Champerty

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An agreement between the party bringing action in a lawsuit (the claimant) and his legal representative (usually a solicitor) that the fees paid will depend on the amount of money recovered in the action. Specifically, the legal representative agrees to finance and carry the lawsuit in return for a percentage of the recovery (the money won by the claimant and paid by the defendant). Champerty has long been unlawful at common law on the grounds that it encourages litigation and is in violation of the 'indemnity principle'. However, in recent years there have been tentative moves to establish the use of conditional fee arrangements, which some believe borders on champerty. The advantage that this arrangement offers in terms of reducing the cost of litigation, thus making it more affordable to the general public, is viewed by its proponents as outweighing the disadvantage of (possibly) encouraging a greater amount of total litigation. Defenders of the conditional fee arrangement also argue that it is not quite the same as barratry, which involves active encouragement of lawsuits.

See conditional fee, indemnity principle, barratry.





UK LAW