A legal arrangement where a third party funds a lawsuit in exchange for a share of the proceeds.
What is champerty?
Champerty is an agreement where someone funds someone else’s litigation in exchange for part of the proceeds, if successful. In the UK, champertous agreements are generally prohibited at common law, although certain types of commercial funding are permitted under tightly controlled rules. The aim is to prevent people from pursuing or promoting lawsuits for their own financial benefit, rather than the interests of justice.
Is champerty a criminal offence in the UK?
Champerty itself is not a criminal offence, but champertous agreements are void and unenforceable in court. This means that a contract which promises to give someone a part of the proceeds of a lawsuit in exchange for funding, would not be enforceable in court. The courts take this approach to discourage people from using the court system for speculative purposes.
Can someone else fund my lawsuit?
Yes, but only via regulated litigation funding or conditional fee agreements. In these cases a third party can fund someone’s case in the UK, but the funding is subject to tightly controlled rules to prevent abuse. The third party should not be able to control the litigation and they will be required to adhere to certain standards and codes of practice. The precise nature of the funding should be carefully reviewed before signing any agreements.
Why is champerty not allowed?
Champerty is not allowed because it allows people with no legitimate interest in a lawsuit, to pursue it for their own financial gain. The law prevents such agreements to protect the integrity of the court system and to ensure that lawsuits are only pursued for genuine reasons. Champerty also acts as a safeguard to prevent a third party from controlling the litigation.
Is champerty a thing in family law?
Theoretically champerty rules apply to family law, but in reality most family cases are funded by legal aid, privately by the parties or through a regulated conditional fee agreement. Agreements to fund a family law case purely for the speculative purpose of profit, are likely to be void. This is because courts are wary of allowing champertous funding of family cases and may protect the parties from being exploited in such situations.