Friday, February 21, 2014
Is investment in litigation (champerty) morally legitimate or legal?
Champerty, the external investment in lawsuits, has long been illegal, at least in common law, but it seems that a whole new industry has built up in putting up money for both plaintiffs and defendants, according to a story in the Wall Street Journal Friday by Gerald Skoning, p. A15, here.
Companies can argue that such investors can help deserving plaintiffs or defendants, particularly to go to trial.
The article reports a particularly disturbing anecdote where an investor helped a Texas security company sue McAfee over a patent. It would sound plausible that champerty could feed patent trolling, although it’s not evident whether that’s the case here.
The Federalist has a forum, “The New Age of Litigation Financing” on YouTube.
All of this leads back to “conflict of interest”, a topic I have paid a lot of heed to.