Business, Legal & Accounting Glossary
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 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 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 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 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 at 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 borders 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 active encouragement of lawsuits.
See conditional fee, indemnity principle, barratry.
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This glossary post was last updated: 26th April, 2020 | 0 Views.