From last week’s Bloomberg BNA article by Peter C. Leung:
A U.S. legal dispute over litigation funding provided a glimpse into how English monarchs felt about being sued. (Hint: they didn’t like it).
Earlier this week, a Delaware court denied E. I. DuPont de Nemours & Co.’s bid to dismiss a case on the grounds that investors are funding the plaintiff’s litigation in exchange for a portion of the winnings. DuPont had argued that the arrangement violated common law prohibitions against champerty and maintenance.
If you don’t know what champerty and maintenance are, you are certainly not alone. Recognizing that the doctrines aren’t particularly well-known in the U.S., the court offered a short explanation.
The doctrines originated in medieval England in response to feudal lords funding others’ lawsuits, the court said. Many times, the suits involved land, with the wealthy investors often targeting political or personal enemies. The practice lent itself to fraud and “Game of Thrones”-style violence. Sometimes, investors would back false land claims against enemies. Some disputes were settled by combat.
What finally brought about laws against champerty and maintenance was the fact that the crown itself became a target. Thus, common law has prohibitions against assigning a legal claim to a third party who initiates and prosecutes lawsuits, and against “officious intermeddlers” stirring up litigation and encouraging others to bring legal actions or defenses.
Today, there are questions as to whether the doctrines still apply. In the DuPont case, the plaintiff argued that they didn’t but the court disagreed, saying it was a question for the state’s supreme court. However, with growing interest in ways to monetize intellectual property, including through litigation funding, there may be more analysis of champerty and maintenance ahead. And more history lessons.
Courts are validating, again and again, that legal funding has become a fully accepted part of the personal injury world. This is a huge win for consumers!
Everyday people need help when they are trying to stand up against insurance companies and their armies of lawyers. The insurance companies will promise fair offers and then drag out claims. What’s a person to do without a real-world dragon?
For many, legal funding is an option.
Want to learn more about this case? See Sara Randazzo’s article “Litigation Funder Doesn’t Violate Ethical Boundaries, Court Finds” in The Wall Street Journal’s Law Blog.