Champerty and Maintenance Status by State: A Practical Map

Which states have abolished champerty as a defense to litigation funding, which retain it in limited form, and what that means in practice.

Is litigation funding still vulnerable to a champerty defense? In most states, no — either because the common-law doctrine has been abolished or narrowed by statute or judicial decision, or because courts have declined to apply it to modern non-recourse funding arrangements — but a small number of states retain meaningful champerty or maintenance limits that funders and counsel need to account for when structuring an agreement tied to litigation in that state.

New York illustrates how a state can retain the doctrine on the books while substantially limiting its practical reach. New York Judiciary Law § 489 historically restricted purchasing a claim with the intent to sue on it, but a 2004 amendment created a safe harbor exempting the purchase of debt instruments, including claims, with an aggregate purchase price of at least $500,000 from the statute's reach. That amendment is widely credited with enabling the growth of sovereign debt litigation and larger commercial claim transactions in New York, since most institutional-scale litigation funding transactions exceed the $500,000 threshold and fall outside the statute's prohibition entirely. Smaller transactions below that threshold, and jurisdictions without an equivalent safe harbor, require more careful analysis of how the traditional doctrine applies.

Ohio represents the opposite trajectory: a state where a court decision expanded champerty's reach before the legislature narrowed it back. In Rancman v. Interim Settlement Funding Corp., 99 Ohio St. 3d 121, 2003-Ohio-2721, the Ohio Supreme Court held that a non-recourse advance secured solely by an interest in a pending lawsuit, structured with a return the court found excessive, constituted champerty and maintenance and was void under Ohio law. The Ohio legislature subsequently enacted Ohio Rev. Code § 1349.55, establishing a statutory framework for consumer legal funding agreements intended to operate consistently with Rancman's underlying public policy while giving the industry defined, compliant terms to operate within, rather than leaving the question to case-by-case common-law application.

Most other states fall between these two examples: either the state has judicially abolished champerty as applied to litigation funding, has never recognized a champerty defense with the force New York or Ohio's history illustrates, or has addressed funding through disclosure and licensing statutes — as discussed in our companion piece on state statutory funding regimes — that operate independently of the older common-law doctrine altogether. As a practical matter, the trend line across the past two decades has moved consistently toward statutory regulation and disclosure requirements as the primary tool states use to govern litigation funding, with champerty functioning more as a historical backdrop than an active defense in the large majority of jurisdictions.

Because champerty's status is genuinely state-specific and continues to evolve through both legislation and case law, counsel structuring a funding agreement for litigation in an unfamiliar state should confirm the current status of the doctrine, and of any applicable statutory framework, in that specific jurisdiction rather than relying on a general national assumption in either direction.

The historical policy concerns underlying champerty — preventing officious intermeddling in disputes a stranger has no legitimate interest in, and guarding against a wealthy outside party using litigation ownership to oppress a weaker one — map imperfectly onto modern institutional litigation funding, which is precisely why courts and legislatures addressing the question directly, rather than through inherited common-law doctrine alone, have tended to focus on more targeted concerns: adequate disclosure, reasonable pricing, and preserving the client's and attorney's control over the litigation itself. This shift in framing, from a categorical prohibition to a regulated-conduct model, is the throughline connecting states as different in their specific approach as New York, Ohio, and the growing group of states with dedicated funding-disclosure statutes.

A practical consequence of this state-by-state variation is that the same funding transaction can be entirely uncontroversial if the underlying claim sits in one state and legally fraught if the same transaction were structured around a claim in another. Funders and counsel structuring a multi-jurisdictional portfolio — where the specific claims within it arise across several different states — should confirm the champerty and maintenance status, and any applicable statutory framework, separately for each state represented in the portfolio, rather than applying a single blanket assumption about a doctrine whose practical force varies as much as it does across the states discussed here.

Confirming a state's current champerty posture is not a one-time exercise a fund can complete at formation and rely on indefinitely, since the doctrine continues to move through both legislatures and courts in ways that can change the answer for a specific state within a relatively short window. A practical diligence step before financing a claim in an unfamiliar state is checking not just reported appellate decisions but pending legislation, since several states have active bills addressing litigation funding disclosure or licensing that could reshape how a champerty analysis interacts with a newer statutory framework once enacted, in the way Ohio's statute now interacts with the older Rancman line of cases.

Funders structuring a facility that spans claims in multiple states typically address this variation through the agreement's own governing law and severability provisions rather than assuming a single choice-of-law clause resolves the question uniformly. A severability provision that allows an individual claim's funding terms to be adjusted or unwound if a specific state's law renders them unenforceable, without disturbing the remainder of the portfolio facility, is a common structural response to the reality that the same master agreement may govern claims sitting in states with meaningfully different champerty postures. This is also why portfolio-level facilities frequently include a jurisdiction-by-jurisdiction eligibility screen as part of the borrowing base mechanics discussed in our companion piece on warehouse facility covenants, rather than treating every state's claims as fungible collateral.

Sources: N.Y. Judiciary Law § 489 (as amended 2004); Rancman v. Interim Settlement Funding Corp., 99 Ohio St. 3d 121, 2003-Ohio-2721 (2003); Ohio Rev. Code § 1349.55.

Criterica Capital confirms the champerty and maintenance status, and any applicable statutory funding framework, of the specific state governing each matter before finalizing agreement terms. Counsel with questions about how a particular state's doctrine affects a proposed structure can contact our institutional team.

Discuss your matter with our institutional team.