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The Shark

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June 10, 2009


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Beyond disquieting, it also may be illegal. The act of investing in another's lawsuit is called champerty, and was illegal at common law. Today, a few states explicitly allow it (Massachusetts and New Jersey), while in the rest it is either disallowed or unclear. California does not explicitly allow or disallow champerty, though some old cases suggest that common law champerty has never been adopted in CA. However, a recent case involving "syndication" of the expenses for a lawsuit, Killian v. Millard, 228 Cal.App.3d 1601 (1991), disallowed a champertous agreement on the basis of public policy. A California Bar ethics opinion (No. 500, May 10, 1999) acknowledged that while the legality of a syndication or champerty agreements was unclear, it was not an ethics violation for an *attorney* to make champertous investments in lawsuits under certain circumstances.

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