You know the feeling: You’re crunched for time as you scan the newspaper, the New York Law Journal or the Internet, reading only the first few paragraphs of an article, a newly reported case or a post. As a result, all too often you don’t understand enough of what you’ve just read to fully appreciate its significance. Over the past two years, I’ve always felt that way about third-party litigation funding. On its face, the idea of having a stranger use the courts to make a profit seems at odds with the common law doctrine of champerty and maintenance.
Champerty is an agreement to divide litigation proceeds between the owner of the litigated claim and a party unrelated to the lawsuit who supports or helps enforce the claim. Black’s Law Dictionary (10th ed. 2014). It was developed to prevent the commercialization of (or trading in) litigation. Justinian Capital SPC v. Westlb AG, 28 N.Y.3d 160, 163 (2016). Maintenance is the continuation of something, such as a lawsuit. Black’s Law Dictionary (10th ed. 2014).
