Champerty and Maintenance: The Law Behind Litigation Funding
Two old legal doctrines explain why litigation funding was once forbidden — and why it is lawful today. Here is what they mean, in plain English.
What is maintenance?
Maintenance is the giving of assistance or encouragement to one party in litigation by a person who has no legitimate concern in it and no lawful justification for becoming involved. Historically, English law treated this as a threat to the administration of justice: the fear was that outsiders would stir up or prolong disputes for their own ends, or use their resources to oppress a weaker opponent.
Not all outside support is maintenance. A person with a genuine and legitimate interest in the outcome — a shareholder, an insurer, a close family member, or a body advancing access to justice — has long been allowed to support litigation.
What is champerty?
Champerty is a particular, more serious form of maintenance. It arises where the person supporting the litigation does so in return for a share of the proceeds if the case succeeds. The concern was heightened here: a supporter with a direct financial stake in the outcome might be tempted to inflate the claim, suppress evidence, or take control of the litigation for profit.
This is precisely the shape of modern third-party litigation funding, where a funder pays the costs of a case in exchange for an agreed share of any recovery. That is why the doctrine of champerty is the historical starting point for understanding whether funding is permitted.
How the law changed
The turning point in England and Wales was the Criminal Law Act 1967. Sections 13 and 14 abolished both criminal liability and tortious (civil-wrong) liability for maintenance and champerty. Crucially, however, section 14(2) preserved a separate rule: a contract may still be treated as contrary to public policy, and therefore unenforceable, where it savours of maintenance or champerty.
Over the following decades the courts moved steadily towards accepting third-party funding. Judgments recognised that funding can promote — rather than undermine — access to justice by allowing meritorious claims to be pursued that would otherwise be priced out of the courts. The key question shifted from "is there funding?" to "is this particular arrangement fair and does the funder take improper control?"
Self-regulation followed: the Association of Litigation Funders was established in 2011, with a voluntary Code of Conduct governing capital adequacy, limits on funder control, and how funding agreements are terminated.
Champerty and litigation funding today
In modern practice, a well-drafted funding agreement steers clear of the historical concerns behind champerty by keeping conduct of the litigation with the claimant and their solicitors. The funder is entitled to information and, in some structures, consultation on major decisions — but strategy and settlement authority remain with the client. Read more about the terms in our guide to the litigation funding agreement.
The most significant recent development was the Supreme Court's 2023 decision in PACCAR, which held that certain funding agreements were "damages-based agreements" under the Courts and Legal Services Act 1990 — an enforceability and drafting question, not a revival of champerty as a crime. Funders restructured their agreements in response, and legislation has been proposed to restore enforceability. See our note on UK litigation finance regulation for the current position.
Champerty in other jurisdictions
The doctrine travelled with English common law, so it still shapes the rules on funding around the world — but very unevenly. Australia has largely embraced litigation funding. Singapore and Hong Kong have relaxed the old prohibitions for international arbitration and certain insolvency matters. In the United States the position turns on state law: some states have abolished or narrowed champerty, while others continue to restrict funding arrangements.
For cross-border and international arbitration matters, the enforceability of a funding arrangement should always be checked against the law of the relevant jurisdiction.
Considering funding for a claim?
Audley Capital is a litigation finance adviser and arranger. We help structure funding that is lawful, fair and keeps control of the case with you. Capital is at risk and no outcome is guaranteed. This page is general information, not legal advice.
