The inauthentic claim

Vanderbilt Law Review

Volumn 64, Issue 1, 2011, Pages 61-139

  Sebok, Anthony J ^a  

^a YESHIVA UNIVERSITY   (United States)

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EID: 79952957130     PISSN: 00422533     EISSN: None     Source Type: Journal    
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References (511)

1. Oliver Wendell Holmes, The Path of the Law, 10 HARV. L. REV. 457, 469 (1897).
2. See infra Part III.
3. This is, in effect, the argument of the United States Chamber of Commerce against the expansion of a market in lawsuits in the U.S. See U.S. CHAMBER INST. FOR LEGAL REFORM, SELLING LAWSUITS, BUYING TROUBLE: THIRD PARTY LITIGATION FUNDING IN THE UNITED STATES 4 (2009) [hereinafter SELLING LAWSUITS] (discussing that although practices like third-party litigation financing increase plaintiffs access to the courts, they also "increase the overall litigation volume, including the number of nonmeritorious cases filed, and thus effectively reduce (not increase) the level of justice in the litigation system").
4. Concerns over inauthentic claims are therefore distinguishable from concerns over fraudulent claims brought by unscrupulous attorneys in the mass litigation context.
5. See Roger Parloff, Diagnosing for Dollars, FORTUNE, June 13, 2005, at 96 (noting that the federal court silica litigation raised "great red flags of fraud").
6. See generally Lester Brickman, Disparities Between Asbestosis and Silicosis Claims Generated by Litigation Screenings and Clinical Studies, 29 CARDOZO L. REV. 513 (2007) (describing problems with litigation screenings)
7. Lester Brickman, On the Applicability of the Silica MDL Proceeding to Asbestos Litigation, 12 CONN. INS. L.J. 289 (2006) (same);
8. Lester Brickman, The Use of Litigation Screenings in Mass Torts: A Formula for Fraud?, 61 SMUL. REV. 1221 (2008) (same). The theory of the inauthentic claim parallels the equitable defense of "unclean hands."
9. See 1 DAN B. DOBBS, LAW OF REMEDIES § 2.4(2) (2d ed. 1993) (discussing how the unclean hands defense is closely related to other equitable defenses and equitable concerns over hardship, because any conduct the chancellor may consider to be unethical or improper might suffice to bar the plaintiffs claim, even if the conduct is not actually illegal). The difference is that, whereas unclean hands focuses on actions taken before a claim ripened into legal sufficiency, the theory of the inauthentic claim targets actions taken after a claim has ripened into legal sufficiency.
10. See infra Part V, which provides a quick tour of the reasons why I think consequentialist arguments against the commodification of lawsuits lack empirical support.
11. See infra Part IV.
12. Oren Bar-Gill, The Law, Economics and Psychology of Subprime Mortgage Contracts, 94 CORNELL L. REV. 1073,1126-28(2009).
13. Jeremy Adelman, Property Rules or the Rule of Property? Carol Rose on the History, Theory, and Rhetoric of Ownership, 21 LAW & SOC. INQUIRY 1041, 1041-43 (1996).
14. O. Lee Reed, What is "Property"?, 41 AM. BUS. L.J. 459, 471 n.38 (2004).
15. Felix Cohen offers the following analysis summarizing the relationship between the individual and the state regarding property rights: [T]hat is property to which the following label can be attached: To the world: Keep off X unless you have my permission, which I may grant or withhold. Signed: Private Citizen Endorsed: The state Felix S. Cohen, Dialogue on Private Property, 9 RUTGERS L. REV. 357, 374 (1954).
16. See, e.g., William Boulier, Sperm, Spleens, and Other Valuables: The Need to Recognize Property Rights in Human Body Parts, 23 HOFSTRA L. REV. 693, 713 (1995) (discussing federal and state prohibition on the sale of human organs).
17. Barclay Thomas Johnson, Restoring Civility-The Civil Asset Forfeiture Reform Act of 2000: Baby Steps Towards a More Civilized Civil Forfeiture System, 35 IND. L. REV. 1045, 1048-49 (2002).
18. This is, in effect, the argument of the United States Chamber of Commerce against the expansion of a market in lawsuits in the U.S. See U.S. CHAMBER INST. FOR LEGAL REFORM, SELLING LAWSUITS, BUYING TROUBLE: THIRD PARTY LITIGATION FUNDING IN THE UNITED STATES 4 (2009) [hereinafter SELLING LAWSUITS] (discussing that although practices like third-party litigation financing increase plaintiffs access to the courts, they also "increase the overall litigation volume, including the number of nonmeritorious cases filed, and thus effectively reduce (not increase) the level of justice in the litigation system").
19. Robert W. McGee, Essay: Some Thoughts on the Relationship Between Property Rights and Immigration Policy, 42 CLEV. ST. L. REV. 495, 506 (1994).
20. Jeremy A. Blumenthal, "To Be Human": A Psychological Perspective on Property Law, 83 TUL. L. REV. 609, 610-21, 633-35 (2009);
21. Alan M. White, The Case for Banning Subprime Mortgages, 77 U. ClN. L. REV. 617, 642-44 (2008).
22. Michelle Bourianoff Bray, Personalizing Personalty: Toward a Property Right in Human Bodies, 69 TEX. L. REV. 209, 212-20, 239-43 (1990).
23. Robert F. Schwartz, Risk Distribution in the Capital Markets: Credit Default Swaps, Insurance and a Theory of Demarcation, 12 FORDHAM J. CORP. & FIN. L. 167, 181-200 (2007).
24. John A.E. Pottow, Private Liability for Reckless Consumer Lending, 2007 U. ILL. L. REV. 405, 446-51.
25. Kimberly M. Watt, Eminent Domain, Regulatory Takings, and Legislative Responses in the Post-Kelo Northwest, 43 IDAHO L. REV. 539, 558-72 (2007).
26. Diane Hellwig, Exposing the Loansharks in Sheep's Clothing: Why Re-regulating the Consumer Credit Market Makes Economic Sense, 80 NOTRE DAME L. REV. 1567, 1574-80, 1600-10 (2005).
27. This is not a new observation. See Walter Wheeler Cook, The Alienability of Choses in Action, 29 HARV. L. REV. 816, 816-21 (1916),
28. Max Radin, Maintenance by Champerty, 24 CAL. L. REV. 48, 71-72 (1936), for a criticism of restrictions on assignment and maintenance by the Legal Realists in the early twentieth century.
29. See Wallis v. Duke of Portland, (1797) 30 Eng. Rep. 1123 (Ch.) 1128; 3 Ves. Jun. 494, 502. This expression will be discussed in more detail infra Section III.B.4.
30. See infra Section IV.B.
31. MNC Credit Corp. v. Sickles, 497 S.E.2d 331, 332 (Va. 1998).
32. Id. at 333-34.1 briefly address the argument that the assignment of tort suits between clients and their attorneys are especially dangerous below. See infra text accompanying note 29. This argument uses the attorney-client relationship as a device to limit the client's rights after that relationship has been allegedly violated by the attorney. For this reason, many courts have rejected the position adopted by the Virginia Supreme Court. See infra note 103.
33. Id. at 339-34 (quoting Goodley v. Wank & Wank, Inc., 133 Cal. Rptr. 83, 87 (Ct. App. 1976)).
34. The degree to which investors can choose relatively stronger cases depends, in part, on their willingness to invest early in search costs. See STEVEN GARBER, RAND INST. FOR CIVIL JUSTICE, ALTERNATIVE LITIGATION FINANCING IN THE UNITED STATES: ISSUES, KNOWNS, AND UNKNOWNS 24 (2010) (discussing how due diligence processes will reduce costs associated with adverse selection and moral hazard).
35. N.H. Ins. Co. v. McCann, 707 N.E.2d 332, 337 (Mass. 1999);
36. Kevin Pennell , Note, On the Assignment of Legal Malpractice Claims: A Contractual Solution to a Contractual Problem, 82 TEX. L. REV. 481, 494, 496 (2003).
37. BLACK'S LAW DICTIONARY 262 (9th ed. 2009).
38. MNC Credit Corp., 497 S.E.2d at 333.
39. Furthermore, although the party in interest may be a "stranger, " the claim is not that of a stranger's. The claim is grounded in the injury suffered by the person with whom the defendant had the original relationship that gave rise to the claim for redress. So the lawsuit does not require the defendant to encounter anything alien or strange.
40. The portion of social resources dedicated to the resolution of legal claims can vary tremendously even among liberal democracies, and are the result (in part) of collective decisions about judicial resources, legal aid, and indirect methods of funding civil litigation (e.g., the contingency fee or legal insurance).
41. See Erhard Blankenburg, Civil Litigation Rates as Indicators for Legal Culture, in COMPARING LEGAL CULTURES, 41 (David Nelken ed., Dartmouth 1996);
42. Erhard Blankenburg, The Infrastructure for Avoiding Civil Litigation: Comparing Cultures of Legal Behavior in the Netherlands and West Germany, 28 LAW & SOCY REV. 789 (1994) (discussing how the absence or presence of institutions at the pretrial stage filtering disputes explains the difference in litigation frequency between the Netherlands and West Germany);
43. Erhard Blankenburg, Studying the Frequency of Civil Litigation in Germany, 9 LAW & Soc. Y REV. 307, 310-18 (1975) (exploring the potential ecological, economic, and social factors influencing the difference in litigation rates between urban and rural districts in Western Germany). Of course, at some point a society may decide that adversarial legal methods for evaluating claims are simply not worth the cost, and move to various forms of social insurance or strict liability.
44. See Guido Calabresi & Jon T. Hirschoff, Toward a Test for Strict Liability in Torts, 81 YALE L.J. 1055, 1084 (1972) (noting that the strict liability approach is more likely than either the classical negligence calculus and its mirror image to accomplish "a minimization of the sum of accident costs and of accident avoidance costs")
45. Holmes, supra note 1.
46. See infra Section IV.B. 39
47. See infra Section IV.B. 39
48. See, e.g., Julia H. McLaughlin, Litigation Funding: Charting a Legal and Ethical Course, 31 VT. L. REV. 615 (2007) (discussing the "potentially dilatory" impact upon settlements that litigation loan agreements have by forcing litigation and the potential victimization of litigants by third parties with superior bargaining power when entering into such agreements);
49. Paul H. Rubin, Third Party Financing of Litigation (Third Party Financing of Litigation Roundtable, Searle Ctr., Nw. Univ. Law Sch. Sept. 24-25, 2009), available at http://www.law.northwestern.edu/jep/symposia/JEP-CJ-2009-Rubin.pdf (discussing the external costs of allowing sale of legal claims including increased litigation costs and inefficient substantive law).
50. See GARBER, supra note 26, at 45 ("It is also wise to be skeptical of one-size-fits-all policy responses ⋯ [t]o different types of [markets in lawsuits] ⋯. It seems implausible that widely applicable policies will be widely effective in promoting social objectives.").
51. My arguments do nothing more than establish the need for careful policy-based research to draw boundaries and rules for a market in lawsuits. One recent publication that takes up this challenge is Maya Steinitz, Whose Claim Is This Anyway? Third Party Litigation Funding, 95 MINN. L. REV. (forthcoming 2011), available at http://papers.ssrn.com/sol3/papers.cfm?abstract-id=1586053.
52. EDMOND H. BODKIN, THE LAW OF MAINTENANCE AND CHAMPERTY 6-7 (1935) ("Inseparably bound up with the historical development of the law of maintenance, although totally distinct from that law in origin, is the doctrine of the non-assignability of choses in action.")
53. Id. at 7-8 ("(M]aintenance was in fact assigned by the Courts as the reason for the non-assignability of choses in action.")
54. 6 AM. JUR. 2D Assignments § 1 (2010).
55. Webb v. Pillsbury, 144 P.2d 1, 3 (Cal. 1943) (quoting 3 CAL. JUR. Assignments § 5 (1921)). In addition, most states will not permit the assignment of breach of contract claims that are "purely personal in nature," such as promises of marriage. 6 AM. JUR. 2D Assignments § 52 (2010).
56. BLACK'S LAW DICTIONARY 1039 (9th ed. 2009). Barratry is also a species of maintenance: it is the practice of frequently exciting or stirring up suits in others. In other words, someone who engages in maintenance or champerty once has not committed barratry, but may nonetheless have violated the prohibition on champerty or maintenance.
57. Id. at 262.
58. " '[P]ut simply, maintenance is helping another prosecute a suit; champerty is maintaining a suit in return for a financial interest in the outcome; and barratry is a continuing practice of maintenance or champerty.' " Osprey, Inc. v. Cabana Ltd. Fship, 532 S.E.2d 269, 273 (S.C. 2000) (quoting In re Primus, 436 U.S. 412, 424 n.15 (1978)).
59. 798 A.2d 901 (R.I. 2002).
60. d. at 904.
61. Id. at 906. Note that the distinction between maintenance and champerty did not turn on the law firm's motive in helping to fund the case brought by the third party (which was self-interested) but on the absence of an agreement between the third party and the law firm to share in the proceeds from the suit brought by the third party and paid for by the law firm.
62. 167 N.E. 437, 439 (N.Y. 1929).
63. Gilman involved maintenance by the party's own lawyer, which may have made it especially obnoxious to Cardozo, although today such an arrangement-the contingency fee-is the one form of maintenance that is universally accepted in every part of the United States. In fact, the first efforts to loosen the limitations on champerty came out of the struggle to introduce the contingency fee.
64. See James E. Moliterno, Broad Prohibition, Thin Rationale: The "Acquisition of an Interest and Financial Assistance in Litigation" Rules, 16 GEO. J. LEGAL ETHICS 223, 229 (2003) (discussing how the contingent fee, "a particular form of 'maintenance by champerty,' " arose in the United States);
65. Richard W. Painter, Litigating on a Contingency: A Monopoly of Champions or a Market for Champerty?, 71 CHI.-KENT L. REV. 625, 639-40 (1995) (discussing how contingent fees were eventually excepted from the doctrine of champerty).
66. See, e.g., Brown v. Bigne, 28 P. 11 (Or. 1891).
67. See Osuna v. Albertson, 184 Cal. Rptr. 338, 345 (Ct. App. 1982) (discussing how "the tendency of modern jurisprudence strongly favors the assignability and the survivability of things in action");
68. McKenna v. Oliver, 159 P.3d 697, 699 (Colo. App. 2006) (discussing how Colorado law generally favors the assignability of claims, with the exception being causes of action for invasion of privacy);
69. Conrad Bros. v. John Deere Ins. Co., 640 N.W.2d 231, 236 (Iowa 2001) C[T]he l"w now generally favors the assignability of choses in action, and courts have permitted the assignment of insurance policies under statutes providing for the assignment of contracts in exchange for a money payment.");
70. Lemley v. Pizzica, 36 Pa. D. & C.2d 327, 330 (Ct. Com. PI. 1964) (The trend of judicial decisions as to the assignability of certain causes of action is to enlarge, rather than to restrict the causes that may be assigned.");
71. Wis. Bankers Ass'n v. Mut. Sav. & Loan Ass'n of Wis., 291 N.W.2d 869, 876 (Wis. 1980) (discussing how the principle of assignability exemplifies a trend of increasing commercial flexibility, shared by the courts and legislature).
72. 6 AM. JUR. 2D Assignments § 49 (2010).
73. See Beech Aircraft Corp. v. Jinkins, 739 S.W.2d 19, 22 (Tex. 1987) ("[A] cause of action for damages for personal injuries may be sold or assigned [in Texas].").
74. "By statute, Mississippi eventually changed the common law and held that '[a]ny chose in action or any interest therein, after suit has been filed thereon, may be sold or assigned the same as other property, whether such cause of action or any interest therein was heretofore assignable under the laws of this state or not.' " Kaplan v. Harco Nat'l Ins. Co., 716 So. 2d 673, 676 (Miss. Ct. App. 1998) (quoting MISS. CODE ANN. § 11-7-7 (1972)).
75. Marc J. Shukaitis, A Market in Personal Injury Tort Claims, 16 J. LEGAL STUD. 329, 330 (1987).
76. JOHN C.P. GOLDBERG, ANTHONY J. SEBOK & BENJAMIN C. ZIPURSKY, TORT LAW: RESPONSIBILITIES AND REDRESS 354 (2d ed. 2008). Actio personalis worked in both directions- the death of the tortfeasor put an end to the plaintiffs suit also. As Blackstone put it, "neither the [heirs of the deceased] plaintiff have received, nor those of the defendant have committed, in their own personal capacity, any manner of wrong or injury." 3 WILLIAM BLACKSTONE, COMMENTARIES 302.
77. In 1846 the English Parliament passed Lord Campbell's Act, which created causes of action for wrongful death and allowed designated representatives of the deceased plaintiff to maintain the plaintiffs causes of action for personal injury;
78. That is, it abrogated actio personalis. The various states of the United States soon followed. GOLDBERG ET AL., supra note 55, at 357;
79. see, e.g., Nelson v. Dolan, 434 N.W.2d 25 (Neb. 1989) (describing operation of state survival statute).
80. Patrick T. Morgan, Unbundling Our Tort Rights: Assignability for Personal Injury and Wrongful Death Claims, 66 MO. L. REV. 683, 689-90 (2001).
81. Shukaitis, supra note 54, at 331
82. Harold R. Weinberg, Tort Claims as Intangible Property: An Exploration from an Assignee's Perspective, 64 KY. L.J. 49, 69 (1975);
83. see, e.g., In re Schmelzer, 350 F. Supp. 429, 431 (S.D. Ohio 1972), affd, 480 F.2d 1074, 1077 (6th Cir. 1973) ("[GJoals of the Bankruptcy Act can hardly be achieved if the trustee is permitted to take over the bankrupt's unliquidated claims for serious personal injuries.").
84. Weinberg, supra note 58, at 71.
85. See, e.g., Warner v. Flack, 278 111. 303, 309 (1917) (" [Assignability and heritability of rights are not always, though usually, coexistent. Rights may pass by descent which cannot be assigned.").
86. Farm Bureau Cas. Ins. Co. v. Wright Oil Co., 454 S.W.2d 69, 72 (Ark. 1970); Notarian v. Plantation AMC Jeep, Inc., 567 So. 2d 1034, 1035 (Fla. Dist. Ct. App. 1990);
87. Goldfarb v. Reicher, 171 A. 149, 150 (N.J. 1934);
88. Travelers Indem. Co. v. Rader, 166 S.E.2d 157, 161 (W. Va. 1969).
89. See, e.g., Standard Chartered PLC v. Price Waterhouse, 945 P.2d 317, 327 (Ariz. Ct. App. 1996);
90. Town & Country Bank of Springfield v. Country Mut. Ins. Co., 459 N.E.2d 639, 640 (111. App. Ct. 1984);
91. Joos v. Drillock, 338 N.W.2d 736, 738 (Mich. Ct. App. 1983);
92. Wagener v. McDonald, 509 N.W.2d 188,191 (Minn. Ct. App. 1993);
93. Forsthove v. Hardware Dealers Mut. Fire Ins. Co., 416 S.W.2d 208, 217 (Mo. Ct. App. 1967);
94. Can Do, Inc. v. Manier, 922 S.W.2d 865, 867 (Term. 1996).
95. Comegys v. Vasse, 26 U.S. 193, 213 (1828) (noting in dictum: "In general ⋯ mere personal torts, which die with the party, and do not survive to his personal representative, are not capable of assignment.").
96. See, e.g., McKee v. Judd, 12 N.Y. 622 (1855) (Hand, J., dissenting) (stating that if the cause of action arises from an act that "diminishes or impairs" a person's property, it passes to the assignees, and that the transfer in these cases complies with a statute and is generally in invitum).
97. See Weinberg, supra note 58, at 73 (citing a difference in the treatment of voluntary inter vivos assignments of personal tort claims and involuntary assignments to executors and administrators).
98. 3 JOHN N. POMEROY, A TREATISE ON EQUITY JURISPRUDENCE § 1275 (3d ed. 1905);
99. Weinberg, supra note 58, at 69.
100. Barnes Coal Corp. v. Retail Coal Merchs. Assoc., 128 F.2d 645, 649 (4th Cir. 1942).
101. For example: Should fraud claims be permitted to survive in the common law? Pomeroy assumed yes, but some states held otherwise, distinguishing between fraud that affected property and fraud that affected the person.
102. See, e.g., Nichols v. U.S. Fid. & Guar. Co., 155 N.W.2d 104, 108 (Wis. 1967) ("The crucial question is whether a cause of action to recover damages for fraud is one for 'damage done to the property rights or interest of another.' ") (citation omitted).
103. Weinberg, supra note 58, at 69.
104. Austin v. Michiels, 6 Haw. 595, 595 (1885) (emphasis added).
105. Cook attacked Ames (or at least his formalist disciples) for making exactly this kind of jurisprudential error: [If Ames] meant by the statement that the rule of that a chose in action is not assignable "is a principle of universal law" ⋯ that the rule is a necessary one, one that must exist in all systems of law, it seems to be erroneous⋯ . [S]ome at least some of Dean Ames's students seem to assume that he meant⋯ that there is some universally necessary and absolute principle of universal law-one that from the nature of things exists in all systems of law. Cook, supra note 20, at 818 (emphasis added). For a discussion of Langdell's common law formalism, see ANTHONY J. SEBOK, LEGAL POSITIVISM AND AMERICAN JURISPRUDENCE 78-92 (1998).
106. BODKIN, supra note 37, at 6 (citing FREDERICK POLLOCK, POLLOCK ON CONTRACTS 232 (9th ed., 1921));
107. see Weinberg, supra note 58, at 78.
108. Torkington v. Magee, [1902] 2 K.B. 427 at 430 (Eng.).
109. W.S. Holdsworth, The History of the Treatment of Choses in Action by the Common Law, 33 HARV. L. REV. 997, 997-98 (1920).
110. Id. at 1021;
111. see also Master v. Miller, (1791) 100 Eng. Rep. 1042 (KB.) 1052;
112. 4 T.R. 320, 339 (Buller, J.) ("Courts of Equity from the earliest times thought the doctrine too absurd for them to adopt, and therefore they always acted in direct contradiction to it.");
113. Lee Aitken, Before the High Court: 'Litigation Lending' after Fostit An Advance in Consumer Protection, or a License to 'Bottom-feeders'?,
114. SYDNEY L. REV. 171 (2006) (reviewing the same history).
115. Holdsworth, supra note 74, at 1021-22.
116. Judicature Act of 1873, 36 & 37 Vict. (Eng.) (contract);
117. Real Property Act, 1845, 8 & 9 Vict., c. 106, § 6 (Eng.) (land). Note that special legislation was passed as early as 1330 allowing executors and administrators to sue for trespass committed to the personal property during the decedent's lifetime.
118. See Weinberg, supra note 58, at 52.
119. Cook took issue with Ames' description of reception of English law of assignment of choses in action, and argued that early American cases reveal that Colonial courts made little or no effort to preserve the legal fictions developed so painstakingly by the English courts. Cook,
120. supra note 20, at 826.
121. Weinberg, supra note 58, at 61.
122. Id.; see also Cook, supra note 20, at 826;
123. Radin supra note 20, at 68.
124. Rice v. Stone, 83 Mass. 566, 568 (1861) (citations omitted).
125. 10 Id. at 571 ("[B]y our recent legislation actions for damage to the person survive; but we do not consider this as materially affecting the question whether such rights of action may be assigned to a stranger.").
126. Id. at 569.
127. MNC Credit Corp. v. Sickles, 497 S.E.2d 331, 333-34 (Va. 1998).
128. Id. at 569-70.
129. Austin v. Michiels, 6 Haw. 595, 595 (1885).
130. Rice, 83 Mass. at 570.
131. Id. ("The considerations which are urged to a jury in behalf of one whose reputation or domestic peace has been destroyed, whose feelings have been outraged, or who has suffered bodily pain and danger, are of a nature so strictly personal, that an assignee cannot urge them with any force."). Arguably, one might view this as a primitive corrective justice argument for prohibiting the assignment of certain tort claims. That is, one might argue that the court in Austin was merely noting that, while there is a free-standing duty to repair a violation of a contract or an invasion of property, a tort merely gave to the victim a right to demand repair;
132. it did not create a duty to repair on the part of the defendant.
133. See Benjamin C. Zipursky, Civil Recourse, Not Corrective Justice, 91 GEO. L.J. 695, 720 (2003) ("Under our system, a defendant's tortious injury to another does not give rise to a duty of repair ⋯. The defendant does not ordinarily have a freestanding legal obligation to pay independent of any action against her."). Even if corrective justice theory provides an argument against the commodification of lawsuits- a view I criticize in Section IV.B.-I still cannot see the reason for claiming, as the court does here, that the duty to repair in contract and property preexists the claim by the right-holder yet it does not in the case of tort.
134. U.C.C. § 9-104(k) (1972).
135. U.C.C. § 9-102(a)(13)(B)(ii) (2000).
136. Achrem v. Expressway Plaza Ltd. Fship, 917 P.2d 447, 448-49 (Nev. 1996) (emphasis omitted) (citation omitted).
137. See, e.g., Costanzo v. Costanzo, 590 A.2d 268, 271 (N.J. Super. Ct. Law Div. 1991) ("Any 'specific thing,' debt or chose in action may be the subject of an assignment. Obviously, that which is not in existence or cannot be identified cannot be assigned.") (citation omitted);
138. Stathos v. Murphy, 276 N.Y.S.2d 727, 731 (App. Div. 1966) (noting that since personal injury torts are non-assignable, "some courts, in order to save the assignment [of proceeds] ⋯ hold that the assignment does not take effect until the judgment is recovered or the money is at hand").
139. N.Y. GEN. OBLIG. LAW § 13-101 (Consol. 2001);
140. see Grossman v. Schlosser, 244 N.Y.S.2d 749, 750 (App. Div. 1963) ("[A] person cannot transfer his cause of action but may transfer its potential proceeds, thereby allowing him to do by indirection what the common law and the statute expressly forbid.").
141. See, e.g., Karp v. Speizer, 647 P.2d 1197, 1198 (Ariz. Ct. App. 1982) ("[A]bsent a statute to the contrary a cause of action for personal injuries is not assignable.");
142. Town & Country Bank of Springfield v. Country Mut. Ins. Co., 459 N.E.2d 639, 640 (111. App. Ct. 1984) ('Illinois law has established that a cause of action for personal injuries may survive by virtue of the Survival Act, but it is nevertheless not assignable, on public policy grounds.").
143. See, e.g., Ala. Farm Bureau Mut. Cas. Ins. Co. v Anderson, 263 So. 2d 149, 154 (Ala. Civ. App. 1972) ("[A] subrogation clause limited only to a portion of the proceeds of a personal injury claim sufficient to reimburse the insurance carrier for the indemnity paid its insured under a medical coverage provision, does not constitute an assignment of the cause of action of the insured against the tort-feasor. We further hold that the subrogation clause in the policy sued upon does not provide for a splitting of the cause of action.").
144. See, e.g., Berlinski v. Ovellette, 325 A.2d 239, 243 (Conn. 1973) ("Some have concluded that the policy provisions before them merely created an equitable lien against any damages the injured insured might recover.").
145. M.L. Marasinghe, An Historical Introduction to the Doctrine of Subrogation: The Early History of the Doctrine 1,10 VAL. U. L. REV. 45, 45 (1975).
146. Oklahoma, for example simply creates the exception by statute. See OKLA. STAT. tit. 12, § 2017(D) (2008) ("The assignment of claims not arising out of contract is prohibited. However, nothing in this section shall be construed to affect the law in this state as relates to the transfer of claims through subrogation.");
147. see also Quality Chiropractic, PC v. Farmers Ins. Co., 51 P.3d 1172, 1179 (N.M. Ct. App. 2002) f[W]e think there are substantive differences between subrogation agreements and contingency fee contracts, on the one hand, and assignments, on the other.").
148. See D'Angelo v. Cornell Paperboard Prods. Co., 120 N.W.2d 70 (Wis. 1963). It should be noted that the Wisconsin Supreme Court, while permitting the assignment of the personal injury claim, limited the insurer's recovery if they brought that suit to the amount that they had paid to the insured.
149. Interestingly, Arizona does, by statute, permit the complete assignment of personal injury claims to employers and workman's compensation insurers in the event of an injury to an employee.
150. See ARIZ. REV. STAT. ANN. § 23-1023 (2008);
151. see also, e.g., Allstate Ins. Co. v. Druke, 576 P.2d 489, 492 (Ariz. 1978) (noting that the distinction between assignment of proceeds and assignment of personal injury claim is "meaningless");
152. 8A JOHN ALAN APPLEMAN & JEAN APPLEMAN, INSURANCE LAW AND PRACTICE § 4903 (2005).
153. See Fifteenth RMA Partners, L.P. v. Pacific/West Commc'ns Grp., Inc., 301 F.3d 1150, 1152 (9th Cir. 2002) ("Section 9306 defined 'Proceeds'⋯ to include 'whatever is received upon the sale, exchange, collection or other disposition of collateral or proceeds.' But [section] 9104 provided that '[a] transfer in whole or in part of any claim arising out of tort' could not be granted as collateral to a secured party.").
154. Id. at 1150;
155. see also Adam Scales, Against Settlement Factoring? The Market in Tort Claims Has Arrived, 2002 Wis. L. REV. 859, 941 (2002) ("Revised Section 9-109 governs sales of 'payment intangibles,' a residual category of general intangibles in which the principal obligation is the payment of money⋯ . Comment Fifteen [of 9-109] specifically rejects the supposed identity between tort claims and their derivative payment rights: 'Note that once a claim arising in tort has been settled and reduced to a contractual obligation to pay, the right to payment becomes a payment intangible and ceases to be a claim in tort.'").
156. At law, there could be no assignment of the damages, because they were for a personal tort, and the assignment could not take effect upon the award, because that had no existence at the time. But it is otherwise in equity. Story, in his Equity Jurisprudence, in section 1040, says: "Courts of equity will support assignments, not only of choses in action, and of contingent interests and expectancies, but also of things which have no present, actual or potential existence, but rest in mere possibility." Williams v. Ingersoll, 89 N.Y. 508, 518 (1882).
157. Karp v. Speizer, 647 P.2d 1197, 1199 (Ariz. Ct. App. 1982).
158. Sprague v. Cal. Pac. Bankers & Ins., Ltd., 74 P.3d 12, 21-27 (Haw. 2003).
159. The states that prohibit assignment include: ARIZONA, Franko v. Mitchell, 762 P.2d 1345, 1353-54 n.l (Ariz. Ct. App. 1988), abrograted on other grounds by Paradigm Ins. Co. v. Langerman Law Offices, P.A., 24 P.3d 593 (Ariz. 2001);
160. Schroeder v. Hudgins, 690 P.2d 114, 118 (Ariz. Ct. App. 1984);
161. CALIFORNIA, Goodley v. Wank & Wank, Inc., 133 Cal. Rptr. 83 (Ct. App. 1976); COLORADO, Roberts v. Holland & Hart, 857 P.2d 492 (Colo. App. 1993);
162. CONNECTICUT, Contl Cas. Co. v. Pullman, 709 F. Supp. 44 (D. Conn. 1989);
163. FLORIDA, KPMG Peat Marwick v. Nat'l Union Fire Ins. Co., 765 So. 2d 36 (Fla. 2000);
164. Forgione v. Dennis Pirtle Agency, Inc., 701 So. 2d 557 (Fla. 1997);
165. ILLINOIS, Brocato v. Prairie State Farmers Ins. Ass'n, 520 N.E.2d 1200 (111. App. Ct. 1998);
166. INDIANA, Picadilly, Inc. v. Raikos, 582 N.E.2d 338 (Ind.1991);
167. KANSAS, Bank IV Wichita, Natl Ass'n v. Am, 827 P.2d 758 (Kan. 1992);
168. KENTUCKY, Coffey v. Jefferson Cnty. Bd. of Educ, 756 S.W.2d 155 (Ky. Ct. App. 1988);
169. MICHIGAN, Joos v. Drillock, 338 N.W.2d 736 (Mich. Ct. App. 1983);
170. MINNESOTA, Wagener v. McDonald, 509 N.W.2d 188 (Minn. Ct. App. 1993);
171. MISSOURI, Scarlett v. Barnes, 121 B.R. 578 (W.D. Mo. 1990);
172. NEBRASKA, Earth Sci. Labs., Inc. v. Adkins & Wondra, P.C., 246 Neb. 798, 523 N.W.2d 254 (1994);
173. NEVADA, Chaffee v. Smith, 645 P.2d 966 (Nev. 1982);
174. NEW JERSEY, Alcman Servs. Corp. v. Bullock, P.C., 925 F. Supp. 252 (D.N.J. 1996) affd, 124 F.3d 185 (3d Cir. 1997);
175. TENNESSEE, Can Do, Inc. v. Manier, 922 S.W.2d 865 (Tenn.), cert, denied, 519 U.S. 929 (1996);
176. TEXAS, Britton v. Seale, 81 F.3d 602 (5th Cir. 1996);
177. VIRGINIA, MNC Credit Corp. v. Sickels, 497 S.E.2d 331 (Va. 1998). A minority of jurisdictions allow assignment of legal malpractice claims: DISTRICT OF COLUMBIA, Richter v. Analex Corp., 940 F. Supp. 353 (D.D.C. 1996);
178. MAINE, Thurston v. Cont'l Cas. Co., 567 A.2d 922 (Me. 1989);
179. MASSACHUSETTS, N.H. Ins. Co., Inc. v. McCann, 707 N.E.2d 332 (Mass. 1999);
180. NEW YORK, Vitale v. City of New York, 583 N.Y.S.2d 445 (App. Div. 1992);
181. OREGON, Gregory v. Lovlien, 26 P.3d 180 (Or. Ct. App. 2001); PENNSYLVANIA, Hedlund Mfg. Co. v. Weiser, Stapler & Spivak, 539 A.2d 357 (Pa. 1988);
182. RHODE ISLAND, Cerberus Partners, L.P. v. Gadsby & Hannah, 728 A.2d 1057 (R.I. 1999). For a critique of the majority position, see Michael Reese, The Use of Legal Malpractice Claims as Security Under the UCC Revised Article 9, 20 REV. LTTIG. 529 (2001).
183. See Kenneth S. Reinker & David Rosenberg, Unlimited Subrogation: Improving Medical Malpractice Liability by Allowing Insurers to Take Charge, 36 J. LEGAL STUD. S261, S262-63 (2007) (proposing to change the current system to one that "allow[s] insurers to subrogate the full potential medical malpractice claims of their insureds").
184. Glenn v. Fleming, 799 P.2d 79, 91 (Kan. 1990) ("We hold that an insured's breach of contract claim for bad faith or negligent refusal to settle may be assigned."). It is not clear why the assignment of bad faith claims against insurers are treated so differently from malpractice claims, other than some jurisdictions may view them as contract claims, not tort claims.
185. Cuson v. Md. Cas. Co., 735 F. Supp. 966, 970-71 (D. Haw. 1990) (reviewing cases and holding that, since bad faith breach is a contractual claim in Hawaii, punitive damages are not "personal" and may be assigned).
186. 6 AM. JUR. 2D Assignments § 57 (2010) ("Accountant malpractice claims may be assigned.").
187. See KPMG Peat Marwick v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 765 So. 2d 36 (Fla. 2000) (allowing assignment of a claim of an accountant's professional malpractice in the preparation of an audit); First Cmty. Bank & Trust v. Kelley, Hardesty, Smith & Co., 663 N.E.2d 218, 220 (Ind. Ct. App. 1996), distinguished by INS Investigations Bureau, Inc. v. Lee, 709 N.E.2d 736, 742 (Ind. Ct. App. 1999) (same);
188. see also Forgione v. Dennis Pirtle Agency, Inc., 701 So. 2d 557 (Fla. 1997) (allowing assignment of claim by insured against insurer for negligent failure to provide auto insurance coverage to victim).
189. See generally Michael Sean Quinn, On the Assignment of Legal Malpractice Claims, 37 S. TEX. L. REV. 1203 (1996) (discussing some of the arguments against assignment considered by courts); Pennell, supra note 27, at 493-94 (same).
190. Sprague v. Cal. Pac. Bankers & Ins. Ltd., 74 P.3d 12, 22-23 (Haw. 2003).
191. TMJ Haw., Inc. v. Nippon Trust Bank, 153 P.3d 444, 455 (Haw. 2007). The claim from which the proceeds were assigned in Sprague was "for injury to the commercial credit and general reputation of a business that was allegedly forced into bankruptcy," and this was deemed a "personal tort." Sprague, 74 P.3d at 23-34 . The claim that was assigned in TMJ Hawaii, Inc., which was deemed not to be a personal tort was for "direct and quantifiable economic injuries to the estate or property" of a building. TMJ Haw., Inc., 153 P.3d at 455. It is hard to see why the torts in the two cases were treated differently, since in both cases the injuries were purely economic without any physical loss.
192. Cowan Liebowitz & Latman, P.C. v. Kaplan, 902 So. 2d 755 (Fla. 2005).
193. But see Law Office of David J. Stern, P.A. v. Sec. Nat'l Servicing Corp., 969 So. 2d 962, 968-69 (Fla. 2007) (distinguishing Kaplan as an exceptional case because it involved disclosures relied upon by third parties).
194. See Teal E. Luthy, Assigning Common Law Claims for Fraud, 65 U. CHI. L. REV. 1001, 1026-28 (1998) (listing cases and statutes that concern the assignment of fraud claims).
195. See, e.g., Jandera v. Lakefield Farmers' Union, 185 N.W. 656, 658 (Minn. 1921) ("A cause of action arising out of fraud or deceit is not a cause of action for injury to the person, but a cause of action for injury to a property right, and is assignable."); see also Luthy, supra note 116, at 1026.
196. See Morehead v. Ayers, 71 S.E. 798, 798 (Ga. 1911) ("A right of action for injuries arising from fraud cannot be assigned.");
197. Luthy, supra note 116, at 1026.
198. See Beall v. Farmers' Exch. Bank of Gallatin, 76 S.W.2d 1098, 1099 (Mo. 1934) (" The mere fact that the right to enforce a claim which is itself assignable depends upon showing fraud incidentally does not make such right of action nonassignable.' ") (citation omitted);
199. see also Luthy, supra note 116, at 1026-27.
200. Some states could simply rely on the explicit instructions from the legislature. Georgia explicitly prohibits the assignment of fraud claims by statute. GA. CODE ANN. § 44-12-24 (2010) ("A right of action for personal torts or for injuries arising from fraud to the assignor may not be assigned."); see also James v. Emmco Ins. Co., 30 S.E.2d 361, 363-64 (Ga. Ct. App. 1944) (citing the Georgia code).
201. Minnesota, for example, looked to the fact that its survival statute mentioned only personal injuries when it created the cause of action of wrongful death, meaning that all other choses in action, including fraud, could be assigned.
202. See Guggisberg v. Boettger, 166 N.W. 177, 177 (Minn. 1918) ("[A]ll other causes of action ⋯ survive the death of either party. Under this statute it is plain that a cause of action for fraud survives.").
203. John V. Farwell Co. v. Wolf, 70 N.W. 289, 291 (Wis. 1897). In 1907 Wisconsin amended its survival statute to include "damage done to the ⋯ interests of another." This was interpreted to mean any interest which, "if lost or impaired would pecuniarily [sic] diminish the estate of plaintiff," entailing that claims for fraud, malicious prosecution or even the alienation of affection could be assigned. Nichols v. U. S. Fid. & Guar. Co., 155 N.W.2d 104, 108 (Wis. 1967) (emphasis added) (quoting Howard v. Lunaburg, 213 N.W. 301, 303 (Wis. 1927)).
204. See, e.g., Nat'l Shawmut Bank of Boston v. Johnson, 58 N.E.2d 849, 851 (Mass. 1945) ("It is doubtless the law of this Commonwealth that a right to litigate a fraud perpetrated upon a person is not assignable at law or in equity, and that the prosecution by the alleged assignee of an action or suit on account of the fraud would be contrary to public policy.").
205. See, e.g., Powe v. Payne, 94 So. 587, 588 (Ala. 1922) ("fl]t appears that complainants are not entitled to immediate possession or enjoyment of any estate in the land and hence that they are not in a position to file a bill for partition.");
206. Simmons v. Klemme, 291 S.W.2d 801, 802 (Ark. 1956) ("A mere naked right to set aside a contract on the ground of fraud is not assignable.");
207. McCord v. Martin, 166 P. 1014, 1015 (Cal. Dist. Ct. App. 1917) (holding that the cause of action was assignable because it was "much more than a mere naked right of action for fraud and deceit");
208. Marshall v. Means, 12 Ga. 61, 67 (1852) ("Before such an interest can be assigned ⋯ the party assigning such right, must have some substantial possession ⋯ and not a mere naked right to maintain a suit.");
209. Mulready v. Pheeny, 148 N.E. 132. 133 (Mass. 1925) ("A mere naked right to set aside a contract on the ground of fraud is not assignable.");
210. Cornell v. Upper Mich. Land Co., 155 N.W. 99, 102 (Minn. 1915) (affirming that "an assignment of a bare right to [bring suit] for a fraud ⋯ is void as against public policy," but holding the assignment at issue valid).
211. 23 P. 858 (Nev. 1890).
212. Id. at 860.
213. Id. at 862 (emphasis added).
214. 166 P. 1014 (Cal. Dist. Ct. App. 1917).
215. Id. at 1015 (emphasis added).
216. The expressions may have first appeared in Prosser v. Edmonds, (1835) 160 Eng. Rep. 196 (KB.); 1Y. & C. Ex. 481.
217. 29 P. 624 (Cal. 1892).
218. Id. at 625-26.
219. Id. at 625 (quoting 3 JOSEPH STORY, COMMENTARIES ON EQUITY JURISPRUDENCE § 1400 (W.H. Lyon, Jr. ed., Little, Brown & Co., 14th ed. 1884)) 211 See Wikstrom v. Yolo Fliers Club, 274 P. 959, 960 (Cal. 1929) ("[T]he following demands, claims, and rights of action have been held to be assignable: ⋯ claims arising from the carrying away or conversion, of personal property, from the fraudulent misapplication of funds by the officer of a bank, from negligent or intentional injury done to personal property or upon real estate ⋯ [and] where property is obtained by deceit or fraudulent device of any sort, the cause of action is assignable, for here the injury is done in respect of the particular property which is wrongfully acquired.") (quoting 3 THOMAS ADKINS STREET, FOUNDATIONS OF LEGAL LIABILITY 86-87 (1906)).
220. Id. at 962.
221. Metro. Life Ins. Co. v. Fuller, 23 A. 193,196 (Conn. 1891).
222. Gruber v. Baker, 23 P. 858, 862 (Nev. 1890) (quoting STORY, supra note 133).
223. Rice v. Stone, 83 Mass. (1 Allen) 566, 569 (1861).
224. Gruber, 23 P. at 862 (emphasis added).
225. Prosser v. Edmonds, (1835) 160 Eng. Rep. 196 (KB.) 204.
226. 1 Y. & C. Ex. 481, 497 (emphasis added).
227. see also Poe v. Davis, 29 Ala. 676, 681 (1857) (citing Prosser, 160 Eng. Rep. at 198)).
228. Metro. Life Ins. Co., 23 A. at 196 (same); Gruber, 23 P. at 863 (same). 221 Gruber, 23 P. at 862.
229. Thus, a party sued in fraud could defeat the claim if the assignor of the fraud suit subsequently refused to cooperate in the assignee's suit even if the assignor did not repudiate the evidence that supported the assignee's claim. See, e.g., Mulready v. Pheeny, 148 N.E. 132, 133 (Mass. 1925) ("It would be contrary to the fundamental principles of equity to allow Meagher, the intervener, whose only interest in the personal wrong done to Mrs. Mulready arises from his agreement with her, to prosecute a suit which she does not believe has merit⋯.").
230. See Prosky v. Clark, 109 P. 793, 794 (Nev. 1910) (suggesting that the doctrine of maintenance is the basis for the limitation of all forms of assignment).
231. 29 Ala. 676 (1857).
232. 23 A. 193 (Conn. 1891).
233. Poe, 29 Ala. at 681-82.
234. Id. at 681.
235. Id. at 682 (quoting STORY, supra note 133).
236. The court alluded to its concerns that the assignees somehow would have an unfair advantage over the defendants in the probate suit that the assignors lacked, but it did not spell out exactly what those concerns were: But when, as is recited in the assignment before us ⋯ a protracted litigation has been carried on ⋯ and one of the contestants becoming uneasy, and willing and desirous of selling out for a small sum ($100) ⋯ the seller allowing it to proceed, being indemnified against all expense, cost and trouble; and the purchasers, (strangers) who thus interfere bringing into the cause to bear upon the result whatever of power, influence or adroitness they may command.
237. Id. at 683-84 (emphasis added).
238. Metro. Life Ins. Co., 23 A. at 196. Despite similarities with a modern class action, Fuller was neither a class action attorney nor even the functional equivalent of a class action attorney. Put simply, Fuller did not litigate the cases that were assigned to him on behalf of the "class" of assignors-for example, he owed them no fiduciary duties.
239. Id.
240. Id.
241. Id.
242. Id. ("It would manifestly be both useful and convenient to policy-holders of the plaintiff, residing in this state, who ⋯ having ⋯ just demands, the individual enforcement of which, to any person in ordinary circumstances, would be so expensive and difficult as to amount to a practical impossibility, that a more fortunate person, of experience, ability and inclination, should assist them, and wait for his compensation until the suits were determined, and be paid out of the fruits of it.").
243. Id. at 196-97 ("fW]hatever was the motive of the defendants, whether selfish or philanthropic ⋯ we can discover no rule of public policy that would be thereby violated.").
244. See Poe v. Davis, 29 Ala. 676, 681 (1857) (quoting Prosser v. Edmonds, (1835) 160 Eng. Rep. 196 (KB.) 204; 1 Y. & C. Ex. 481, 497).
245. Id. at 682 (quoting STORY, supra note 133).
246. Id.
247. See CHARLES W. WOLFRAM, MODERN LEGAL ETHICS § 8.13, at 489-90 (1986) ("The most common kinds of impermissible maintenance involve financial assistance. Champerty is simply a specialized form of maintenance in which the person assisting another's litigation becomes an interested investor because of a promise by the assisted person to repay the investor with a share of any recovery. Barratry is adjudicative cheerleading-urging others, frequently, to quarrels and suits. All were thought to lead to a corruption of justice because of their tendency to encourage unwanted and unmeritorious litigation, inflated damages, suppressed evidence, and suborned perjury. Those, of course, are the same arguments that have traditionally been made against other aids to impecunious litigants, such as free legal services and the contingent fee.") (footnotes omitted).
248. See Radin, supra note 20, at 68 (pointing out the relationship between English and American law with regard to champerty and maintenance).
249. Id.
250. These jurisdictions are: ARIZONA, Landi v. Arkules, 835 P.2d 458, 464 n.l (Ariz. Ct. App. 1992).
251. CALIFORNIA, Abbott Ford, Inc. v. Superior Court, 741 P.2d 124, 142 n.26 (Cal. 1987); COLORADO, Fastenau v. Engel, 240 P.2d 1173, 1174 (Colo. 1952).
252. CONNECTICUT, Robertson v. Town of Stonington, 750 A.2d 460, 463 (Conn. 2000); FLORIDA, Kraft v. Mason, 668 So. 2d 679, 682-83 (Ha. 1996).
253. HAWAII, TMJ Haw., Inc. v. Nippon Trust Bank, 153 P.3d 444, 449-50 (Haw. 2007); IOWA, Wright v. Meek, 3 Greene 472, 472 (Iowa 1852).
254. KANSAS, Boettcher v. Criscione, 299 P.2d 806, 809-12 (Kan. 1956); MAINE, ME. REV. STAT. ANN. tit. 9-A, §§ 12-101 to -107 (2009) (partially amending ME. REV. STAT. ANN. tit. 17-A, § 516(1) (2009)).
255. MARYLAND, Son v. Margolius, Mallios, Davis, Rider & Tomar, 709 A.2d 112, 119-20 (Md. 1998).
256. MASSACHUSETTS, Saladini v. Righellis, 687 N.E.2d 1224, 1224 (Mass. 1997).
257. MICHIGAN, Smith v. Childs, 497 N.W.2d 538, 540 (Mich. Ct. App. 1993).
258. MISSOURI, Schnabel v. Taft Broad. Co., 525 S.W.2d 819, 823 (Mo. Ct. App. 1975).
259. MONTANA, Green v. Gremaux, 945 P.2d 903, 907-08 (Mont. 1997).
260. NEW HAMPSHIRE, Adkin Plumbing & Heating Supply Co. v. Harwell, 606 A.2d 802, 803-04 (N.H. 1992).
261. NEW JERSEY, Polo v. Gotchel, 542 A.2d 947, 949 (N.J. Super. Ct. Law Div. 1987); NEW YORK, Leon v. Martinez, 638 N.E.2d 511, 512-14 (N.Y. 1994), NORTH CAROLINA, Odell v. Legal Bucks, LLC, 665 S.E.2d 767, 773-76 (N.C. Ct. App. 2008).
262. NORTH DAKOTA, Interstate Collection Agency v. Kuntz, 181 N.W.2d 234, 242 (N.D. 1970).
263. OHIO, OHIO REV. CODE ANN. § 1349.55 (West 2009) (superseding Rancman v. Interim Settlement Funding Corp., 789 N.E.2d 217, 220 (Ohio 2003)).
264. OKLAHOMA, Mitchell v. Amerada Hess Corp., 638 P.2d 441, 444-45 (Okla. 1981).
265. OREGON, Brown v. Bigne, 28 P. 11, 13 (Or. 1891).
266. SOUTH CAROLINA, Osprey, Inc. v. Cabana Ltd. Fship, 532 S.E.2d 269, 277 (S.C. 2000).
267. TENNESSEE, Record v. Ins. Co. of N. Am., 438 S.W.2d 743, 747 (Term. 1969).
268. TEXAS, Anglo-Dutch Petroleum Int'l, Inc. v. Haskell, 193 S.W.3d 87, 103-04 (Tex. App. 2006).
269. WASHINGTON, Giambattista v. Nat'l Bank of Commerce of Seattle, 586 P.2d 1180, 1186 (Wash. Ct. App. 1978).
270. WEST VIRGINIA, Currence v. Ralphsnyder, 151 S.E. 700, 700 (W. Va. 1929). This is based upon the author's survey of the current state of the law. It is consistent with a survey by Paul Bond. Paul Bond, Making Champerty Work: An Invitation to State Action, 150 U. PA. L. REV. 1297 app. at 1333-41 (2002).
271. The last state to finally permit the contingency fee was Maine. 1965 Me. Laws 333 (codified as amended at ME. REV. STAT. ANN. tit. 17-A, § 516(2) (2009)). On the other hand, the freedom of lawyers to help maintain their client's lawsuits is not limitless. In virtually all jurisdictions lawyers are prohibited from advancing funds to their clients, especially for living expenses.
272. See Michael R. Koval, Living Expenses, Litigation Expenses, and Lending Money to Clients, 7 GEO. J. LEGAL ETHICS 1117, 1126-27 (1994) (stating that courts interpret Model Code section 5-103(B) to prohibit living expenses).
273. Radin, supra note 20, at 73 ("Contingent fees of lawyers, supported by a lien on the proceeds of a suit, can scarcely be differentiated from the assignment of a cause of action, or rather part of one.").
274. According to Radin, objections to the champertous nature of the contingent fee were "ineffective" in the face of an increasing demand for legal representation as industrialization brought more and more claims for compensation against railroads and other powerful defendants. Id. at 70-71; see also Painter, supra note 48, at 639-42 (tracing the development of contingency fee exceptions in champerty law).
275. Bond, supra note 162, at 1304.
276. Not all states have taken a position on the permissibility of any form of maintenance. Nine states have judicial decisions that are ambiguous as to the current status of the common law prohibition of maintenance: ALASKA, Wichman v. Benner, 948 P.2d 484, 487 (Alaska, 1997).
277. ARKANSAS, Bennett v. NAACP, 370 S.W.2d 79, 83 (Ark. 1963).
278. IDAHO, Wolford v. Tankersley, 695 P.2d 1201, 1222 (Idaho 1984) (Bistline, J., dissenting).
279. INDIANA, Reichhart v. City of New Haven, 674 N.E.2d 27, 32 (Ind. Ct. App. 1996).
280. NEBRASKA, Hadley v. Platte Valley Cattle Co., 10 N.W.2d 249, 253 (Neb. 1943); NEW MEXICO, Rienhardt v. Kelly, 917 P.2d 963, 967 (N.M. Ct. App. 1996).
281. UTAH, Croco v. Oregon Short-Line R. Co., 54 P. 985, 987 (Utah 1898).
282. VERMONT, D'Amato v. Donatoni, 168 A. 564, 568 (Vt. 1933).
283. WYOMING, Johnson v. Sellers, 84 P.2d 744, 751 (Wyo. 1938).
284. It could be argued that a more natural dividing line would be between the states that criminalize champerty and those that do not. This is not correct for three reasons. First, it is hard to determine whether champerty is still punishable as a crime in some states, given that it may be a common law crime, albeit unenforced. E.g., R.I. GEN. LAWS § 11-1-1 (1956). Second, among those states that have statutory criminal prohibitions against certain forms of maintenance (Illinois, Maryland, Maine, Mississippi, and New York), some of those statues prohibit a very narrow range of conduct, for example, N.Y. JUD. LAW § 489 (2004), while others categorically prohibit maintenance for any reason, for example, MISS. CODE ANN. § 97-9-11 (2009). Finally, it is likely that the threat of a contract being voided under a common law of prohibition of maintenance deters maintenance as much as the threat of a criminal sanction. See Bond, supra note 162, at 1304 (pointing out that champerty's most visible impact is as a contract defense rather than in criminal statutes).
285. See Alex J. Hurder, Nonlawyer Legal Assistance and Access to Justice, 67 FORDHAM L. REV. 2241, 2248-52 (1999) (tracing the decisions of the Supreme Court that overturned state statutes and allowed the NAACP and unions to assist in representing members).
286. NAACP v. Button, 371 U.S. 415, 439 (1963) ("However valid may be Virginia's interest in regulating the traditionally illegal practices of barratry, maintenance and champerty, that interest does not justify the prohibition of the NAACP activities disclosed by this record.").
287. The fourteen jurisdictions are: ALABAMA, Wilson v. Harris 688 So. 2d 265, 270 (Ala. Civ. App. 1996).
288. DELAWARE, Street Search Partners, L.P. v. Ricon Intl, L.L.C., No. 04C-09-191-PLA, 2006 Del. Super. LEXIS 200, at z.ast;12-15 (Del. Super. Ct. May 12, 2006).
289. DISTRICT OF COLUMBIA, Design for Bus. Interiors, Inc. v. Herson's, Inc., 659 F. Supp 1103, 1107-08 (D.C. 1986).
290. GEORGIA, GA. CODE ANN. § 13-8-2 (2009).
291. ILLINOIS, 720 ILL. COMP. STAT. 5/32-12 (2009).
292. KENTUCKY, KY. REV. STAT. ANN. § 372.060 (West 2009).
293. MINNESOTA, Johnson v. Wright, 682 N.W.2d 671, 675-79 (Minn. Ct. App. 2004).
294. MISSISSIPPI, MISS. CODE ANN. § 97-9-11 (2009).
295. NEVADA, Schwartz v. Eliades, 939 P.2d 1034, 1036-37 (Nev. 1997).
296. PENNSYLVANIA, Fleetwood Area Sch. Dist. v. Berks Cnty. Bd. of Assessment, 821 A.2d 1268, 1273 (Pa. Commw. Ct. 2003).
297. RHODE ISLAND, Toste Farm Corp. v. Hadbury, Inc., 798 A.2d 901, 906 (R.I. 2002); SOUTH DAKOTA, McKellips v. Mackintosh, 475 N.W.2d 926, 928-29 (S.D. 1991).
298. VLRIGNIA, Allstate Ins. Co. v. Commonwealth, 100 S.E.2d 31 (Va. 1957).
299. WISCONSIN, In re Estate of Katze-Miller, 463 N.W.2d 853, 858 (Wis. Ct. App. 1990). All of these states have explicitly held that their common law or statutes prohibit champerty. Certainly most would permit selfless maintenance, if the question were ever presented to a court, although this is a matter of speculation, which, as I will note below, introduces a degree of uncertainty which may inhibit those inclined towards performing acts of maintenance.
300. MISS. CODE ANN. § 97-9-11 (2009). Illinois' law sweeps slightly less broadly: If a person officiously intermeddles in an action that in no way belongs to or concerns that person, by maintaining or assisting either party, with money or otherwise, to prosecute or defend the action, with a view to promote litigation, he or she is guilty of maintenance and upon conviction shall be fined and punished as in cases of common barratry. It is not maintenance for a person to maintain the action of his or her relative or servant, or a poor person out of charity. 720 ILL. COMP. STAT 5/32-12 (2009). Illinois allows selfless maintenance when the recipient of the support is either one's family or a person who is poor.
301. Oliver v. Bynum, 592 S.E.2d 707, 711 (N.C. Ct. App. 2004). Arguably, this case, like Toste Farm, 798 A.2d at 901, are cases of "regular" champerty, since it could be argued that in both cases the maintainer, who were lawyers, were using their professional knowledge or status to provide 'in-kind' services (not money) to support the litigation of a stranger (who really was once, or still was, their client) in order to secure a long-term financial advantage. I do not disagree, and this only supports my ultimate conclusion that the common law distinctions currently employed to help lawyers and judges navigate the law of maintenance, champerty, and assignment are formalistic and ought to be redrawn on the basis of policies untainted by conceptual concerns raised by the principle of the inauthentic claim.
302. Wolford v. Tankersley, 695 P.2d 1201, 1222 (Idaho 1984) (Bistline, J., dissenting).
303. See RESTATEMENT (SECOND) OF TORTS, § 674 (1977) ("One who takes an active part in the initiation, continuation or procurement of civil proceedings against another is subject to liability to the other for wrongful civil proceedings if: he acts without probable cause, and primarily for a purpose other than that of securing the proper adjudication of the claim in which the proceedings are based, and except when they are ex parte, the proceedings have terminated in favor of the person against whom they are brought."). Although section 674 is entitled "Wrongful Use of Civil Proceedings" and restricts the tort of "malicious prosecution" to improper initiation of criminal proceedings, many courts refer to both wrongful use of either the criminal or the civil process as malicious prosecution, a convention adopted by this Article.
304. See also RESTATEMENT (SECOND) OF TORTS § 682 (1977) ("One who uses a legal process, whether criminal or civil, against another primarily to accomplish a purpose for which it is not designed, is subject to liability to the other for harm caused by the abuse of process."); 1 RONALD E. MALLEN & JEFFREY M. SMITH, LEGAL MALPRACTICE § 6:10 (4th ed. 1996) (stating that malicious prosecution derived from the torts of champerty and maintenance).
305. The five elements for intentional interference with prospective economic advantage are: (1) an economic relationship between the plaintiff and some third party, with the probability of future economic benefit to the plaintiff; (2) the defendant's knowledge of the relationship; (3) intentional acts on the part of the defendant designed to disrupt the relationship; (4) actual disruption of the relationship; and (5) economic harm to the plaintiff proximately caused by the acts of the defendant.
306. Youst v. Longo, 729 P.2d 728, 733 n.6 (Cal. 1987).
307. See generally Kenneth J. Vandevelde, A History of Prima Facie Tort: The Origins of a General Theory of Intentional Tort, 19 HOFSTRAL. REV. 447 (1990) (tracing the history of prima facie torts).
308. South Dakota, following this line of argument, equates malice maintenance with malicious prosecution, although oddly, it calls this "barratry": "Barratry is the assertion of a frivolous or malicious claim or defense or the filing of any document with malice or in bad faith by a party in a civil action." S.D. CODIFIED LAWS § 20-9-6.1 (2009).
309. See Moffett v. Commerce Trust Co., 283 S.W.2d 591, 596-600 (Mo. 1955) (showing that elements of abuse of process claim and malice maintenance-defined as " 'officious intermeddling in a suit'" in order to injure another-are indistinguishable).
310. See SELLING LAWSUITS, supra note 3, at 5 ("[T]hird-party financing encourages frivolous and abusive litigation.")
311. See Bond, supra note 162 (defining and distinguishing "malice champerty" as a form of champerty in general).
312. Id. at 1301 (emphasis added).
313. "A frivolous action exists when 'the proponent can present no rational argument based on the evidence or law in support of the claim'⋯. To fall to the level of frivolousness there must be such a deficiency in fact or law that no reasonable person could expect a favorable judicial ruling." Ridley v. Lawrence Cnty. Comm'n, 619 N.W.2d 254, 259 (S.D. 2000) (citations omitted). While it is possible for a person to subjectively believe in the validity of a claim that is objectively false, it is highly unlikely. See Robert G. Bone, Modeling Frivolous Suits, 145 U. PA. L. REV. 519, 530-34 (1997) (examining the ability of a plaintiff to subjectively believe in the validity of a claim).
314. P may sue D under the tort of abuse of process even though D's suit against P was non-frivolous-that is, based on true allegations and established precedent-if P can show that D's suit was brought to achieve improper ends. This is in contrast, for example, with the tort of malicious prosecution, which requires that the proceeding be brought without probable cause. See RESTATEMENT (SECOND) OF TORTS § 682 (1977); Nathan M. Crystal, Limitations on Zealous Representation in an Adversarial System, 32 WAKE FOREST L. REV. 671, 687 (1997) (stating that malicious prosecution requires that the suit be brought without probable cause in addition to the existence of an improper purpose).
315. See, for example, Jacque v. Steenberg Homes, Inc., 563 N.W.2d 154, 154 (Wis. 1997), where the plaintiff, a landowner, sued the defendant, a builder, for cutting across his property in winter and won $1 in nominal damages and $100,000 in punitive damages.
316. This is the converse of Bone's definition of a frivolous lawsuit. Bone, supra note 181, at 533.
317. "[N]ot all unsuccessful legal arguments are frivolous." Mareno v. Rowe, 910 F.2d 1043, 1047 (2d Cir. 1990).
318. see also George L. Priest & Benjamin Klein, The Selection of Disputes for Litigation, 13 J. LEGAL STUD. 1 (1984) (examining the likelihood that litigation will ensue in terms of the expected return values of the parties). If only successful claims (from the ex post perspective) were meritorious ex ante, then half of all claims resolved at trial are, by definition, non-meritorious, which is not consistent with the convention of using "meritorious" in litigation as a synonym for "non-frivolous." See Townsend v. Holman Consulting Corp., 929 F.2d 1358, 1362 (9th Cir. 1991) (describing "frivolous" as "shorthand that this court has used to denote a filing that is both baseless and without a reasonable and competent inquiry").
319. To be sure, the historical justifications for prohibiting any form of maintenance was that third-party funding of litigation encouraged fraudulent lawsuits. The wealthy and powerful would "buy up claims, and, by means of their exalted and influential positions, overawe the courts, secure unjust and unmerited judgments, and oppress those against whom their anger might be directed." Casserleigh v. Wood (Casserleigh J), 59 P. 1024, 1026 (Colo. App. 1900) (emphasis added). Whether this historical story was true or not, American courts held judicial corruption had disappeared with the advent of modern reforms. See, e.g., Thallhimer v. Brinckerhoff, 3 Cow. 623, 645 (N.Y. 1824) ("In modern times, and since England has enjoyed a pure and firm administration of justice, these evils are little felt, and champerty and maintenance are now seldom mentioned ⋯ as producing mischief in that country.").
320. As the Massachusetts Supreme Judicial Court said in response to the argument that restrictions on champerty were necessary to control for frivolous lawsuits: There are now other devices that more effectively accomplish these ends ⋯. [Such] devices include Mass. R. Civ. P. 11, 365 Mass. 753 (1974), providing sanctions for misconduct, and G. L. c. 231, § 6F, regulating the bringing of frivolous lawsuits ⋯. To the extent that we continue to have the concerns that the doctrine of champerty was thought to address, we conclude that it is better to do so directly, rather than attempting to mold an ancient doctrine to modern circumstances.
321. Saladini v. Righellis, 687 N.E.2d 1224, 1226-27 (Mass. 1997).
322. see also Osprey, Inc. v. Cabana Ltd. P'ship, 532 S.E.2d 269, 277 (S.C. 2000) ("We are convinced that other well-developed principles of law can more effectively accomplish the goals of preventing speculation in groundless lawsuits and the filing of frivolous suits than dated notions of champerty.").
323. Andrew Hananel & David Staubitz, The Ethics of Law Loans in the Posi-Rancman Era, 17 GEO. J. LEGAL ETHICS 795, 811-12 (2004) (citing Bond, supra note 162, at 1330, stating that the goals of champerty and maintenance are more easily accomplished through other legal mechanisms).
324. To quote Justice Thomas in a slightly different, but related context: The common law consistently has sought to place limits on [negligent infliction of emotional distress] by restricting the class of plaintiffs who may recover and the types of harm for which plaintiffs may recover. This concern underlying the common-law tests has nothing to do with the potential for fraudulent claims; on the contrary, it is based upon the recognized possibility of genuine claims ⋯.
325. Conrail v. Gottshall, 512 U.S. 532, 552 (1994) (emphasis added). One may not agree with Justice Thomas' conclusion, but one has to respect his honesty: The real reason that tort reformers want to change the basic rules of civil litigation is not because they fear a flood of frivolous litigation, but because they fear a flood of genuine, well-founded lawsuits.
326. In these suits, of course, there is someone investing in the lawsuit other than the plaintiff: the plaintiffs attorney.
327. The sixteen jurisdictions are: COLORADO, Fastenau v. Engel, 240 P.2d 1173, 1174 (Colo. 1952).
328. CONNECTICUT, Robertson v. Town of Stonington, 750 A.2d 460, 463 (Conn. 2000).
329. FLORIDA, Kraft v. Mason, 668 So. 2d 679, 682-83 (Fla. 1996).
330. IOWA, Wright v. Meek, 3 Greene 472, 472 (Iowa 1852).
331. KANSAS, Boettcher v. Criscione, 299 P.2d 806, 812 (Kan. 1956).
332. MAINE, ME. REV. STAT. ANN. tit. 9A, §§ 12-101 to -107 (2009) (partially amending ME. REV. STAT. ANN. tit. 17A, § 516(1) (2009)).
333. MARYLAND, Son v. Margolius, Mallios, Davis, Rider & Tomar, 709 A.2d 112, 119-20 (Md. 1998).
334. MASSACHUSETTS, Saladini v. Righellis, 687 N.E.2d 1224, 1224 (Mass. 1997).
335. MISSOURI, Schnabel v. Taft Broad. Co., 525 S.W.2d 819, 823 (Mo. Ct. App. 1975).
336. NEW HAMPSHIRE, Adkin Plumbing & Heating Supply Co. v. Harwell, 606 A.2d 802, 803-04 (N.H. 1992).
337. NORTH CAROLINA, Odell v. Legal Bucks, LLC, 665 S.E.2d 767, 774 (N.C. Ct. App. 2008); OHIO, OHIO REV. CODE ANN. § 1349.55 (West 2009) (superseding Rancman v. Interim Settlement Funding Corp., 789 N.E.2d 217, 220 (Ohio 2003)).
338. OKLAHOMA, Mitchell v. Amerada Hess Corp., 638 P.2d 441, 444-45 (Okla. 1981).
339. OREGON, Brown v. Bigne, 28 P. 11, 13 (Or. 1891);WASHINGTON, Giambattista v. Nat'l Bank of Commerce of Seattle, 586 P.2d 1180, 1186 (Wash. Ct. App. 1978).
340. WEST VIRGINIA, Currence v. Ralphsnyder, 151 S.E. 700, 700 (W. Va. 1929).
341. There is a well-developed body of scholarship that analyzes and describes the evolution of champerty in the United States by examining the litigation lending and funding industries. .
342. GARBER supra note 26; GEOFFREY McGOVERN ET AL., UCLA-RAND CTR. FOR LAW & PUB. POLY, THIRD-PARTY LITIGATION FUNDING AND CLAIM TRANSFER: TRENDS AND IMPLICATIONS FOR THE Crra, JUSTICE SYSTEM, (2010), available at http://www.rand.org/pubs/conf-proceedings/2010/RAND-CF272.pdf.
343. Bond supra note 162; Ari Dobner, Litigation for Sale, 144 U. PA. L. REV. 1529 (1996); Hananel & Staubitz.
344. supra note 187 Susan Lorde Martin, Financing Litigation On-Line: Usury and Other Obstacles, 1 DEPAUL BUS. & COM. L.J. 85 (2002).
345. Susan Lorde Martin, Financing Plaintiffs' Lawsuits: An Increasingly Popular (and Legal) Business, 33 U. MICH. J.L. REFORM 57 (2000).
346. Susan Lorde Martin, Litigation Financing: Another Subprime Industry that Has a Place in the United States Market, 53 ViLL. L. REV. 83 (2008).
347. Susan Lorde Martin, Litigation Financing Industry: The Wild West of Finance Should Be Tamed Not Outlawed, 10 FORDHAM J. CORP. & FIN. L. 55 (2004).
348. Julia H. McLaughlin, Litigation Funding: Charting a Legal and Ethical Course, 31 VT. L. REV. 615 (2007); Marial Rodak, It's About Time: A Systems Thinking Analysis of the Litigation Finance Industry and Its Effects on Settlement, 155 U. PA. L. REV. 503 (2006). Some of this work is explicitly comparative. VICKI WAYE, TRADING IN LEGAL CLAIMS: LAW, POLICY AND FUTURE DIRECTIONS IN AUSTRALIA, UK & US (2008).
349. Peter Cashman & Rachael Mulheron, Third Party Funding: A Changing Landscape, 27 Civ. JUST. Q. 312 (2008); Vicki Waye & Vince Morabito, The Dawning of the Age of the Litigation Entrepreneur, 28 Civ. JUST. Q. 389 (2009).
350. Record v. Ins. Co. of N. Am., 438 S.W.2d 743, 747 (Tenn. 1969).
351. Texas courts have invalidated six types of claims based on public policy: legal malpractice claims, certain assignment of interests in an estate, collusive assignments of insurance claims, Mary Carter agreements, settlement agreements enabling one joint tortfeasor to sue another on the injured plaintiffs claim, and assignments of claims under the [Texas] Deceptive Trade Practices Act (DTPA).
352. Christy B. Bushnell, Note, Champerty Is Still No Excuse in Texas: Why Texas Courts (And the Legislature) Should Uphold Litigation Funding Agreements, 7 HOUS. BUS. & TAX L.J. 358, 376-77 (2007).
353. Kraft v. Mason, 668 So. 2d 679, 682 (Fla. Dist. Ct. App. 1996) (citation omitted).
354. I recognize that it is possible that an intermeddler could influence litigation without enjoying a contractual right to control, but in cases where a funder's suggestions are offered gratuitously and are accepted entirely, it seems to me that, although the funder is a cause-in-fact of the change in the litigation's direction, she is not a proximate cause. The proximate cause is the funded party, who bears the responsibility for choosing to subject their will to that of the funder.
355. See, for example, State Bar of Michigan Comm. on Profl and Judicial Ethics, Op. RI-321 (2000), which described a litigation funding agreement offered in Michigan by a Nevada-based funder, containing the following conditions: (1) The funder had the right to order the litigant to replace the lawyer currently handling the case the funder had the right to order the litigant to refuse any settlement (3) the litigant had promised to continue the case "under all circumstances"; and the funder had the right to inspect any document in the litigant's (or his attorney's) possession, regardless of the effect that the inspection might have on the potential waiver of attorney-client privilege. The committee offered the opinion that no lawyer could recommend this agreement to a client because it made the funder "in real terms" a "client" in the case "with a co-equal, if not superior, decision making role" to the litigant receiving the funding. Id.
356. See Am. Optical Co. v. Curtiss, 56 F.R.D. 26, 29-32 (S.D.N.Y. 1971) (holding that an agreement which limited the litigant's control over whether to sue at all violated Federal Rule of Civil Procedure 17(a), which requires the
357. Id.
358. Id. at 29-30. It must be noted that, technically, the transaction in question was not champertous but was an assignment, since the patent holder assigned its patent to the party who presented itself before the court as the real party in interest. The court viewed the assignment as a "contrivance" chosen only after the original patent claimant rejected the original proposal by the assignee, which was that the assignee would fund the original patent holder's enforcement action. Id. at 30.
359. But there is a still more objectionable provision in this contract, one upon which we mainly rest our decision. It is the one which binds the defendant not to settle the claim without the written consent of the plaintiff, and provides that, if he does settle without plaintiffs consent, he shall pay the plaintiff a fixed and arbitrary sum, without any regard to the amount or value of the services which the latter may have performed. Huber v. Johnson, 70 N.W. 806, 808 (Minn. 1897).
360. see also Brown v. Dyrnes, 109 So. 2d 788, 789 (Fla. Dist. Ct. App. 1959) (noting that the funder had demanded a fixed sum if litigant settled without his consent).
361. See Kraft v. Mason, 668 So. 2d 679, 683 (Fla. Dist. Ct. App. 1996) ("[The funder did not] concern herself with the antitrust litigation or impose her views upon the attorneys or the litigants once she provided the loan."); Clifford v. Wilcox, 27 P.2d 722, 725 (Wash. 1933) (noting that the funder did not control settlement).
362. While control over settlement cannot be given over to the funder, the funder might legitimately demand that if the litigant wants to accept a settlement the funder believes is too low, given the funder's own estimate of the expected value of the case, the litigant must permit the funder to exercise an option (written into the champerty contract, of course) to take an assignment in the case. Similarly, while the funder cannot control the "theory of the case," which must be kept in the hands of the party in interest, the funder might insist that none of the funds provided to the litigant (assuming that the funds were dedicated to pay for litigation expenses) be used for a particular legal expense with which the funder disagrees (e.g., an expert the funder believes is ill-suited to the litigant's own theory of the case). Even if these 'lesser" rights are permitted individually, it may be that if a funder demanded both of them (plus others I have not set out), a court would correctly hold that the funder had overreached and was now intermeddling.
363. See Rancman v. Interim Settlement Funding Corp., 789 N.E.2d 217, 221 (Ohio 2003) (finding that a champerty contract implicitly impedes the settlement of lawsuits).
364. see also Johnson v. Wright, 682 N.W.2d 671, 679-80 (Minn. Ct. App. 2004) (endorsing Rancman).
365. Rancman, 789 N.E.2d at 221.
366. Id. at 220.
367. Id. (emphasis added).
368. Id. at 221.
369. While the existence of [the flinders'] lien on the proceeds of Plaintiffs recovery may have influenced some of Plaintiffs decisions regarding her personal injury claim, Plaintiff simply has not demonstrated that [the funders] attempted to control the resolution of her claim for the purpose of stirring up strife and continuing litigation.
370. Odell v. Legal Bucks, LLC, 665 S.E.2d 767, 775 (N.C. Ct. App. 2008).
371. Bashor v. Northland Ins. Co., 480 P.2d 864, 867 (Colo. App. 1970). The case arose in the context of assignment: The assignor, whose only asset was the expected return from a bad faith claim against his insurer, assigned that claim to the party who had been the original plaintiff in the underlying suit that gave rise to the bad faith claim. The defendant insurance company moved to have the assignee dismissed from the case on the ground that it was not the real party in interest, in part because the assignor maintained significant control over the conduct of the case by the assignee. Compare Bashor, 480 P.2d at 867, with Am. Optical Co. v. Curtiss, 56 F.R.D. 26 (S.D.N.Y. 1971) (involving a case where one party assigned its rights to certain patents to a third party in exchange for the third party bringing suit to enforce the patent). In fact, the court pointed to the irony of an insurer making this argument against the assignment, since virtually every insurance contract contains a clause reserving to the insurer the right to control the selection of counsel in any suit brought by the insured involving the redress of an injury to the insured for which the insurer is responsible. Bashor, 480 P.2d at 867.
372. [The rule against champerty] was never intended, although possibly such cases might have come within the strict letter and reading of the old rule, to prevent poor persons from charging the subject-matter of the suit in order to secure the means to assert and enforce their rights by legitimate methods and in a legitimate manner. Casserleigh I, 59 P. 1024, 1027 (Colo. App. 1900) (citations omitted). Colorado courts will not permit malice maintenance, even if the plaintiff would have brought a meritorious suit "but for" the want of resources: [S]uch contracts ⋯ will not be enforced from reasons based upon considerations of public policy and good morals, if it appears that they were entered into, not with the bona fide object of assisting a claim believed to be meritorious and just, but for the purpose of injuring and oppressing others.
373. Casserleigh v. Wood (Casserleigh II), 119 F. 308, 312 (8th Cir. 1902) ("[Champerty] is committed when a man, with a view of fomenting litigation, encourages another to bring a suit or to make a defense which otherwise he would not have brought or made.") (emphasis added). It is interesting that the federal court thought that the doctrine of maintenance (and the limits it imposed) applied to third party support of plaintiffs or defendants. In 1902 Colorado was in the Eighth Circuit.
374. The "but for" test for causation is a familiar one in law; it is also known as the sine qua non or counterfactual test. It holds simply that an act is a legal cause if it was necessary (but not necessarily sufficient) to produce the effect in question. See RESTATEMENT (SECOND) OF TORTS § 431 (1965) (stating what constitutes legal cause); GOLDBERG ET AL., supra note 55, at 218 (addressing legal cause).
375. Wood v. Casserleigh, 30 Colo. 287, 290 (1902).
376. Casserleigh I, 59 P. at 1025.
377. Id.
378. Id. at 1027.
379. Id.
380. Id. at 1028-29 (" '[A]n agreement to pay one for the disclosure of instruments for proof of claims asserted in courts of justice is valid, unless the production of the same could be a dereliction of duty on the part of the person producing the evidence.' ") (citation omitted). The court noted that the agreement was not directed to the suppression of truthful evidence, but towards the production of truthful evidence, something that is in the public interest. Id. at 1029.
381. Id. at 1027-28 (emphasis added).
382. This is not to say that as a matter of history, the rule of "but-for maintenance' was universally accepted in England or the United States. The real story is much more nuanced, as will be seen in the next Part.
383. Stephen B. Presser, How Did We Get Here? What Litigation Was, What It Is Now, What It Might Be 7, COMMON GOOD (June 27, 2005), http://commongood.org/ assets/attachments /142.pdf (emphasis added).
384. Radin, supra note 20, at 68.
385. Id. at 48.
386. 4 JAMES KENT, COMMENTARIES ON AMERICAN LAW 528 n.(c) (John Gould ed., Little, Brown & Co. 1896) (1826) (emphasis added).
387. WILLIAM HAWKINS, A TREATISE OF THE PLEAS OF THE CROWN 255 (n.p. 1716).
388. Blackstone conceded that maintenance motivated by "charity and compassion"-e.g., selfless maintenance-could be allowed by the common law. BLACKSTONE, supra note 55, at z.ast;134.
389. A poor man may have the right upon his side, but be without means to enforce such rights in the courts, and possibly against some powerful adversary. Surely, it cannot be said that in such case it is the intent of the law to prohibit a friend from assisting him with the necessary money to enforce his rights, dependent for his reimbursement solely upon the contingency of securing a portion of the property which may be obtained by the litigation; this being the only security or chance for repayment which the party could give or have. Casserleigh I, 59 P. at 1026 (emphasis added).
390. The contract between the investor and the litigants in Casserleigh did not cross the line into "desire but-for maintenance" because "[i]n the case at bar, it appears that the [litigants] contemplated and desired the bringing of a suit to assert their rights" before they were approached by the investor. Id. at 1027. 229. "[I]t may be said, on the other hand, that such assistance or maintenance may have a tendency to secure rights and promote the ends of justice." Id. at 1026.
391. See, e.g., Sygma Photo News, Inc. v. Globe Int'l, Inc., 616 F. Supp. 1153, 1157 (S.D.N.Y. 1985) ("Section 489 prohibits assignments 'for the purpose of bringing an action' and thus, read strictly, extends only to the 'transfer of claims prior to the institution of any proceeding or action.'") (quoting Rosenkrantz v. Berlin, 317 N.Y.S.2d 704, 705 (1971)).
392. Bluebird Partners v. First Fid. Bank, 94 N.Y.2d 726, 736 (2000).
393. The most recent statement to this effect came out in 2004, which permitted the partial assignment to a third party of the money owed to a property owner by its fire insurer: Here, the loans were made after the action was commenced and pending, and thus were not made "with the intent and for the purpose of bringing an action." Further, plaintiff did not assign his claim against defendants ⋯ but merely assigned to [the third [party] an interest in the proceeds of the policy. Fahrenholz v. Sec. Mut. Ins. Co., 13 A.D.3d 1085, 1086 (N.Y. App. Div. 2004) (emphasis added). The question of the primacy of the intent to sue was raised recently in Trust for the Certificate Holders of the Merrill Lynch Mortgage Investors v. Love Funding Corp., 918 N.E.2d 889 (N.Y. 2009). This question was certified to the New York Court of Appeals by the Second Circuit, but the New York court was able to resolve the case without reaching the question. Since this case involved an assignment of a chose of action that was filed after the assignment, it did raise an important question about the significance of the New York rule that all assignments, whether partial or full, had to occur after the lawsuit had been filed. The Court of Appeals did not reach this question, however, since the unanimous opinion by Judge Pigott held that as a matter of law, it is not champerty for a party to purchase a full (or partial) interest in a lawsuit in which it has a "pre-existing interest" in the lawsuit, and that the assignee could have had a pre-existing interest in this case.
394. See also Trust for the Certificate Holders of the Merrill Lynch Mortg. Investors, Inc. v. Love Funding Corp., 591 F.3d 116 (2d Cir. 2010) (holding that as a matter of law the assignee had a pre-existing interest).
395. Fairchild Hiller Corp. v. McDonnell Douglas Corp., 28 N.Y.2d 325, 329 (1971).
396. Refac Int'l v. Lotus Dev. Corp., 131 F.R.D. 56, 58 (S.D.N.Y. 1990).
397. Casserleigh I, 59 P. at 1026. This is assuming that the only way to secure Casserleigh's cooperation was to promise him a contingent part of the recovery. Of course, if Casserleigh had acted out of political or charitable motives, then the maintenance would not be champerty, but selfless maintenance, which was discussed infra Section III.B.2.236. Gruber v. Baker, 23 P. 858, 862 (Nev. 1890).
398. Prosser v. Edmonds, (1835) 160 Eng. Rep 196 (K.B.) 204; 1 Y. & C. Ex. 481, 497 (emphasis added).
399. See, e.g., Dilan A. Esper & Gregory C. Keating, Abusing "Duty", 79 S. CAL. L. REV. 265, 319-23 (2006) (discussing the place of "no duty" rules in modern American negligence law); Gary T. Schwartz, The Beginning and the Possible End of the Rise of Modern American Tort Law, 26 GA. L. REV. 601, 659-63 (1992).
400. It is worth recalling the words of Judge Kaufman, who fought for a clear rule barring liability for negligently inflicted emotional distress independent of physical contact: "To be sure, the majority freely-one might say almost cheerfully-acknowledges that its position is arbitrary; yet nowhere does it consider the cost of such institutionalized caprice." Thing v. La Chusa, 771 P.2d 814, 882 (Cal. 1989). I agree with Kaufman that courts ought not to be engines of "institutionalized caprice.".
401. The history of inconsistencies noted in this Article has been drawing comment for some time. See, e.g., Cnty. Hotel & Wine Co. v. London and N.W. Ry. Co., [1918] 2 K.B. 251 (Eng.); BODKIN, supra note 37, at 9-10; Radin, supra note 20, at 78 (commenting on inconsistencies in common law treatment of third-party investment in litigation).
402. See supra note 176 (explaining why South Dakota law deems maintenance prohibition unnecessary).
403. Thallhimer v. Brinckerhoff, 3 Cow. 623, 645 (N.Y. 1824).
404. See, e.g., SELLING LAWSUITS, supra note 3 (explaining that third-party litigation financing was not allowed at common law); Stephen B. Presser, A Tale of Two Models: Third Party Litigation in Historical and Ideological Perspective, (10th Annual Legal Reform Summit, U.S. Chamber Inst, for Legal Reform Oct. 28, 2009).
405. Presser, supra note 221, at 4,12.
406. Presser, supra note 243, at 5-9.
407. Stephen C. Yeazell, Brown, the Civil Rights Movement, and the Silent Litigation Revolution, 57 VAND. L. REV. 1975, 1990-97 (2004).
408. F. B. MACKINNON, PROFESSIONAL ECONOMICS AND RESPONSIBILITY 210 (1964).
409. Presser, supra note 243, at 9-12.
410. BLACKSTONE, supra note 55, at z.ast;133.
411. Id. at z.ast;134.
412. Id. at z.ast;135-36.
413. Id.; see also Radin, supra note 20, at 59-60 (explaining that even supporters of rightful actions were presumed to be wrongful under Roman Law).
414. BLACKSTONE, supra note 55, at z.ast;134.
415. Id.
416. Beliefs about legal concepts as well as other types of beliefs may play a role in guiding choices about the structure of legal systems.
417. See, e.g., Herbert M. Kritzer et al., The Aftermath of Injury: Cultural Factors in Compensation Seeking in Canada and the United States, 25 LAW & SOCVREV. 499, 536 (1991) (hypothesizing that the differences between claiming rates in Canada and the United States can be explained by differences in how each society conceptualizes "adversary culture").
418. Radin, supra note 20, at 56-65.
419. Id. at 56.
420. Id.
421. Id. at 59.
422. Id. at 59-60.
423. Id. at 58 ("Vexatiousness, accordingly, consisted not merely in using legal procedures unjustifiably, but in using them excessively, even when it was justified, or in using it all except under the pressure of necessity. A man ⋯ had no business to intermeddle with the interests or wrongs of someone else.").
424. Id. at 59-61. Radin pointed out that the term "champerty" was derived from the concept in property law of tenure by champart, which was a form of tenancy by which a landowner shared ownership with the tenant and received a portion of the harvest, but took the risk that there may be no return at all (the tenant, in turn, had an obligation to work the land or risk forfeiture). Id. at 61-62. Radin argued that tenancy in champart was imported into the Statute of Westminster II, which was the earliest legal prohibition of third party support of litigation, in order to apply to a new context a familiar concept. Id. at 62.
425. Id. at 68.
426. Id. at 65 ("[The law prohibiting] champerty ⋯ had its source in the resistance to the slowly growing capitalism that followed the Renaissance ⋯.").
427. Id. at 66.
428. See generally MORTON J. HORWTTZ, THE TRANSFORMATION OF AMERICAN LAW 1780-1860 (1979).
429. Radin, supra note 20, at 69-70.
430. Benjamin Zipursky makes a plausible argument that this is the proper way to understand the relationship between tort theory, for example, and tort law. See Benjamin C. Zipursky, Pragmatic Conceptualism, 6 LEGAL THEORY 457, 458-59 (2000).
431. Some of the major recent accounts of corrective justice include JULES L. COLEMAN, RISKS AND WRONGS (1992).
432. ARTHUR RIPSTEIN, EQUALITY, RESPONSIBILITY, AND THE LAW (1998).
433. ERNEST J. WEINRIB, THE IDEA OF PRIVATE LAW (1995).
434. Richard A. Epstein, A Theory of Strict Liability, 2 J. LEGAL STUD. 151 (1973).
435. George P. Fletcher, Fairness and Utility in Tort Theory, 85 HARV. L. REV. 537 (1972).
436. Stephen R. Perry, The Moral Foundations of Tort Law, 77 IOWA L. REV. 449 (1992). Although not a corrective justice theory, civil recourse theory will be discussed in this section. .
437. See Zipursky, supra note 88.
438. John C.P. Goldberg, Twentieth-Century Tort Theory, 91 GEO. L.J. 513, 570 (2003).
439. See Robert L. Rabin, Law for Law's Sake, 105 YALE L.J. 2261, 2264 (1996) (reviewing ERNEST J. WEINRIB, THE IDEA OF PRIVATE LAW (1995)) (noting Weinrib's vision of the bipolar structure of corrective justice).
440. This question assumes that corrective justice theory is a plausible account of the private law. If it were the case that the theory of the inauthentic claim was entailed by corrective justice theory, and that corrective justice theory was invalid or failed to describe the common law, then the entailment would be of merely academic interest. It would have no practical implications for whether the current law of assignment and maintenance should be preserved or liberalized. But given the importance of corrective justice theory to scholars in modern commonwealth jurisdictions, it seems prudent to proceed under the assumption that an entailment between corrective justice and the theory of the inauthentic claim would have practical significance.
441. COLEMAN, supra note 269.
442. see also Stephen R. Perry, The Mixed Conception of Corrective Justice, 15 HARV. J.L. & PUB. Poi Y 917, 917 (1992). The mixed conception is different from Coleman's earlier account, the "annulment thesis," which he has abandoned.
443. See Jules L. Coleman, Tort Law and the Demands of Corrective Justice, 67 IND. L.J. 349, 365 (1992).
444. Weinrib differs with Coleman in that his theory of corrective justice posits that the duty of the defendant is to "annul wrongs" rather than "repair losses." Perry, supra note 273, at 921.1 agree with Perry that this leaves Weinrib vulnerable to far more objections than Coleman, hence the emphasis on Coleman's approach. See Perry, supra note 269, at 479.
445. Zipursky, supra note 88, at 739.
446. Jules L. Coleman, The Practice of Corrective Justice, 37 ARIZ. L. REV. 15, 26 (1995).
447. COLEMAN, supra note 269, at 326.
448. See Jules L. Coleman, Risks and Wrongs, 15 HARV. J.L. & PUB. POLY 637, 646 (1992) (arguing that "the status of corrective justice is not necessarily independent of legal or other relevant social practices").
449. Perry, supra note 273, at 925.
450. Coleman, supra note 278, at 646.
451. Coleman, supra note 273, at 352.
452. Coleman, supra note 278, at 645.
453. Coleman, supra note 276, at 26.
454. See Perry, supra note 273, at 926 (describing the agency and wrongfulness requirements).
455. It should be noted that, even if the law of assignment and maintenance did somehow effect a reduction of the defendant's duty to correct a wrongful loss, even this would not necessarily prove a conflict between Coleman's theory and the practices of assignment and maintenance. Corrective justice may be a conceptual essential of the private law, but it can be modified or even suspended. See, e.g., Coleman, supra note 276, at 29 ("Whereas corrective justice is both pre-political and non-instrumental, legal and political practices can affect the content of the duty corrective justice gives rise to in many ways.").
456. Coleman, supra note 278, at 645.
457. Id. at 646 (discussing New Zealand's no fault scheme: "[W]hen such a plan is in effect there are no duties in corrective justice.").
458. See Zipursky, supra note 88, at 718-21 (noting that unlike contractual and property law, tort law does not contain an "affirmative duty to pay").
459. Benjamin C. Zipursky, Rights, Wrongs, and Recourse in the Law of Torts, 51 VAND. L. REV. 1, 4 (1998) (arguing that proponents of corrective justice generally neglect "substantive standing" in tort law).
460. Zipursky, supra note 288, at 80.
461. Zipursky, supra note 88, at 720.
462. Id. at 735.
463. Id.
464. One could hold this position despite the existence of survivorship actions. The argument made earlier was an interpretive one; obviously it is open to the civil justice theorist to argue, if they insisted on the sort of mimetic relationship now under consideration, that survivorship is a second-best solution in the face of the plaintiffs inability to bring suit, where the alternative (the defendant paying no one) is unacceptable.
465. See Zipursky, supra note 88, at 714-15 (describing the "substantive standing" rule and its importance in tort law).
466. See, e.g., Michael Abramowicz, On the Alienability of Legal Claims, 114 YALE L.J. 697 (2005) .
467. Bond, supra note 162; Peter Charles Choharis, A Comprehensive Market Strategy for Tort Reform, 12 YALE J. ON REG. 435 (1995).
468. Robert Cooter, Towards a Market in Unmatured Tort Claims, 75 VA. L. REV. 383 (1989); .
469. Dobner, supra note 191 Jonathan T. Molot, A Market in Litigation Risk, 76 U. Cm. L. REV. 367 (2009) [hereinafter Molot, Litigation Risk].
470. Painter, supra note 48; Poonam Puri, Financing of Litigation by Third-Party Investors: A Share of Justice?, 36 OSGOODE HALL L.J. 515 (1998).
471. Shukaitis, supra note 54; Jonathan T. Molot, A Market Approach to Litigation Accuracy (10th Annual Legal Reform Summit, U.S. Chamber Inst, for Legal Reform, Oct. 28, 2009) [hereinafter Molot, Market Approach].
472. Rubin, supra note 34; Max Schanzenbach & David Dana, How Would Third Party Financing Change the Face of American Tort Litigation?: The Role of Agency Costs in the Attorney-Client Relationship (Third Party Financing of Litigation Roundtable, Searle Ctr., Nw. Univ. Law Sch., Sept. 24-25, 2009), available at http://www.law.northwestem.edu/searlecenter/uploads/Dana-Schanzenbach- JAgency%20Costsl.pdf; David Abrams & Daniel L. Chen, A Market for Justice: The Effect of Litigation Funding on Legal Outcomes (unpublished paper, on file with author).296.
473. Radin, supra note 20, at 52-53, 56.
474. See Damian Reichel, Note, The Law of Maintenance and Champerty and the Assignment of Choses in Action, 10 SYDNEY L. REV. 166, 166 (1983) (noting that in medieval times "[b]arons abused the law to their own ends and ⋯ [bjribery, corruption, and intimidation of judges and justices of the peace [was] widespread").
475. BLACKSTONE, supra note 55, at z.ast;135 ('This is an offence against public justice [that] perverts the remedial process of law into an engine of oppression.").
476. See Radin, supra note 20, at 72. Radin suspected that those who still held onto the "assumption of Medieval society, that a law suit is an evil in itself' suffered from an "infantile psychosis" that insisted on an "all or nothing" approach to legal rules. Id.
477. See SELLING LAWSUITS, supra note 3, at 7-8.
478. See Rancman v. Interim Settlement Funding Corp., 789 N.E.2d 217, 220-21 (Ohio 2003). See supra text accompanying notes 203-08.
479. See FED. R. EviD. 502(b) (stating that an inadvertent disclosure may act as a waiver of privilege if the sending attorney did not take "reasonable steps to prevent disclosure").
480. State Bar of Ariz., Comm. on the Rules of Profl Conduct, Op. 01-07 (2001); Fla. Bar Comm. on Profl Ethics, Op. 00-3 (2002).
481. State Bar of Mich., Standing Comm. on Profl and Judicial Ethics, RI-321 (2000); N.J. Advisory Comm. on Profl Ethics, Op. 691 (2001).
482. Supreme Court of Tex., Profl Ethics Comm., Op. 558 (2005).
483. see also Hananel & Staubitz, supra note 187.
484. See supra Section III.B.3.
485. See, e.g., MARGARET JANE RADIN, CONTESTED COMMODITIES (1996).
486. Margaret Jane Radin, Market-Inalienability, 100 HARV. L. REV. 1849 (1987).
487. see also MARTHA ERTMAN & JOAN C. WILLIAMS, RETHINKING COMMODIFICATION: CASES AND READINGS IN LAW AND CULTURE (2005).
488. Jane Croft & Megan Murphy, Litigation Fund Backs £400m Divorce Case, FIN. TIMES, Oct. 9, 2009, http://www.ft.eom/cms/s/0/97fl005e-b50f-llde- 8bl7-00144feab49a.html?ftcamp=rss.
489. Elena Moya, Hedge Funds, Investors and Divorce Lawyers - It's Match Made in Heaven, GUARDIAN (London), Oct. 16, 2009, at 35, available at http://www.guardian.co.uk/business/2009/oct/16/hedge-funds-divorce-litigation- funding.
490. Id. The article also notes that litigation funding came to the U.K. from continental Europe. Allianz Litigation Funding UK, which is part of the German insurance group Allianz, has already funded divorces in Germany and Switzerland. Id.
491. See supra Section III.B.4(b). One might want to strictly limit the ability of a funder to have veto power over the terms of the divorce settlement, for example, where one might permit a funder to have some control over the terms of a settlement of a contract case.
492. See, e.g., Abramowicz, supra note 295, at 702 (expressing skepticism about the overall economic benefit of allowing alienation because adverse selection would lead to only problematic claims being alienated).
493. Choharis, supra note 295, at 444 ("The economic efficiencies resulting from a tort claims market will benefit nearly every participant in the tort process.").
494. Dobner, supra note 191, at 1529 (describing the economic efficiency benefits of allowing claim alienation); Molot, Litigation Risk.
495. supra note 295, at 438 (addressing the feasibility of developing a market in litigation risk and arguing its benefits).
496. Painter, supra note 48, at 687 (arguing for the abolition of champerty doctrines so that plaintiffs can better insure against legal cost).
497. Rubin, supra note 34, at 3 (arguing that allowing claim alienation would produce negative externalities, namely increasing the amount and cost of litigation and moving the law in inefficient directions); Schanzenbach & Dana.
498. supra note 295, at 4 (arguing that claim alienation might reduce attorney-client agency costs, as well as reduce negotiation and settlement costs and make alternative dispute resolution more common); Shukaitis.
499. supra note 54, at 330 (arguing that the benefits of allowing claim alienation would substantially outweigh its costs); Molot, Market Approach.
500. supra note 295 (arguing that investment in litigation on both plaintiff and defendant sides could promote more accurate settlements and lower total transaction costs).
501. See, e.g., SELLING LAWSUITS, supra note 3, at 9 (examining third-party litigation funding in Australia to warn that it can lead to an increased volume of litigation); Abrams & Chen.
502. supra note 295. Both of these studies rely exclusively on Australian data.
503. Choharis, supra note 295, at 473.
504. Molot, Litigation Risk, supra note 295, at 382; Molot, Market Approach, supra note 295.
505. Rubin, supra note 34, at 10-12.
506. Id. at 13-14.
507. SELLING LAWSUITS, supra note 3 at 9; Abrams & Chen.
508. supra note 295, at 19 ("[T]he effect appears to be driven by the fact that lawsuits filed are declining in states without litigation funding as funding amount increases, whereas lawsuits filed are increasing in states with litigation funding as funding increases.").
509. Abrams & Chen, supra note 295, at 24-25.
510. SELLING LAWSUITS, supra note 3, at 2. It should be noted that this study discusses only the effect of changes in Australian law relating to third-party investment in class actions. The law in Australia governing "group litigation" is different in many ways from American class action law, specifically in the area of whether class representatives or their lawyers have the power to promise a third party a contingent portion of the class action recovery. In Australia the class representatives and their lawyers apparently have this power. See Campbells Cash & Carry Pty Ltd. v. Fostif Pty Ltd. (2006) 229 C.L.R. 386 (Austl.) (allowing a litigation funder to continue appeals as part of representative proceeding). I believe that no American class representative or her lawyer has this power. 319. Radin.
511. supra note 20, at 72.