The Minnesota Supreme Court officially abolished the common law doctrine of champerty. The court ultimately chose to enforce a litigation funding agreement. The finding for the Minnesota case of Maslowski v. Prospect Funding Partners LLC, et al., yielded a significant triumph for the litigation finance sector.
The roots of champerty date back to the Middle Ages in England. Champerty was established to prevent third-parties from funding legal claims in return for a portion of the returns. At that time in history, seeking a claim was viewed as an evil to be avoided. Much like everything else, over the past few centuries, this sentiment has evolved. Today, asserting a claim is viewed as a potentially valuable means for a claimant to be made whole again, not an evil.
Over the past three decades, there has been a notable global shift in the litigation finance industry. Abroad, Australia and England have gotten rid of their previous champerty laws. In the United States, champerty laws have not been done away with at the federal level. Instead, some states still apply champerty in the context of litigation financing, while others no longer recognize it.
The Minnesota Supreme Court’s recent decision joins it with the slew of states that do not acknowledge champerty. Minnesota’s Supreme Court held that because of the changes that the legal field and society has experienced, the “ancient prohibition” against champerty was no longer needed. Furthermore, the court emphasized the potential benefits of litigation financing. Third-party funding could prospectively increase access to justice for individuals and organizations alike. Minnesota’s recognition of the legitimacy and value of the litigation financing sector serves as a win and hopeful outlook for the industry’s future.
Topics: litigation, litigation finance, third-party funding, champerty, Minnesota
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