Litigation Finance and the Civil Rights Tradition
Critics of third-party litigation funding often cite an ancient legal principle to support their contention that such funding should be prohibited. This principle has a medieval name – champerty – and has often been used to stop plaintiffs from getting help from third parties. But more than fifty years ago, the Supreme Court held that this principle cannot be used to stop serious efforts to achieve justice.
In the early 1960s, Virginia had enacted a statute that prohibited the “improper” solicitation of legal or professional business. The statute was drawn broadly enough so that it was unlawful for civil rights groups, such as the National Association for the Advancement of Colored People (NAACP) to help plaintiffs who sought to bring lawsuits fighting various forms of racial segregation.
The NAACP sued, arguing that this statute was an unconstitutional infringement on political action. Virginia responded by arguing that the common law had long supported prohibitions on any attempt to stir up or encourage parties to file or continue litigation, regardless of the purpose of that litigation. According to the state’s lawyers, the statute was within the well-established tradition of banning champerty.
The Supreme Court agreed with the NAACP. In his majority opinion, Justice William Brennan pointed out that “association for litigation may be the most effective form of political association” for minority groups and others who facing various forms of government or social oppression. And he ruled that “a State may not, under the guise of prohibiting professional misconduct, ignore constitutional rights.” Thus, speaking for the Court, he concluded that “[w]e hold that the activities of the NAACP, its affiliates and legal staff shown on this record are modes of expression and association protected by the First and Fourteenth Amendments which Virginia may not prohibit, under its power to regulate the legal profession.”
Of course, political action and the fight for justice can take many forms in addition to the struggle to ban racial segregation. Many plaintiffs have been the victims of unfair social or economic arrangements, and they can find justice only by suing. When litigation financing promotes justice in this way, it comes within a legal tradition whose validity has been confirmed by the United States Supreme Court.
Topics: litigation finance, civil rights, third-party funding, litigation costs, legal costs
Works Cited:
National Ass’n for the Advancement of Colored People v. Button, 371 U.S. 415 (1963).
