The New York Court of Appeals recently issued an important new opinion on the reach of New York Judiciary Law §489, which bars certain forms of trading in litigation claims. The decision, in the Justinian Capital case,1 breathes new life into what is known as champerty, a doctrine many had thought to be largely dormant in New York following the issuance of the court’s earlier decisions in Bluebird Partners2 and Love Funding.3 This article discusses the trio of Court of Appeals cases and the current state of the champerty law in New York.
Champerty, broadly speaking, is “a venerable doctrine developed hundreds of years ago to prevent or curtail the commercialization of or trading in litigation.”4 In New York, the doctrine (and an important safe harbor thereto) is codified in §489 of the Judiciary Law, which provides, in part, that no corporation “shall solicit, buy or take an assignment of … a bond, promissory note, bill of exchange, book debt, or other thing in action, or any claim or demand, with the intent and for the purpose of bringing an action or proceeding thereon.”5
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