Financing Plaintiffs’ Lawsuits: An Increasingly Popular (and Legal) Business

In the late eighties and early nineties there were a few publicized cases in which the plaintiffs invited investors to finance their litigation in exchange for a share of the awards if the plaintiffs won. This kind of arrangement provides access to the justice system which might otherwise be denied impecunious plaintiffs with meritorious claims. The problem with this kind of arrangement is that it is champerty, which is prohibited in most states. This Article discusses Massachusetts’ recent rejection of the champerty prohibition, the expansion of exceptions to the prohibition in this country and others, and the emergence of firms whose business is investing in litigation. The Article concludes that any potential evils associated with champerty are addressed in a variety of other laws and, therefore, champertous agreements should be enforceable.