What Is Champerty?
At its core, champerty is a centuries-old English common law prohibition against "lawsuit investing." The doctrine was designed to prevent wealthy speculators from buying up other people's legal claims and profiting from the resulting litigation.
In its simplest form: Person A has a valid breach of contract claim against Person B but cannot afford a lawyer. Person C (a complete stranger with no connection to the dispute) approaches Person A and says, "I'll pay for your entire lawsuit. In exchange, I get 50% of whatever the jury awards you." Under the champerty doctrine, this arrangement is illegal because Person C is buying into litigation purely for profit.
Champerty vs. Maintenance
The two doctrines are closely related but distinct:
- Maintenance — The act of a stranger financially supporting someone else's lawsuit without having a legitimate interest. The stranger funds the case but does not share in the profits.
- Champerty — A specific, more egregious form of maintenance where the stranger funds the case AND takes a cut of the winnings. Champerty always involves a profit motive.
Modern Florida Application
Florida still technically recognizes champerty as a defense, but modern courts have significantly narrowed its application. The key exceptions include:
- Contingency Fee Agreements — An attorney who takes a case on a contingency basis ("I get 33% of your settlement") is NOT committing champerty. The attorney has a professional, legitimate interest in the outcome.
- Litigation Funding — The rapidly growing industry of third-party litigation finance (where specialized companies fund lawsuits in exchange for a return) is pushing the boundaries of champerty law nationwide. Florida courts are increasingly permitting these arrangements under strict ethical guidelines.
- Assignment of Claims — In commercial real estate, sellers sometimes "assign" their pending construction defect or insurance claims to the buyer at closing. Whether this constitutes champerty depends on whether the buyer has a legitimate, pre-existing interest in the property.
Related Terms
- Civil Complaint — The lawsuit document that a champertous party would improperly fund
- Damages — The financial award the champertous party seeks to share
- Contract — The agreement funding the lawsuit, which may be void as champertous
Barnes Walker Litigation Ethics
Barnes Walker's civil litigators navigate the complex intersection of champerty, litigation funding, and Florida Bar ethics rules, ensuring our clients' funding arrangements and claim assignments are structured to withstand judicial scrutiny and avoid dismissal on champerty grounds. Request a legal inquiry for assistance.
Reviewed by the attorneys at Barnes Walker, Goethe, Shea & Robinson, PLLC