[11]

England and Wales

Maintenance and champerty have not been crimes or torts since the passing of the Criminal Law Act 1967,^[12] though embracery was unaffected. However, the 1967 Act stated:

The abolition of criminal and civil liability under the law of England and Wales for maintenance and champerty shall not affect any rule of that law as to the cases in which a contract is to be treated as contrary to public policy or otherwise illegal.

– section 14(2)

There are circumstances in which a non-party who funds litigation can be liable for costs, should the action fail.^[13][14][15]

Hong Kong

In Hong Kong, champerty and maintenance were long thought to be obsolete both as a crime and a tort, but these two principles have been revived in recent years in response to the prevalence of recovery agents which present problems quite different from the mischief which historically these rules intended to combat.

The recovery agents typically perform "ambulance chasing" on accident victims, offering to arrange lawyers to handles their claims on a "no win no fee" basis. If the claim succeeds the recovery agents share a portion of the damages. This is seen as deception on uneducated victims who are ignorant to the availability of legal aid. The division of the damages in effect deprives the victims of the just compensation that they are entitled to for the their bodily injury. The intermeddling of recovery agents in the lawsuit also presents ethical problems to lawyers, who may have undermined impartiality in advising on settlement. In response, the Department of Justice and the Law Society of Hong Kong carried out a massive publicity campaign aiming at educating the public to refuse recovery agents, citing that maintenance and champerty are criminal offences under the laws of Hong Kong.

In 2008, 21 people were arrested for champerty, maintenance and conspiracy. They were recovery agents "helping" accident victims on a "no win no fee" basis. One of the people arrested was a lawyer. Champerty and maintenance carries a sentence of up to seven years in Hong Kong.^[16][17]

On 25 June 2009, a solicitor was convicted for conspiracy to maintain and a recovery agent for conspiracy to champer. They were found to have agreed to share 25% from the damages paid to the next friend of a 18-year-old traffic accident victim who suffered from permanent total loss of earning capacity. On 10 July 2009, the solicitor was sentenced to 15 months' imprisonment and the recovery agent to 16 months' imprisonment. (Case number: DCCC 610/2008)

New Zealand

Maintenance and champerty are torts, not crimes, under New Zealand law. Despite calls for their abolition, the New Zealand Law Commission recommended their preservation in a 2001 report titled Subsidising Litigation.^[18]

United States

The practice of champerty by non-attorneys came back in vogue in the early 1990s. Accident victims were lured by television and radio commercials promising them that they would have their case evaluated by an expert and receive risk-free money before trial. The finance companies also promised that if the case was lost, the victim would not owe them any money. Typically, the amount of money advanced to the accident victim was a fraction of the total judgment granted by the court.^{[citation needed]} Proponents contend that champerty allows indigent plaintiffs access to expensive and expansive legal services they might not otherwise be able to afford. Opponents note that the ubiquity of attorneys willing to take cases "on contingency" obviates the need for champerty by non-attorneys. The opponents further note that the ethical codes which limit the percentage of recovery which an attorney may charge on contingency are not applicable to non-attorneys, thereby exposing litigants to potentially predatory practices.^{[citation needed]}

Current state of law

The current state of the law of champerty is in flux. The practice is prohibited in some jurisdictions; in others, there is no recent case law and judges have to re-analyse old cases. In most jurisdictions, judges have the responsibility for policing contracts which would run afoul of ethical guidelines or would cause the manifest injustice that enforcing a champertous contract would entail. A small minority of jurisdictions, such as New Jersey, do not consider champertous contracts illegal.^[19] It is also useful to note that what may generally be categorized as champerty may not be so clear. At one end of the spectrum would be the assignment of a cause of action relating to a personal tort. The accident example above arguably only narrowly avoids being clearly champertous in that an evaluation "service" is being performed.^{[citation needed]} On the other end, the assignment of a cause of action which is subsidiary, yet integrally related to a bona fide transfer of a property or other right should not be champertous. As an example, the assignment of a patent may include the transfer of a right to sue for past damages. In this case, certain jurisdictions recognize that the assignment of all rights associated with a species of intellectual property may for practical purposes include the right to sue. Therefore, these transactions will not constitute champerty.^{[citation needed]}

See also

• Litigation funding
• Subpoena ad testificandum

References

Further reading

• Rancman v. Interim Settlement Funding Corp., 99 Ohio St.3d 121 (2003)
• "VENTURE CAPITALISM FOR LAWSUITS? Why It Doesn't Exist, And What Alternatives For Financing Exist Instead"
• "The Continuing Struggle Over Litigation Funding"
• "Defense of champerty no longer valid in South Carolina"
• "Ethics of Law Loans in the Post-Rancman Era"
• "Broad prohibition, thin rationale: The "'acquisition of an interest and financial assistance in litigation' rules"
• " Selling Your Torts:Creating a Market for Tort Claims and Liability" 33 Hofstra L. Rev. 1543
• Burton, F. et al. (2007). PIBA Personal Injury Handbook. London: PIBA/ Jordans. pp. 719–720. ISBN 978-1-84661-054-7. 
• Winfield, P. H. (1919). "The history of maintenance and champerty". Law Quarterly Review 35: 50.