Champerty and Maintenance

CHAMPERTY AND MAINTENANCE

Champerty is the process whereby one person bargains with a party to a lawsuit to obtain a share in the proceeds of the suit. Maintenance is the support or promotion of another person's suit initiated by intermeddling for personal gain.

Both champerty and maintenance have been illegal for two basic public policy reasons since early common law: (1) It is considered desirable to curb excess litigation for the operation of an efficient judicial system. The reasons for this are numerous and include problems of over-crowding on court calendars, economic considerations, and the desirability of promoting a society that is not excessively litigious. Champerty and maintenance work contrary to this societal goal by stirring up litigation. (2) Champerty and maintenance bring money to an individual who was not personally harmed by the defendant. An attorney found guilty of either champerty or maintenance will be subject to the payment of any damages that may have been incurred by the parties to the lawsuit and to disciplinary proceedings, which can result in his or her disbarment.

Whether or not champerty and maintenance exist in a particular instance depends upon the facts and circumstances of the case. They apply specifically to cases wherein one person profits from another person's recovery in a lawsuit. If a licensed collection agency purchases a group of bad accounts from a store, the agency is buying the right to collect on the accounts rather than on a particular lawsuit and is therefore not guilty of champerty. An attorney who buys a chose in action with the sole, specific intent to initiate an action for his or her own benefit would be guilty of champerty provided the purchase was made with that intent.

To lend money to an individual who would not otherwise be able to afford to bring a lawsuit is not maintenance unless the lender intends to gain substantially from his loan by being compensated with a portion of the recovery.

Today, some states still recognize champerty and maintenance as offenses but in most states they have been replaced with the civil actions of abuse of process and malicious prosecution, both of which deal with the wrongful initiation of litigation and perversion of legal process.