Champerty
Encyclopedia
Champerty and maintenance are doctrines in common law
jurisdiction
s, 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 condition that the subject matter of the action is to be shared with the maintainer. Among laypersons, this is known as "buying into someone else's lawsuit."
At common law, maintenance and champerty were both crime
s and tort
s, 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). 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.
. Unscrupulous noble
s and royal official
s would lend their names to bolster the credibility of doubtful and fraud
ulent claims in return for a share of the property recovered. Gradually, judicial independence
was established and by the early 19th century Jeremy Bentham
wrote:
, champerty and maintenance as common law causes of action
(as either a crime
or a tort
) have mostly been abolished by statute. In New South Wales, champerty and maintenance were abolished by the Maintenance, Champerty and Barratry Abolition Act 1993. In Victoria, champerty and maintenance was abolished as a tort by section 32 of the Wrongs Act 1958. and as a crime by section 332A of the Crimes Act 1958
, though embracery
was a crime until until the Bribery Act 2010
. However, the 1967 Act stated:
There are circumstances in which a non-party who funds litigation can be liable for costs,if the action fails.
For instance, in Re Oasis Merchandising Services Ltd
[1998] Ch 170 the Court of Appeal reincarnated the tort against the assignment of a wrongful trading
claim by a liquidator to a specialist litigation company to pursuing directors for wrongful trading. This has come under criticism given that claims against directors are enforced sub-optimally as company liquidators, typically accountants, are cautious to take on risks rather than save as much of the company as possible.
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 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.
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)
recommended their preservation in a 2001 report titled Subsidising Litigation.
http://www.vegasinc.com/news/2011/jun/14/judge-rules-righthaven-lacks-standing-sue-threaten and Ohio
.http://www.sconet.state.oh.us/rod/docs/pdf/0/2003/2003-ohio-2721.pdf
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
jurisdiction
Jurisdiction
Jurisdiction is the practical authority granted to a formally constituted legal body or to a political leader to deal with and make pronouncements on legal matters and, by implication, to administer justice within a defined area of responsibility...
s, that aim to preclude frivolous litigation
Frivolous litigation
In law, frivolous litigation is the practice of starting or carrying on law suits that, due to their lack of legal merit, have little to no chance of being won. The term does not include cases that may be lost due to other matters not related to legal merit...
. "Maintenance" is the intermeddling of a disinterested party to encourage a lawsuit
Lawsuit
A lawsuit or "suit in law" is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant's actions, demands a legal or equitable remedy. The defendant is required to respond to the plaintiff's complaint...
. 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 condition that the subject matter of the action is to be shared with the maintainer. Among laypersons, this is known as "buying into someone else's lawsuit."
At common law, maintenance and champerty were both crime
Crime
Crime is the breach of rules or laws for which some governing authority can ultimately prescribe a conviction...
s and tort
Tort
A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
s, as was barratry
Barratry
Barratry is the name of four legal concepts, three in criminal and civil law, and one in admiralty law.* Barratry, in criminal and civil law, is the act or practice of bringing repeated legal actions solely to harass...
, the bringing of vexatious litigation
Vexatious litigation
Vexatious litigation is legal action which is brought, regardless of its merits, solely to harass or subdue an adversary. It may take the form of a primary frivolous lawsuit or may be the repetitive, burdensome, and unwarranted filing of meritless motions in a matter which is otherwise a...
. This is generally no longer so as during the nineteenth century, the development of legal ethics
Legal ethics
Legal ethics encompasses an ethical code governing the conduct of persons engaged in the practice of law and persons more generally in the legal sector.-In the United States:...
tended to obviate the risks to the public, particularly after the scandal of the Swynfen will case
Swynfen will case
The Swynfen will case was a series of English trials over the will of Samuel Swynfen that ran from 1856 to 1864 and raised important questions of ethics in the legal profession.-The case:...
(1856–1864). However, the principles are relevant to modern contingent fee
Contingent fee
A contingent fee or conditional fee is any fee for services provided where the fee is only payable if there is a favourable result...
agreements between a lawyer
Lawyer
A lawyer, according to Black's Law Dictionary, is "a person learned in the law; as an attorney, counsel or solicitor; a person who is practicing law." Law is the system of rules of conduct established by the sovereign government of a society to correct wrongs, maintain the stability of political...
and a client and to the assignment
Assignment (law)
An assignment is a term used with similar meanings in the law of contracts and in the law of real estate. In both instances, it encompasses the transfer of rights held by one party—the assignor—to another party—the assignee...
by a plaintiff
Plaintiff
A plaintiff , also known as a claimant or complainant, is the term used in some jurisdictions for the party who initiates a lawsuit before a court...
of his rights in a lawsuit to someone with no connection to the case. Champertous contracts can still, depending on jurisdiction, be void
Void (law)
In law, void means of no legal effect. An action, document or transaction which is void is of no legal effect whatsoever: an absolute nullity - the law treats it as if it had never existed or happened....
for public policy
Public policy (law)
In private international law, the public policy doctrine or ordre public concerns the body of principles that underpin the operation of legal systems in each state. This addresses the social, moral and economic values that tie a society together: values that vary in different cultures and change...
or attract liability
Legal liability
Legal liability is the legal bound obligation to pay debts.* In law a person is said to be legally liable when they are financially and legally responsible for something. Legal liability concerns both civil law and criminal law. See Strict liability. Under English law, with the passing of the Theft...
for costs.
History
The restrictions arose to combat abuses in medieval EnglandEngland
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
. Unscrupulous noble
Nobility
Nobility is a social class which possesses more acknowledged privileges or eminence than members of most other classes in a society, membership therein typically being hereditary. The privileges associated with nobility may constitute substantial advantages over or relative to non-nobles, or may be...
s and royal official
Royal court
Royal court, as distinguished from a court of law, may refer to:* The Royal Court , Timbaland's production company*Court , the household and entourage of a monarch or other ruler, the princely court...
s would lend their names to bolster the credibility of doubtful and fraud
Fraud
In criminal law, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation...
ulent claims in return for a share of the property recovered. Gradually, judicial independence
Judicial independence
Judicial Independence is the idea that the judiciary needs to be kept away from the other branches of government...
was established and by the early 19th century Jeremy Bentham
Jeremy Bentham
Jeremy Bentham was an English jurist, philosopher, and legal and social reformer. He became a leading theorist in Anglo-American philosophy of law, and a political radical whose ideas influenced the development of welfarism...
wrote:
Australia
In AustraliaAustralia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
, champerty and maintenance as common law causes of action
Cause of action
In the law, a cause of action is a set of facts sufficient to justify a right to sue to obtain money, property, or the enforcement of a right against another party. The term also refers to the legal theory upon which a plaintiff brings suit...
(as either a crime
Crime
Crime is the breach of rules or laws for which some governing authority can ultimately prescribe a conviction...
or a tort
Tort
A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
) have mostly been abolished by statute. In New South Wales, champerty and maintenance were abolished by the Maintenance, Champerty and Barratry Abolition Act 1993. In Victoria, champerty and maintenance was abolished as a tort by section 32 of the Wrongs Act 1958. and as a crime by section 332A of the Crimes Act 1958
England and Wales
Maintenance and champerty have not been crimes or torts since the passing of the Criminal Law Act 1967Criminal Law Act 1967
The Criminal Law Act 1967 is an Act of the Parliament of the United Kingdom. However, with some minor exceptions, it generally applies to only England and Wales. It made some major changes to English criminal law...
, though embracery
Embracery
Embracery is the attempt to influence a juror corruptly to give his verdict in favour of one side or the other in a trial, by promise, persuasions, entreaties, money, entertainments and the like....
was a crime until until the Bribery Act 2010
Bribery Act 2010
The Bribery Act 2010 is an Act of the Parliament of the United Kingdom that covers the criminal law relating to bribery. Introduced to Parliament in the Queen's Speech in 2009 after several decades of reports and draft bills, the Act received the Royal Assent on 8 April 2010 following cross-party...
. However, the 1967 Act stated:
There are circumstances in which a non-party who funds litigation can be liable for costs,if the action fails.
For instance, in Re Oasis Merchandising Services Ltd
Re Oasis Merchandising Services Ltd
Re Oasis Merchandising Services Ltd [1998] Ch 170 is a UK insolvency law and company law case, concerning wrongful trading.-Facts:The liquidator brought proceedings against 5 individuals, alleged to be directors or shadow directors, amounting to lots...
[1998] Ch 170 the Court of Appeal reincarnated the tort against the assignment of a wrongful trading
Wrongful trading
Wrongful trading is a type of civil wrong found in UK insolvency law, under s 214 Insolvency Act 1986. It was introduced to enable contributions to be obtained for the benefit of creditors from those responsible for mismanagement of the insolvent company....
claim by a liquidator to a specialist litigation company to pursuing directors for wrongful trading. This has come under criticism given that claims against directors are enforced sub-optimally as company liquidators, typically accountants, are cautious to take on risks rather than save as much of the company as possible.
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 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.
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 CommissionNew Zealand Law Commission
New Zealand's Law Commission was established in 1986 by the Law Commission Act 1985. The Commission is a Crown Entity under the Crown Entities Act 2004....
recommended their preservation in a 2001 report titled Subsidising Litigation.
United States
Obviously this concept exists in US jurisprudence but disdained by "fans of entrepreneurial lawyering in the academy and elsewhere." There has been recent common usage of the term in the media in NevadaNevada
Nevada is a state in the western, mountain west, and southwestern regions of the United States. With an area of and a population of about 2.7 million, it is the 7th-largest and 35th-most populous state. Over two-thirds of Nevada's people live in the Las Vegas metropolitan area, which contains its...
http://www.vegasinc.com/news/2011/jun/14/judge-rules-righthaven-lacks-standing-sue-threaten and Ohio
Ohio
Ohio is a Midwestern state in the United States. The 34th largest state by area in the U.S.,it is the 7th‑most populous with over 11.5 million residents, containing several major American cities and seven metropolitan areas with populations of 500,000 or more.The state's capital is Columbus...
.http://www.sconet.state.oh.us/rod/docs/pdf/0/2003/2003-ohio-2721.pdf