Not exact matches
Under doctrines called
champerty and maintenance, the law used to bar unrelated third parties from paying someone else to engage in litigation and financing a lawsuit in exchange
for a share of the damages.
Casting aside traditional prohibitions on
champerty and maintenance, the United Kingdom has of late thrown open its doors to «litigation finance» enterprises that fund legal actions as an investment in exchange
for a share of the proceeds.
In its Commission on Ethics 20/20 White Paper in February 2012, the ABA opined that «shifts away from older legal doctrines such as
champerty, and society's embracing of credit as a financial tool have paved the way
for a litigation financing industry that appears poised to continue to grow...»
Historically, the practice of funding legal action in exchange
for future remuneration has been governed by the common law doctrines of
champerty and maintenance, which emerged to safeguard a party's best interests and protect the administration of justice against abuse from nonparties.
By affirming that providing financial support to a lawsuit may not amount to maintenance or
champerty, the Court has opened the door
for litigation funders to involve themselves in lawsuits by way of third party agreements.
A search
for «
champerty» in Ontario's e-Laws Current Consolidated Law turns up only the Class Proceedings Act, 1992, s. 33, which, as noted, licenses contingency fees in class actions «despite the Solicitors Act and An Act Respecting
Champerty, being chapter 327 of Revised Statutes of Ontario, 1897.»
It is now clear that the centuries - old doctrines of maintenance and
champerty, which still prohibit third party funding
for litigation, do not apply to funding of arbitration and mediation.
The first statutory restrictions against maintenance and
champerty were enacted in England in 1305, as a result of royal officials and nobles lending their names to dubious legal claims in exchange
for a portion of any proceeds.
The funders have recognized that the courts still have a long - standing aversion to maintenance and
champerty, even though they have now recognized that contingency fees and third party funding are necessary
for access to justice in some situations.