June 11, 2010 – Last week, the Minnesota Supreme Court affirmed consumer litigation funding in Minnesota, finding that champerty, the English common law doctrine prohibiting disinterested third parties from providing money to plaintiffs in exchange for an interest in their case no longer applies.
“The American Legal Finance Association (ALFA) applauds the Minnesota Supreme Court’s decision to eliminate the application of this outdated doctrine to consumer legal funding. Minnesota is joining the ranks of states that understand the important role of consumer legal funding in helping victims access justice.” said Kelly Gilroy, Executive Director of ALFA.
Despite a lower court decision voiding a funding contract, the Minnesota Supreme Court wrote in their decision “We decline, however, to hold that the contract between Maslowski and Prospect is void as against public policy as we understand it today.” The court’s decision in Pamela Maslowski vs. Prospect Funding Partners LLC et al resolves the question in Minnesota that the doctrine of champerty does not prohibit consumer litigation funding and ensures that victims in Minnesota will continue to safely access this crucial financial resource. The court remanded the case to the district court for final disposition.
Consumer legal funding helps level the playing field for victims pursuing justice through the courts. A pre-settlement advance offers immediate financial relief to victims for use on non-legal expenses — including groceries, medical bills, student loans, and rent. For victims facing powerful defendants with the ability to slow-walk a case, legal funding helps relieve financial pressure and prevent the premature abandonment of the case.
ALFA supports common-sense regulation that provides oversight, accountability, and transparency in the industry and protects access to this critical resource for consumers.
