Delaware Court Approves Litigation Funding Agreement

Executive Summary The Delaware Superior Court issued a recent decision providing the following guidance to parties regarding how to properly structure litigation finance agreements in order to avoid claims of champerty and maintenance: (i) the agreement should not assign ownership of the claims to the financier; (ii) the financier should not have any rights to direct or control the litigation; and (iii) the plaintiff should retain the unfettered right to settle the litigation at any time and for any amount. The Superior Court's decision follows an earlier decision from the Delaware Court of Chancery, in which the Court of Chancery protected from discovery litigation financing communications through application of the work product doctrine.