Champerty, rooted in common law, is an arrangement whereby an attorney or an external party finances the costs associated with a lawsuit in return for a share of the awarded damages. Historically considered illegal, this practice has seen a gradual decline in prohibition across various jurisdictions, modified or abolished in most modern legal systems.
Historical Context of Champerty
Origins
The term “champerty” derives from the Old French “champartie,” roughly translating to “sharing of the plea.” Its origins trace back to medieval England, where it was often linked with maintenance—the support provided to a party in litigation by an uninterested outsider without a legitimate concern in the case.
Legal Prohibitions
During medieval and early modern periods, champerty and maintenance were viewed as mechanisms for corrupting the judicial process, primarily benefitting affluent litigants capable of affording such arrangements. By the 14th century, English statutes specifically targeted and prohibited champerty.
Modern Legal Landscape
Jurisdictions and Modifications
Today, the outright prohibition of champerty has largely been modified or abolished:
- United States: Champerty is still prohibited in a few states but generally permissible under certain regulated frameworks, especially in the context of litigation financing companies.
- United Kingdom: The Criminal Law Act 1967 effectively abolished the prohibition of champerty, though courts maintain the ability to strike down agreements deemed to offend public policy.
- Australia: Champerty restrictions have been significantly relaxed, facilitating litigation funding for class actions.
Legal and Ethical Considerations
Modern analysis of champerty involves balancing the benefits of increased access to justice against potential abuses of the judicial system. Advocates argue it enables financially constrained plaintiffs to pursue legitimate claims, while critics remain wary of risks such as frivolous lawsuits and conflicts of interest.
Examples of Champerty in Practice
Litigation Finance
In jurisdictions where champerty prohibitions have been lifted, litigation finance companies specialize in underwriting legal actions, aiming for returns on successful claims. This has paved the way for a burgeoning industry, especially in high-stakes commercial litigation.
Personal Injury Cases
In practical applications, personal injury law has embraced limited champerty arrangements, ensuring injured parties can seek restitution without upfront financial burdens.
Applicability and Comparisons
Related Terms
- Maintenance: General support for a lawsuit without a stake in the outcome.
- Barratry: Vexatious instigation of lawsuits, often considered a criminal act.
- Split Fee Arrangements: Similar to champerty within legal ethics, though regulated differently.
Comparing Legal Frameworks
- France and Civil Law: Civil law jurisdictions typically approach champerty differently, with strict regulations against speculative litigation financing.
- International Arbitration: Champerty has seen nuanced acceptance in international arbitration, offering a potential avenue for cross-border litigants.
FAQs about Champerty
What is the primary argument in favor of champerty?
Champerty supports the argument that it enhances access to justice for individuals unable to afford litigation costs, thus promoting a level playing field in legal disputes.
Why was champerty historically prohibited?
Champerty was traditionally prohibited to prevent the manipulation of the judicial process, discouraging wealthier external parties from influencing legal outcomes for personal gain.
Is champerty still illegal anywhere?
Yes, certain U.S. states and legal systems with specific interests in preserving traditional ethical standards maintain prohibitions against champerty.
References
- Radin, Max. “Maintenance by Champerty in Medieval England.” University of Chicago Law Review, vol. 2, no. 2, 1935, pp. 203-211.
- Sebok, Anthony J. “The Inauthentic Claim.” Vanderbilt Law Review, vol. 64, 2011, pp. 61-122.
- Molot, Jonathan T. “Litigation Finance: A Market Solution to a Procedural Problem.” Stanford Law Review, vol. 99, 2010, pp. 1021-1080.
Summary
Champerty represents a fascinating intersection of legal, financial, and ethical considerations that originated in medieval common law. While historical legal frameworks largely viewed it with disfavor due to potential abuses, modern reformations have seen a measured acceptance of champerty, especially within regulated frameworks. This duality highlights the evolving nature of legal systems in balancing access to justice with safeguarding judicial integrity.
