Champerty and Maintenance: How State Doctrine Shapes Structuring

The historical doctrine behind litigation funding restrictions, and how modern funding agreements are structured around it.

Champerty and maintenance are common-law doctrines with roots that predate modern litigation finance by centuries. Maintenance historically prohibited a stranger to a lawsuit from improperly supporting one side's litigation without a legitimate interest in the outcome; champerty was a specific, aggravated form of maintenance, where the person supporting the litigation did so in exchange for a share of any resulting recovery. Both doctrines developed to prevent officious intermeddling in disputes that were not one's own and to guard against the fomenting of litigation purely for profit — concerns that predate, but clearly anticipate, the modern litigation finance industry.

How much these doctrines constrain funding today varies significantly by state, which is precisely why litigation finance cannot be structured uniformly across the country. Some states have abolished or substantially narrowed champerty and maintenance as a matter of common law or statute, treating properly structured, non-controlling funding arrangements as distinct from the historical evil the doctrines targeted. Others retain the doctrines in some form and require funders to structure carefully around them. A number of states have addressed third-party litigation funding directly through statute — establishing disclosure requirements, registration regimes, or specific safe harbors — which can supersede or clarify how the older common-law doctrines apply. The practical result is that the same funding instrument, offered on functionally similar terms, may require materially different structuring depending on which state's law governs the claim.

Across this variation, funders rely on a consistent structural response that addresses the underlying concerns the doctrines were built to guard against, regardless of a given state's specific doctrinal posture. Funding is priced and documented as a return on capital deployed against the docket or claim, not as a purchase of an ownership interest in the cause of action itself — a distinction that speaks directly to what champerty doctrine historically prohibited. Equally important, funding agreements preserve the claimant's or firm's full control over case strategy and settlement decisions, with the funder holding no authority to direct litigation — addressing the officious-intermeddling concern at the doctrine's core, independent of how strictly a particular state still enforces the historical rule.

Modern professional-responsibility regulation of attorneys provides an additional, largely independent layer of protection against the concerns champerty and maintenance doctrine historically addressed, which is part of why many jurisdictions have felt comfortable narrowing or abandoning the older common-law rule. Rules governing attorney independence, conflicts of interest, and control over litigation decisions constrain a funder's ability to influence a case regardless of what champerty doctrine specifically requires, because the attorney remains bound by professional-conduct rules that exist entirely apart from and regardless of any funding arrangement. This overlapping structure — doctrinal limits where they still apply, statutory disclosure regimes where enacted, and professional-responsibility rules binding the attorney independent of either — means a well-structured funding agreement in a modern jurisdiction is rarely relying on a single legal safeguard, but on several operating together. This is one reason properly structured, non-controlling litigation finance has gained broader acceptance even in jurisdictions that have not formally abandoned champerty doctrine: the practical protections the doctrine was meant to provide are substantially covered by regulation that did not exist when the doctrine was first developed. Funders and counsel structuring an agreement account for all of these layers together rather than treating any single one as sufficient on its own.

Because the doctrine's exact contours — or the statute that has replaced it — differ by state, responsible funders review each agreement against the specific jurisdiction where the claim sits before closing, rather than applying a generic template regardless of governing law. This typically involves coordination with local counsel familiar with that state's current treatment of third-party funding, professional-responsibility rules affecting fee arrangements, and any funding-specific disclosure statute in effect. A structure that is unremarkable in one state can require additional safeguards, disclosure, or modification in another.

Criterica Capital structures every funding agreement to the third-party funding rules of the jurisdiction where the claim sits, coordinating with local counsel on the applicable champerty, maintenance, and statutory disclosure framework rather than applying a single national template. This jurisdiction-by-jurisdiction review is repeated whenever a matter's governing law changes, such as through transfer or consolidation, rather than performed once and assumed to remain accurate. Firms and claimants with questions about how a specific state's doctrine affects a proposed funding structure can contact our institutional team.

Discuss your matter with our institutional team.