## Facts

- Pamela Maslowski was injured in a 2012 automobile accident in Minnesota and hired attorney James Schwebel and his firm to pursue personal-injury claims.
- While the tort action was pending, Maslowski sought litigation funding for living expenses and entered a “Sale and Repurchase Agreement” with Prospect Funding Partners LLC on May 21, 2014.
- Prospect paid Maslowski $6,000 in exchange for a right to receive a portion of any future settlement proceeds.
- The agreement used a scheduled increase in the repayment amount (increasing by 30% every six months from a baseline of the advance plus fees), capped at $25,245.
- If Maslowski recovered no settlement, she owed Prospect nothing; repayment was limited to the amount of any settlement received.
- Maslowski’s attorney reviewed the agreement with her and signed an acknowledgment related to the terms and settlement payment directions.
- Prospect later notified Maslowski that, under the schedule, the payoff amount would be $14,108 if paid by a specified date in 2015.
- Maslowski ultimately settled her personal-injury case but did not pay Prospect; Prospect sued to enforce the agreement and asserted claims involving Maslowski’s counsel and his firm.

## Issues

1. Whether the litigation-funding agreement was champertous under Minnesota common law and therefore unenforceable.
2. Whether Minnesota should retain or abolish its common-law prohibition against champerty.

## Decision

- The Minnesota Supreme Court reversed the court of appeals and remanded to the district court for further proceedings.
- The court held that Minnesota’s common-law prohibition against champerty is abolished.
- The court agreed that, under preexisting Minnesota precedent, the agreement fit the traditional definition of champerty and the lower courts correctly deemed it unenforceable at the time of their rulings.
- The court concluded that modern legal and institutional developments make a categorical common-law ban unnecessary, and that concerns about unfairness can be addressed through other doctrines on remand.

## Legal Principles

- Minnesota’s common-law prohibition against champerty is abolished; champerty no longer operates as a per se bar to enforcement of litigation-funding agreements.
- Courts may modify or abrogate common-law doctrines when their historical justifications no longer fit current legal conditions.
- Potential abuses historically associated with champerty may be evaluated through existing legal controls (e.g., unconscionability, public-policy limits, consumer-protection doctrines, usury concepts, and attorney professional-conduct rules), rather than through an automatic invalidation rule.
- Abolition of champerty does not validate every funding agreement; enforceability remains subject to other applicable contract and public-policy doctrines.

## Conclusion

The Minnesota Supreme Court eliminated champerty as an automatic defense to litigation-funding contracts, reversed the invalidation of the agreement on that ground, and remanded for case-specific evaluation under other contract and public-policy doctrines.


Maslowski v. Prospect Funding Partners LLC, 944 N.W.2d 235 (Minn. 2020)