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Champerty or Championing?

24 Aug 2016

Champerty used to be the illegal act incurred by a person maintaining legal action for a share of the proceedings where the supporter has no legitimate concern, without just cause or excuse. This was illegal in order to protect the justice system from abuses.

 

The modern take on champerty is based in public policy considerations and as such the application of champerty has been lessened.

 

It used to be that conditional fee agreements (CFAs), also known as no win no fee agreements, would fall foul and be deemed immoral. This of course is no longer the case. Similarly, the courts are now much more willing to allow third party funding to allow claimants to gain access to justice that they would not have had if it were not for the third party funders.

 

There is now an interesting debate on the introduction of crowd funding to finance a claim.

 

Crowd funding is usually related to the starting up of small businesses and the development of new technologies; however in recent years, there has been an increase in litigation crowdfunding platforms.  These platforms are an alternative to private funding and third party funding.

 

Launched in May 2015, CrowdJustice is an example of such a platform.  CrowdJustice’s objective is to create “a funding platform where you can come together with your community to build support and share the costs of taking legal action for issues that affect your community”.  The platform does not assess the merits of the cases they market as they believe they are merely facilitators to access to justice.  The platform can be used to raise funds for legal fees, court fees, disbursements, adverse costs and numerous other legal fees.

 

Those that pledge to give a donation to the funding of a case will not receive any funds back unless there are exceptional circumstances including there being surplus funds.  There is therefore no benefit to those that pledge other than helping fund a case and raise awareness in relation to it.

 

CrowdJustice do not stipulate that there is a certain type of case that will be taken on however they do state that there must be:

 

  • A lawyer instructed on the matter

  • A person who is passionate about their case

  • Enough time to raise funds

  • A community or network who will aim to support the case.

 

The latter is seemingly the most important point.  Unless there are people willing to support your case, there is no way that this process will benefit a claim.

 

In Excalibur Ventures LLC v Texas Keystone Inc and Others, it was held that professional funders (who receive payments where claims are successful) are joint and severally liable for claims that they back and cost orders can be made on an indemnity basis.  As such, professional funders need to take into account the risks in backing a claim prior to doing so.

 

In the case of crowdfunding, the funders (1) do not have any input into or control over how the claim is conducted, (2) do not have any communication with the case owner, (3) do not receive anything in return for their donation, even if the claim is successful, and (4) do not have any access to the evidence nor how much is requested in damages.

 

It therefore follows that it would be highly unlikely that the court would enforce a costs order against ordinary members of the public who did not have anything to gain from the success of the claim other than promoting access to justice.

 

The court try to take a pragmatic approach to costs as without funding many claimants would be otherwise unable to bring a claim before the court. Further, where funder are not receiving anything in return for their funding it would be unjust to imply further obligations on funders.

The champions of access to justice are the everyday citizens pledging their hard-earned money to aid claims that they believe in.

 

For more information please contact Alexandra Withers.

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Tel: +44 (0)191 232 0283  ·  Email: info@srflegal.co.uk

 

Short Richardson and Forth Solicitors Limited is a private limited company registered in England and Wales under company number 10572065, authorised and regulated by the Solicitors Regulation Authority No 637150.

Short Richardson and Forth Solicitors Limited is a private limited company constituted and run in accordance with the provisions of the Companies Act 2006. The term “partner” has been used to denote individual senior solicitors employed by Short Richardson and Forth Solicitors Limited.