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Is it legal to involve supporters by promising them payments from legal judgements or sanctions resulting from a law suit?

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    What does "involve supporters" entail, and what do they have to do (or not do) to get paid?
    – user35069
    Commented Jan 1, 2022 at 21:45
  • Do you mean like crowdfunding the lawsuit and every person paying in X into the total fund Y will later get the portion X/Yth of any money that can be collected?
    – Trish
    Commented Jan 1, 2022 at 22:01
  • Supporters would either pay into legal expense fund or simply express support by spreading word of the case. Commented Jan 1, 2022 at 23:35
  • This seems like a reasonable idea, and it would not in my view cause the sort of problems the traditional prohibition of champerty was intended to prevent, but it seems the law in Ohio forbids this. But possibly a non-Ohio resident could raise money outside Ohio to help fund an Ohio suit. Commented Jan 2, 2022 at 22:36

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No, One cannot lawfully do this in Ohio

Historic Common Law

In English common law, granting a share of a future legal judgement was prohibited as Champerty According to the Wikipedia article just linked:

Champerty (from Old French champart) is the financial support, by a party not naturally concerned in the suit, of a plaintiff that allows them to prosecute a lawsuit on condition that, if it be brought to a successful issue, the plaintiff will repay them with a share of the proceed from the suit.{"Oxford English Dictionary". www.oed.com. Oxford University Press. Retrieved 14 January 2021.}

In Giles v Thompson{ UKHL 2, [1993] 3 All ER 321 (26 May 1993)} Lord Justice Steyn declared: "In modern idiom maintenance is the support of litigation by a stranger without just cause. Champerty is an aggravated form of maintenance. The distinguishing feature of champerty is the support of litigation by a stranger in return for a share of the proceeds."

At common law, maintenance and champerty were both crimes and torts, as was barratry (the bringing of vexatious litigation). This is generally no longer so1 as, during the nineteenth century, the development of legal ethics tended to obviate the risks to the public, particularly after the scandal of the Swynfen will case (1856–1864).2 However, the principles are relevant to modern contingent fee agreements between a lawyer and a client and to the assignment by a plaintiff of his rights in a lawsuit to someone with no connection to the case. Champertous contracts can still, depending on jurisdiction, be void for public policy or attract liability for costs.

In any common-law jurisdiction that inherited the common law of England (which includes all US states other than Louisiana) champerty will remain unlawful unless a) a specific stature has removed or altered this part of the common law, b) a general statute has done away with the common law entirely, replacing it with statutory law generally (in which case a similar prohibition may or may not be in statute), or c) an appellate court has declared that champerty is no longer unlawful in that jurisdiction.

Ohio

In Ohio a case precisely on point was Rancman v. Interim Settlement Funding Corp., 99 Ohio St.3d 121, 2003-Ohio-2721.. In that case a Ms. Rancman, who had a valid claim against an insurance company, did not wish to wait for the resolution of her case, and contracted with Interim Settlement Funding Corp. for an advance against the settlement of $6,000, in return for a promise of an amount ranging from $16,800 to $27,600, depending on how soon the case was resolved. If she lost the case, she would owe nothing according to the terms of the contract. When her insurance case settled for $100,000, she refused to pay as specified in the contract, instead offering to return the money advanced plus interest at eight percent per year. The lower courts upheld the eight percent rate as valid, The Ohio Supreme Court, however, held (at ¶19}) that:

The advances made to Rancman constituted champerty and maintenance. Consequently, the contracts requiring their repayment are void and shall not be enforced.

Apparently this left Interim Funding not even getting their principal back. Given this relatively recent holding (2003), one doubts that funding companies would be willing to advance money on future Ohio claims.

In the Rancman opinion Justice O’Connor wrote:

{¶9} It is unnecessary for the resolution of this case to determine the threshold level of risk necessary for a contingent advance to be treated as an investment rather than a loan. The advances here are void as champerty and maintenance regardless of whether they are loans or investments. {Emphasis added}
{¶10} “Maintenance” is assistance to a litigant in pursuing or defending a lawsuit provided by someone who does not have a bona fide interest in the case. “Champerty” is a form of maintenance in which a nonparty undertakes to further another’s interest in a suit in exchange for a part of the litigated matter if a favorable result ensues. 14 Ohio Jurisprudence 3d (1995), Champerty and Maintenance, Section 1.

The doctrines of champerty and maintenance were developed at common law to prevent officious intermeddlers from stirring up strife and contention by vexatious and speculative litigation which would disturb the peace of society, lead to corrupt practices, and prevent the remedial process of the law.” 14 Corpus Juris Secondum (1991), Champerty and Maintenance, Section 3.

See, also, Bluebird Partners, L.P. v. First Fid. Bank, N.A. (2000), 94 N.Y.2d 726, 709 N.Y.S.2d 865, 731 N.E.2d 581.

{¶11} The ancient practices of champerty and maintenance have been vilified in Ohio since the early years of our statehood. Key v. Vattier (1823), 1 Ohio 132, 136, 1823 WL 8. We stated in Key that maintenance “is an offense against public justice, as it keeps alive strife and contention, and perverts the remedial process of the law into an engine of oppression.” Id. at 143. We have held the assignment of rights to a lawsuit to be void as champerty. Brown v. Ginn (1902), 66 Ohio St. 316, 64 N.E. 123, paragraph two of the syllabus. We have also said

that the law of Ohio will tolerate no lien in or out of the [legal] profession, as a general rule, which will prevent litigants from compromising, or settling their controversies, or which, in its tendencies, encourages, promotes, or extends litigation. (Davy v. Fid. & Cas. Ins. Co. (1908), 78 Ohio St. 256, 268-269, 85 N.E. 504.)

{¶12} In recent years, champerty and maintenance have lain dormant in Ohio courts. Historically, champertors and maintainors were attorneys, and these practices by attorneys have been regulated by DR 5-103 of the Code of Professional Responsibility. See, e.g., Disciplinary Counsel v. Williams (1990), 51 Ohio St.3d 36, 553 N.E.2d 1082. Nonetheless, the codification of these doctrines for attorney discipline did not remove them from the common law. “[T]he doctrines of champerty and maintenance appear in numerous Ohio cases as contract defenses * * *.” Tosi v. Jones (1996), 115 Ohio App.3d 396, 400, 685 N.E.2d 580, appeal dismissed upon the application of appellant in (1997), 78 Ohio St.3d 1430, 676 N.E.2d 535.

...

{¶18} ...[A] lawsuit is not an investment vehicle. Speculating in lawsuits is prohibited by Ohio law. An intermeddler is not permitted to gorge upon the fruits of litigation

Ohio Conclusion

To be clear, noting that I found in Ohio law makes such an agreement a crime, even though it was on under ancient common law. In the Rancman case, it seems that no one was criminally prosecuted.

Such an agreement is not legal in Ohio only in the sense that the court will not enforce it. Thus no funding company who checks the law would, I expect, enter into such an agreement and risk the same fate as Interim Settlement, not even getting the money advanced back when the suit had been won by the plaintiff.

Nor is this case obscure -- a simple google search found it via the Wikipedia article, and other simple searches probably would also.

Notes

  1. Abolished by Part II of the [UK] Criminal Law Act 1967, except as regards embracery, abolished by section 17 of the Bribery Act 2010.
  2. Pue, W. W. (1990). "Moral panic at the English Bar: Paternal vs. commercial ideologies of legal practice in the 1860s". Law and Social Inquiry. 15 (1): 49–118. doi:10.1111/j.1747-4469.1990.tb00275.x
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  • Very thorough !
    – kisspuska
    Commented Jan 2, 2022 at 20:21
  • “In NAACP v. Button, laws that overburden free speech rights in the name of preventing champerty were found to be unconstitutional.” (Wikipedia referencing NAACP v. Button, 371 U.S. 415. Even the case cited here merely concluded that the agreement was not enforceable, and allowing the party expected to repay from the proceeds not to pay back, but no one was criminally charged; in fact, Section 2901.03(A) Abrogation of Common Law Offenses: “No conduct constitutes a criminal offense against the state unless it is defined as an offense in the Revised Code.”
    – kisspuska
    Commented Jan 3, 2022 at 0:39
  • Not only the recipient party should not get charged, but neither should the speculator. Then what remains is: What exactly does it mean that it is not legal? Not legal I’m the sense that it does not create a legally binding agreement. Now, if the recipient knows this, and makes the agreement concealing his or her knowledge that the contract would never be enforceable, that would likely be fraud. But so long as it is not concealed (cause they don’t know, or because the future beneficiary disclosed it) I wonder whether there could be any other legal reason why they couldn’t make this transaction
    – kisspuska
    Commented Jan 3, 2022 at 0:44
  • @kisspuska My answer never said that such an agreement was "not legal": search it. I have added an "Ohio conclusion" section to emphasize the actual legal results of the cited case. What more do you think this answer needs or could profit by? IMO the case of NAACP v. Button is not relevant to the fact pattern in the question. Commented Jan 3, 2022 at 2:47
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    Worth noting that state law varies considerably, that Ohio's position is a minority position, and that many states retain the doctrine only in personal injury cases. Also, some claims arise exclusively under federal law unlike the claim in Rancman so it is unclear if Ohio law or federal common law would apply to an assignment of those claims. I haven't researched the question to see how those issues are resolved, or if they remain open issues.
    – ohwilleke
    Commented Jan 3, 2022 at 17:16

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