champerty
Champerty is an arrangement where a third party supports someone else's lawsuit in exchange for a share of the outcome. This support is usually financial, and is only considered champerty if the third party has no bona fide interest in the case, and is motivated solely by profit.
Champerty is a type of maintenance, which refers to any outside support given to a litigant. The key difference is that in champerty, the supporter expects to benefit if the case succeeds. If there is no reward involved, it is maintenance but not champerty. See: In re Primus , 436 U.S. 412 (1978), and Osprey, Inc. v. Cabana Ltd. Partnership, 532 S.E.2d 269 (S.C. 2000).
Early common law and Roman law were hostile to champerty. William Blackstone described champerty as "an offense against public justice, as it keeps alive strife and contention, and perverts the remedial process of the law into an engine of oppression." Even by the early twentieth century, champerty was broadly prohibited. Matter of the Estate of Gilman was a case about maintenance from the litigant’s own lawyer, an arrangement that Judge Cardozo did not favor. Judge Cardozo wrote that "maintenance for spite or envy or the promise or hope of gain" is forbidden whereas "maintenance inspired by charity or benevolence" is permitted.
Today, U.S. states vary in how they treat champerty. Some allow it by law, others restrict or ban it. Contingency fees, where lawyers are paid only if the client wins, are now widely accepted and illustrate how the rules have changed over time. Indeed, the history of contingency fee arrangements capture the gradual liberalizing of champerty laws in the United States. That said, some states characterize it as a risky form of gambling and therefore illegal speculation. For example, in Rancman v. Interim Settlement Funding Corp, Ohio’s Supreme Court, while voiding a champertous contract, held that "a lawsuit is not an investment vehicle. Speculating in lawsuits is prohibited by Ohio law. An intermeddler is not permitted to gorge upon the fruits of litigation" because such contracts give a non-party an impermissible interest in a suit, impedes settlement, and promotes litigation for speculative purposes.
Champerty is not the same as an assignment or a loan. An assignment transfers legal rights, while a loan must be repaid regardless of the lawsuit’s outcome. Litigation funding, where outside investors back lawsuits for a cut of the winnings, is often compared to champerty. Critics argue it promotes unnecessary lawsuits and delays settlements. Supporters say it helps people afford to bring valid claims, like venture capital for legal cases. See: Anglo-Dutch Petroleum Inter. v. Haskell , 193 S.W.3d 87 (Tex. App. 2006).
[Last reviewed in July of 2025 by the Wex Definitions Team]
Wex