“I believe there are many funding opportunities in Texas and the Southwest,” said Eric Chenoweth, commercial and intellectual property litigator, formerly of Yetter Coleman and recently tapped to head the new Houston office of Australian litigation-funding firm Bentham IMF.

“Bentham is superbly positioned to serve as a commercial litigation funder of choice for plaintiffs, companies, and law firms across the region that recognize the value of sharing financial risk in their litigation matters,” Chenoweth continues.

“Texans have a strong appreciation for innovation, and Bentham, with its risk-sharing models and excellent track record, will fit extremely well in our market.”

Ordinarily, we'd be delighted to see another successful enterprise opening up in Texas. Not this time. We don't think what Bentham has to offer is good for Texas. Until fairly recently, nobody else in Texas thought so either. In fact, it used to be illegal.

Not long ago, Texas had a law against third-party financing of lawsuits, as did most states. The financing of someone else’s litigation in exchange for a share of the settlement was considered a crime, the crime of champerty.

The negative effects of champerty are well-documented and have been known for centuries. You can look it up online and read all about it.

Nevertheless and needless to say, it had its champions, as all slick ideas do, for those in search of profit regardless of the costs to others. Dedicated opportunists lobbied state legislatures across the country (or cast votes as lawyer-lawmakers) to legalize this financing scheme and give it a virtuous veneer.

Massachusetts abandoned the wholesome proscription in 1997 and Texas soon followed suit. The hope of discouraging frivolous lawsuits, protecting the integrity of our judicial system, and keeping unscrupulous lenders from preying on potential plaintiffs seems to have gone by the wayside.

Sure, there's money to be made here in Texas and Bentham may make a lot of it, but the cost to our culture could be incalculable.

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Bentham IMF
437 Madison Avenue
New York, NY 10022

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