Also known as: champerty · maintenance · champertous maintenance · maintenance and champerty
Written by attorneys · grounded in primary & secondary sources — see below
A common-law doctrine that bars a third party from acquiring a proprietary interest in another's lawsuit or from officiously intermeddling in litigation without a legitimate interest.
Select any source to read its text and confirm it supports the definition.
Crestview Holdings faces a shareholder demand alleging mismanagement. An outside investor offers to fund the suit in exchange for a share of any recovery. The board moves to dismiss after a good-faith inquiry concludes the action is not in the corporation's best interests. The court grants the motion because the investor's stake constitutes champerty.
Cascade Manufacturing hires an independent contractor to fix a loading dock. After the work, a visitor is injured. A litigation funder who has no prior connection to the property agrees to pay the visitor's legal fees in return for a percentage of any damages. The arrangement is champerty and the court refuses to enforce the funding contract.
Copperfield Mining defaults on two mortgages. A junior lender pays a third-party consultant to litigate for appointment of a receiver and promises the consultant a cut of any rents collected. The senior mortgagee objects that the arrangement is maintenance. The court denies the consultant's fees on that ground.
Cardinal Insurance solicits and maintains a policy with a forum resident. When a claim arises, a litigation investor who never dealt with the insured agrees to finance the coverage suit in exchange for a share of the proceeds. The court finds the funding agreement champertous and dismisses the action.
Christine Castro and her spouse negotiate a separation agreement. A third-party investor offers to pay Christine's legal fees in return for a portion of any maintenance award. The court finds the agreement unconscionable in part because the funding constitutes maintenance and orders revised terms.
After Carlos Castillo's death, his surviving spouse seeks a family allowance. An outside investor agrees to advance litigation costs in exchange for a share of any allowance recovered. The probate court rejects the funding contract as champerty and directs the estate to pay the allowance directly to the spouse.
The prohibition traces to common-law concerns that wealthy lawyers would purchase claims and flood the courts with litigation they controlled for their own profit. The rule prevents the lawyer from obtaining an economic stake that would allow the lawyer to dominate prosecution or settlement decisions and relegate the client to a subordinate role.
Supporting sources
…for the bringing about of political and social changes desired by the people." Roth v. United States, 354 U. S. 476, 484. "The maintenance of the opportunity for free political discussion to the end that government may be responsive to the will of the people and that changes may be obtained by lawful means, an opportunity…