Champerty lives / Alte Rechtskonzepte wiederbelebt

The ABA Journal reports that an Ohio court found money paid to litigants void as champerty and maintenance.

Champerty, says Dietl: Br Unterstützung einer Prozeßpartei (gegen Zusicherung eines Teils des Prozeßgewinns)
Maintenance: . unzulässige Unterstützung einer Prozeßpartei (od. beider) durch einen Außenstehenden (Am obs.)

British? American? Both are obsolete terms in both Britain and America, as far as I know.

Interim Settlement Funding Corp. is a law-loan company. It lent the defendant $6,000 in return for her later paying it $16,800 if the case was over within 12 months, and increasing amounts if it took longer.

She refused to pay – she paid back the $6,000 plus 8% interest. She then sued the companies, asking the court to find the contract void.A magistrate judge found the loans usurious, and this was confirmed by a trial court and by the Ohio Court of Appeals. The case finally went to the Ohio Supreme Court, where the champerty and maintenance decision was made.

The article is interesting because it reports the reactions of various lawyers to this curious decision.

Here is a nice diagram of the Ohio courts.

A related article about lawsuit funding at Findlaw.

Not quite the same topic, but in recent years Prozessfinanzierer (litigation financers) have appeared in Germany. Handakte WebLAWg reports on a case where it was held that the litigation financer FORIS had no right to organize settlement negotiations, as it was not a lawyer.

8 thoughts on “Champerty lives / Alte Rechtskonzepte wiederbelebt

  1. You’re right about champerty & maintenance having been abolished in the UK. I’m not so sure from your articles they have also been in the US.
    Allied to the topic is the hair-splitting difference between a conditional-fee arrangement – ‘no win, no fee’ – allowed in the UK and giving the solicitor a 100% uplift in fees charged in the event of winning the case.
    Disallowed in the UK, in principle, is the US ambulance-chasing contingent-fee arrangement, giving the ‘attorney’ a slice of the winnings.
    I say in principle because I was personally involved in a case in London where an Eng. solicitor who received a substantial winning settlement figure into his firm’s account helped himself to a percentage. The winning claimant was loathe for me to report the solicitor as his bullying ways had secured a deal – running into thousands of pounds – the claimant’s first sacked law firm had missed by miles – “accept a couple of hundred”. The pressure to accept such a ‘rake-off request’ might prove irresistible when it is the lawyer and not the claimant who is sent the non-coriander bread.

  2. I like the language of the American courts sometimes. Here: ‘An intermeddler is not permitted to gorge upon the fruits of litigation.’

    Yes, perhaps not abolished in the U.S.A. It would be a state thing, I presume. Here is an Australian article on the topic:
    http://www.onlineopinion.com.au/aug99/Rayment.htm
    It says that in the UK, champerty and maintenance are no longer crimes or torts, but the concepts can be used in contract law.
    Further research (OED) reveals champart (divided field), a system still in use in the Channel Islands, in which the landlord receives part of the produce; or a charge on land, consisting of part of the produce. Similarly, in champerty, the helper is to receive part of the suit.

  3. The offence of maintenance and champerty was abolished by section 13 of the Criminal Law Act 1967, section 14 exempting liability in tort for such. Though the terms may be used in contract, agreements on such are void and illegal.

    I also distinctly remember being slapped down for suggesting it was still on the contract agenda by legal author Prof. Michael Zander – a good Leipzig name, Solicitor and QC, at a London Uni. lecture I gatecrashed.

    Interestingly, a contract law ref. work, written coincidentally by another German, Sir Günter Treitel, also describes the arrangement as ‘officious intermeddling by C in litigation between A and B’. He then goes on to claim that the common law did recognize other methods ‘such as a tripartite contract known as novation and acknowledgment by A to C by which C could become entitled to enforce B’s claim against A – but only (unlike assignment) with A’s consent’.

    I’m unsurprised champert is still used on the Channel Islands. Their conveyances used to be – are still written? – in Norman French. I remember having to translate one into Eng. and searching out mediaeval French dictionaries at the British Library and French lawyers who had studied Norman Law at the Uni. of Caen.

  4. Interesting about the CI translation. And about Günter – on my copy he calls himself G.H. Treitel.
    But since when is Zander an expert on contract law? (And do you know about his origins?)
    Cheshire, Fifoot & Furmston says that s. 14 (2) of the CLA 1967 itself provides ‘that this abolition of criminal and civil liability “shall not affect any such rule of law as to the cases in which a contract is to be treated as contrary to public policy or otherwise illegal”. Therefore, the long-established rule still stands that an agreement tainted by maintenance or champerty is void as being contrary to public policy.’ Footnote holds that it applies to agreements by lawyers making the amount of fees dependent on success, even if the dela is to charge an ordinary fee in the event of success and a reduced fee in the event of failure.
    Book is dated 1996, though. There must have been discussion of this in connection with contingent fees.

  5. I go along with your Cheshire public policy quotes. Some nameless uni. law professors back in the UK won’t recommend ‘patchwork-edited’ Chesire, Fifoot & Furmston that used to be contract law set reading as Cheshire and Fifoot and feel any later edition ‘needs to be rewritten from scratch’.

    I know something about Prof. Michael Zander’s origins. On the Internet there’s a 1994 address given by him in honour of his father Dr. Walter Zander, ‘Holocaust survivor’, lawyer and musician, born Erfurt 1898. Not to be confused with the website of other Michael Zanders, one a student at the TU, Berlin.

    There are also other lawyers and musicians in his family with a Leipzig connection. Prof. Michael happened to start at the LSE – The London School of Economics and not the London Stock Exchange or the now defunct London School of Embroidery – at the same time as my late uncle, a Prof. of Sociology (and of Anthropology before it became a discredited subject).

    I agree Michael – made an hon. QC for his legal academic research and contribution – may not be a contract specialist. But, if ever you take the London Uni. LLM option in civil or criminal litigation, you’re bound to cross swords with him. He often cross-refers to German law, thinking his audience won’t pick up on his points. Well, sometimes we do.

  6. What is recommended if not Cheshire et al? I can well imagine it getting messy over the years. But there must be something newer than Treitl.

    London LLM – there’s something else useful to avoid, I see. I have encountered the Internet Michael Zander on some mailing list or other, I forget for what.

    LSE usually does mean that to me as I studied at King’s College. I played squash at LSE but find that hard to believe now. This was in 1965 or so.

  7. 1. Chitty on Contract as a gen. high-cost ref. work; 2. Prof. Ewan McKendrick, on Eng. & not Scots contract law, in the low-cost MacMillan Law Masters series; 3. Prof. Richard Stone in the also-cheapish Cavendish Law Notes series. His Contract Q&A contains the ‘answers most Eng. & Wales contract examiners want to see’. 4. Jill Poole’s Contract Casebook, prescribed reading on London Uni. courses and arguably a self-contained course in itself.
    My youngest brother is a law AKC but, being big-headed, went into press journalism and radio & TV broadcasting instead.

  8. Chitty is a bit expensive. Will take a flick through the others if I ever have time to read. I think Richard Stone’s sister was a fellow articled clerk of mine.

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