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Tag: champerty

Kansas Appeals Court Says Suspended Lawyer Did Not Demonstrate an Interest to Justify Intervention – But If He Had, It Would Have Been Barred By the Public Policy Against Champerty

Kansas Appeals Court Says Suspended Lawyer Did Not Demonstrate an Interest to Justify Intervention – But If He Had, It Would Have Been Barred By the Public Policy Against Champerty

A Kansas appellate court affirmed a lower court decision to reject the motion to intervene of a suspended lawyer to intervene in a personal injury case, saying that the same Kansas public policy against champerty would have barred his interest – if he had demonstrated a sufficient interest to justify intervention.  In Massali v. Farmers Ins. Co., No. 117464 (Kan. Ct. App. Apr. 18, 2018), the Kansas appellate court summed up the case as follows: Maria E. Massali was injured…

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Illinois Court: No Full Faith and Credit for Default Judgment, and Litigation Funding Agreement Was Unenforceable on Champerty Grounds

Illinois Court: No Full Faith and Credit for Default Judgment, and Litigation Funding Agreement Was Unenforceable on Champerty Grounds

An Illinois court need not give full faith and credit to a Minnesota default judgment, and need not give effect to parts of a litigation funding agreement that was unenforceable, on champerty grounds, based on controlling Minnesota law. That was the ruling of an Illinois appellate court, in Prospect Funding Holdings v. Saulter, No. 1-17-1277, 2018 Ill. App. LEXIS 126 (Ill. App. Ct. Mar. 13, 2018), which involved claims by a litigation funding company against an attorney for a wrongful…

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Finding Violation of New York’s Champerty Laws, Federal Court Dismisses Fair Debt Collection Practices Act Lawsuit

Finding Violation of New York’s Champerty Laws, Federal Court Dismisses Fair Debt Collection Practices Act Lawsuit

Agreements among a credit repair organization, a law firm, and a New York woman were unenforceable or otherwise ran afoul of the law, a federal court ruled this week.  The reasons?  The credit repair organizations agreement with the woman violated a federal statute, and an agreement with the law firm violated New York’s champerty laws and other rules, the court said. Judge Robert W. Sweet, of the U.S. District Court for the Southern District of New York, issued the July 17…

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A Primer on Champerty and Lawsuit Funding – and Impact on Insurers – Is Part of Report On U.S. Chamber’s Support for Federal Rule Change

A Primer on Champerty and Lawsuit Funding – and Impact on Insurers – Is Part of Report On U.S. Chamber’s Support for Federal Rule Change

What’s champerty?  How does it relate to litigation funding? And why should it matter to the insurance industry? These are a few questions addressed this month in a short but pithy piece in the National Law Review, “U.S. Chamber Seeks New Federal Rule Requiring Disclosure Of Third-Party Litigation Funding Arrangements” (available here). As for the answers: (1) champerty is “an agreement between an officious intermeddler in a lawsuit and a litigation by which the intermeddler helps pursue the litigant’s claim…

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Minnesota Court of Appeals Says State’s Strong Policy Against Champerty Means Litigation Funder Can’t Enforce Forum Selection Clause or Compel Parallel Lawsuit to Proceed in New York

Minnesota Court of Appeals Says State’s Strong Policy Against Champerty Means Litigation Funder Can’t Enforce Forum Selection Clause or Compel Parallel Lawsuit to Proceed in New York

The principles at stake in Maslowski v. Prospect Funding, 890 N.W.2d 756, 2017 Minn. App. LEXIS 26 (Minn. App. Ct. Feb. 13, 2017), can be summed up as follows: A trial court does not abuse its discretion to refuse to enforce a contractual forum-selection clause where the court’s refusal was based on protecting Minnesota’s local interest against champerty; and A trial court does not abuse its discretion by issuing an anti-suit injunction enjoining a litigation funding company from prosecuting a lawsuit…

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Champerty Still Valid Defense in Kentucky, So Litigation Funding Agreements Are Void, Says Court

Champerty Still Valid Defense in Kentucky, So Litigation Funding Agreements Are Void, Says Court

A series of litigation funding agreements were champertous and therefore void under Kentucky law, a federal court has ruled. In Boling v. Prospect Funding Holdings, Civil Action No. 1:14-CV-0008-1-00081-GNS-HBB, 2017 U.S. Dist. LEXIS 48098 (W.D. Ky. Mar. 30, 2017), the federal district court reviewed the claims of an individual who had entered into a series of litigation funding agreements and later challenged the agreements, arguing that they were unenforceable due to Kentucky’s public policy against champerty and prohibition against usury….

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Litigation Funding Arrangement Gave Company Too Much Control, Violated North Carolina’s Public Policy Against Champerty, Says Court

Litigation Funding Arrangement Gave Company Too Much Control, Violated North Carolina’s Public Policy Against Champerty, Says Court

A federal court judge last week refused to approve a litigation financing arrangement because it was champertous. The court in In Re DesignLine Corp., Case No. 13-31943/Case No. 13-91944, 2017 Bankr. LEXIS 182 (Bankr. W.D.N.C. Jan. 20, 2017), said that a bankruptcy trustee’s arrangement with a litigation funding company violated North Carolina’s public policy against champerty because of the control that the funding company had over the litigation. The case involved a litigation trust that sued former officers and directors…

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New York’s Highest Court: Champerty Bars Attempted Acquisition of Lawsuit

New York’s Highest Court: Champerty Bars Attempted Acquisition of Lawsuit

New York’s highest court declined to reinstate breach-of-contract and fraud claims against an asset manager accused of making bad mortgage-based investments, finding that the suit represented a violation of the state’s champerty doctrine. So reported the New York Law Journal, describing the ruling this week by the New York Court of Appeals in Justinian Capital SPC v. West LB AG, No. 155, 2016 N.Y. LEXIS 3419 (N.Y. Oct. 27, 2016).  As the Law Journal explained, “Champerty prohibits the buying of…

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Applying Champerty Principles in Litigation Funding Dispute, Pennsylvania Court Rules that Agreement Is Invalid

Applying Champerty Principles in Litigation Funding Dispute, Pennsylvania Court Rules that Agreement Is Invalid

If investors provide monies to fund litigation and were to be paid out of the “principal, interest, and incentive” out of the proceeds of the litigation fund, could payment to those investors be enforced via an attorneys’ “charging lien” that entitles an attorney to a security interest in litigation proceeds relating to the attorney’s legal work? No, as enforcement of such an agreement would be contrary to the public policy as reflected by the principles of champerty, according to a…

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ABA Journal Describes Growing Litigation Financing Business That Has Faced ‘A Few Setbacks’

ABA Journal Describes Growing Litigation Financing Business That Has Faced ‘A Few Setbacks’

The American Bar Association’s ABA Journal today published an article about how litigation financing business is growing, while mentioning that the business has “faced a few setbacks.” The article begins by describing how “[l]awyers have used a lot of bad words to describe litigation funding over the years — words such as champerty and maintenance” and other descriptions that “were created hundreds of years ago to describe third parties who finance litigation for personal gain.”  Now, says the ABA Journal,…

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