Feudal flap

Peter Thiel is Exhibit A for medieval law revival

Call it the Peter Principle. Silicon Valley billionaire Peter Thiel's funding of ex-wrestler Hulk Hogan's privacy case against Gawker Media might have violated archaic prohibitions on stirring up litigation for spite. American courts have largely bounced those rules on the basis that they stifled access to justice. The Facebook director's free-speech smackdown could merit a comeback.

Backing other people's lawsuits was for centuries considered in Britain as unchristian, scurrilous or worse. The biggest beef was with noblemen using tenant farmers as fronts for suing rival lords. Champerty - as sponsoring suits for profit was called - and maintenance, doing so for any reason, became illegal. Many American states eventually adopted similar bans.
 
Lawyers in the 19th century tried to skirt the rules by pursuing cases at their own expense in exchange for a cut of any proceeds. Those so-called contingency fee arrangements weren't allowed in the United States until the early 20th century, but are now a staple of the litigation business.

A major shift came after the Supreme Court in 1963 struck down a Virginia anti-maintenance statute used to block civil rights groups from assisting victims of discrimination. The law stymied political speech, according to the court. Besides, federal rules against frivolous or abusive litigation - and independent judges to enforce them - made the concepts of champerty and maintenance obsolete.

Thiel has exposed a possible gap. IMF Bentham, Burford Capital and other firms that invest in lawsuits for profit have gained acceptance, while the Supreme Court has essentially blessed the financing of cases that promote speech or help the poor. Whether vindictive litigation funded secretly by thin-skinned tech moguls passes master is a lot less clear.

Thiel, a PayPal cofounder, early Facebook backer and prior Gawker target, says he spent some $10 million on Hogan's suit to combat a bully that gratuitously ruined lives. And the case was hardly frivolous: a jury awarded the mustachioed ex-wrestler $140 million.

Yet even legitimate lawsuits can feel icky when pursued at least in part for a third party's revenge. It's called malice maintenance, a term coined by Cardozo Law School Professor Anthony Sebok. It looks a lot like what dodgy lords engaged in many centuries ago - and can now be practiced with impunity. Thiel could be Exhibit A for a revival of some good, old-fashioned law.