An illegal agreement in which a person with no previous interest in a lawsuit finances it with a view to sharing the disputed property if the suit succeeds.
Champerty is a legal doctrine that prohibits a person from financially supporting or assisting another person in pursuing a legal claim in exchange for a share of the proceeds if the claim is successful. This doctrine is based on the principle that litigation should not be driven by financial gain or speculative investments. Champerty is generally considered to be against public policy and is therefore unenforceable in many jurisdictions. However, some jurisdictions have relaxed the application of champerty laws in certain circumstances, such as allowing third-party litigation funding in certain types of cases.
Champerty and maintenance are doctrines in common law jurisdictions that aim to preclude frivolous litigation. *Maintenance is the intermeddling of a disinterested party to encourage a lawsuit. It is “a taking in hand, a bearing up or upholding of quarrels or sides, to the disturbance of the common right.” *Champerty is the “maintenance” of a person in a lawsuit on the condition that the subject matter of the action is to be shared with the maintainer. Among laymen, this is known as litigation finance.
n. an agreement between the party suing in a lawsuit (plaintiff) and another person, usually an attorney, who agrees to finance and carry the lawsuit in return for a percentage of the recovery (money won and paid). In common law, this was illegal on the theory that it encouraged lawsuits. Today, it is legal and often part of a “contingent fee” agreement between lawyer and client. It is not the same as barratry, which is the active encouragement of lawsuits.
An agreement between the party bringing an action in a lawsuit (the claimant) and his legal representative (usually a solicitor) that the fees paid will depend on the amount of money recovered in the action. Specifically, the legal representative agrees to finance and carry out the lawsuit in return for a percentage of the recovery (the money won by the claimant and paid by the defendant). Champerty has long been unlawful under common law on the grounds that it encourages litigation and is in violation of the ‘indemnity principle’. However, in recent years, there have been tentative moves to establish the use of conditional fee arrangements, which some believe border on champerty. The advantage that this arrangement offers in terms of reducing the cost of litigation, thus making it more affordable to the general public, is viewed by its proponents as outweighing the disadvantage of (possibly) encouraging a greater amount of total litigation. Defenders of the conditional fee arrangement also argue that it is not quite the same as barratry, which involves the active encouragement of lawsuits.
See conditional fee, indemnity principle, and barratry.
Champerty is a legal term that refers to an agreement between a third party and a party involved in a lawsuit, where the third party agrees to finance the lawsuit in exchange for a share of the proceeds if the case is successful.
Champerty is generally considered illegal in many jurisdictions. However, the laws regarding champerty vary from country to country and even within different states or provinces.
Some jurisdictions have recognised certain exceptions to the illegality of champerty. For example, in some cases, a lawyer may be allowed to take a share of the proceeds of a lawsuit as a form of contingency fee.
Engaging in champerty can have serious consequences. It may result in the invalidation of the agreement, financial penalties, or even criminal charges in some jurisdictions.
Yes, it is possible for a third party to provide financial assistance to a party in a lawsuit without engaging in champerty. This can be done through legitimate means, such as providing a loan or funding the legal expenses directly.
In some cases, a defendant may raise champerty as a defence to challenge the validity of a lawsuit. However, the success of such a defence would depend on the specific laws and circumstances of the case.
Yes, if a party is found to have engaged in champerty, they may be held liable for their actions. This could result in legal consequences, including the dismissal of their lawsuit or financial penalties.
To avoid engaging in champerty, it is important to understand the laws and regulations regarding third-party involvement in lawsuits in your jurisdiction. Seeking legal advice and ensuring that any financial arrangements are lawful and ethical is crucial.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 8th April 2024.
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