Source: http://forensicgenealogist.pro/champerty.html
Timestamp: 2019-04-21 23:15:24+00:00

Document:
In order to provide the reader with some insight into the actual documentation that a typical “heir search” firm uses to lure unwitting “clients” on terms referred to as “on spec,” excerpts of such documents will be set forth here. Each of these documents is briefly described so that this type of firm is differentiated from an ethical forensic genealogist that takes these cases on an hourly fee basis.
We are enclosing our agreement for your consideration. If it meets with your approval, please sign and return it ... Once we receive the agreement from you and other interested persons, we will then be in a position to divulge the full particulars to you.
It will be our obligation to compile all the necessary genealogical data in order to establish your relationship to the decedent. We will also be pleased to suggest to you an attorney who concentrates in probate law, to represent your interest in this matter. We would be totally responsible for the fees and costs of that attorney as stated in our enclosed agreement. You would only be obligated to us when you ultimately are to receive your respective shares of these assets.
Enclosure: Agreement for 25 % of the heirs portion of the estate.
Document 2. 23 January 2009 letter from search firm to potential heir acknowledging receipt of the fee agreement and stating the name, place and amount of the estate. It also stated, in part, “We suggest the legal services of [name of lawyer] to represent your interests. ... If you would be interested in having him represent you, please sign the Acknowledgement of Disclosure form and return it to us. The fees and costs of Attorney [surname] [emphasis in original] will be paid entirely by [us]. At any time, you may hire an attorney of your choice, but it will be at your own cost/expense.
Enclosures: Form to hire suggested lawyer; authorization for release of confidential information to search firm and lawyer; and a [poorly drafted] 18-point questionnaire about the decedent and heir.
Document 3: 29 January 2009 letter from law firm to heir asking for the heir's signing the second page of the letter to authorize the law firm to represent them in the matter.
Document 4: 6 March 2009 letter from the law firm to the heir, a second, repeat request (same as the last letter).
Document 5: 7 April 2009, the search firm signs off on an “Affidavit of Due Diligence” (with no citations or supporting documentation; many of the statements of “fact” turn out to be incorrect) that the search firm's lawyer sends to the law firm that is representing the estate. This is followed by the search firm's entering its appearance on behalf of some of the heirs with promise of proofs of heirship, etc., etc.
“A bargain to endeavor to enforce a claim in consideration of a promise of a share of the proceeds, or of any other fee contingent on success, is illegal, if it is also part of the bargain that the party seeking to enforce the claim shall pay the expenses incident thereto” (Restatement, Contracts, § 542), unless such party (section 543) already has or reasonably believes he has an interest recognized by law in the claim. “An assignment of a claim * * * is not rendered illegal by the fact that * * * litigation is necessary for its collection; nor is such an assignment * * * rendered illegal by the further fact the assignee promises to endeavor to enforce the claim at his own expense and pay the assignor a share of the proceeds, unless the assignee gives no other substantial consideration.” Restatement, Contracts, § 547.
All the marks of champerty designated in these sections are to be found in Exhibit B. The plaintiff agreed to bear all the expenses incident to the litigation, though when the contract was made, he had no interest in the culm banks; the purported assignment of the remainder, if any, cannot bring him within the excepted class. He gave nothing for the assignment, assumed no definite obligation to extract and pay for coal; he loses nothing, if not allowed to sue defendant on the alleged claim of another. There appears to be support for the following statement made in defendant's brief: "This is not the case of a person being in possession of a valuable property and having imposed upon him a duty to maintain his title. It is the case of a man attempting to use a court of chancery to ransack the records, accounts and transactions of a company, beginning with December 4, 1900, in order to discover whether the lessors had a reason for forfeiting the lease which they did not know of, in the hope that something might be found which would enable him, not a party to the original lease, to ask for cancellation in order that he might come into possession and share the benefits with the original lessors or their personal representatives."
“For and in consideration of J. L. Gwirtz, of the City and County of Philadelphia having invested his time and effort in investigation, and in further consideration of the said J. L. Gwirtz having found out and revealed to me the fact that there is a sum of money which may be due me, I, the undersigned, hereby agree to transfer, set over and assign and by these presents do hereby transfer, set over and assign unto the said J. L. Gwirtz, all right,  title and interest in and to fifty percent (50%) of the said fund.
“Witnesseth the hand and seal of the undersigned this 22nd day of June, A.D. 1935.
Mr. Gwirtz also claimed the shares of Mary Elizabeth Gallagher and Robert G. McIlwain under similar writings… These assignments and letters of attorneys are attacked by assignors as champertous and, further, because they were obtained in bad faith, overreaching and unfair dealing.
The transaction in the instant case has “all the marks of champerty”, as defined in Ames v. Hillside Coal & Iron Co., supra, to wit, an agreement to pay expenses, and an assignment without consideration other than services rendered and to be rendered in the enforcement of the claim. Whether or not the assignments are to be set aside on the ground of champerty, “it becomes the duty of the courts”, as was said in Perry v. Dicken, supra, “to see that no improper advantage is taken either of the ignorance or necessities of those who enter into such contracts.” The family of decedent were not in close contact with him because of his employment and residence in the Philadelphia General Hospital. It is strange that no one in the hospital knew of a relative or friend to be notified in case of illness or death. All of the family lived in Philadelphia, and it was inevitable, because of their proximity and close relationship, that sooner or later the news of death would be communicated to them. Proof of kinship under such circumstances required little assistance from anyone, and no one could earn 50 percent of the estate for lending such assistance. It is evident, from the testimony given of his interviews with the heirs, that the task to be performed was magnified beyond its due proportions, and that the assignments are void and of no effect.
No compensation can be awarded for services actually rendered, because if there be champerty, no recovery can be had. Furthermore, the testimony shows no services upon which a value can be placed. The claim of Jacob L. Gwirtz is dismissed.
“The type of activity comprehended by the title of this annotation is usually operated through so-called “probate research” organizations which make a business of investigating probate or surrogate court records and notifying heirs of their interest in this particular estate, and also representing to such heirs that the organization has expended considerable time and money in making such investigation, and that the heirs would never have heard of their good fortune otherwise, in return for which they are advised to give the organization power of attorney to assume control of legal proceedings including employment of attorneys, necessary to establish the heirs’ interest in the estate. For these services the heirs are expected to assign to the organization a certain percentage of the proceeds paid over to them by the administrator of the estate, in the event that their claims are successfully established.
“The business or profession of “heir-hunting” or “heir-chasing” has a checkered and interesting history, having long been established on an international local basis as a lucrative means of livelihood. “Probate searchers’ usually operate by investigating probate or surrogate courts records to uncover estates of substantial wealth whose probate or administration has been delayed because of inability to contact one or more of the missing heirs. An investigator, usually unknown to the estate, locates the missing heir through court records and genealogical information collected by his staff, and at times through cooperation with foreign agents in the same business. The missing person is hastily informed that he has a valid claim as an heir against an unsettled estate. He is promised genealogical charts and other information with which he can establish his heirship if he will assign a portion of his inheritance to the probate searcher. As a result of their frequent legal blunders, these investigations have constantly changed their pattern of procedure in order to come formally within the law.
“The appeal arises in part out of the activities of the American Archives Association and its pattern of relations with some members of the legal profession; the fact pattern in this case is fairly representative of similar occurrences in this jurisdiction.
American Archives Association is what is commonly called a "missing heir finder" notwithstanding its pretentious name. As such it located the 14 heirs of Margaret Delano Gage before any of them had counsel, and secured assignments from the 12 paternal heirs, providing that each would pay Archives forty per cent (40%) of any amounts said heirs might receive from the proceeds of the estate. As is Archives' usual practice the name of the estate was not disclosed until Archives had exhausted its efforts to induce all of the heirs to give assignments to it.
The remaining facts are developed in a stipulation entered into by Appellant and the Committee in the District Court.
4. At the time of his retainer by the American Archives Association, the Respondent knew that in similar cases, for many years, and right up to the time of his retainer in the Gage matter, other reputable attorneys practicing in the District of Columbia, known personally to him, had represented and been retained by both the American Archives Association and the heirs who had made assignments of portions of their interests to it.
5. Respondent undertook his representation of American Archives Association and the heirs in good faith. After the Respondent was advised by the Grievance Subcommittee that it questioned whether Respondent’s representation of American Archives Association and the paternal heirs was in conformity with the canons of ethics as to solicitation and as to conflict of interest, Respondent continued to represent the paternal heirs and the American Archives Association. Respondent advised the Grievance Subcommittee as to his reasons for so continuing, and that according to his understanding of the law in this jurisdiction there was no conflict of interest and no solicitation; that if a conflict should arise he would promptly suggest to his clients the need for separate representation; and because of his understanding of his duties and obligations to his clients he did not feel that he could or should withdraw.
That the Bar itself has never taken formal action is regrettable since the Court has been informed by the Committee on Admissions and Grievances that the matter of the particular Association and its relationship with counsel in this jurisdiction over the years in different cases has been discussed.
It is the view of the Court, and we so hold, that such relationship partakes of the nature of champerty, amounts to the solicitation of professional employment, permits the intervention of a lay agency between attorney and client, foments litigation and intrudes upon the duty requiring counsel to use his best efforts to restrain and prevent the client from doing things which the lawyer himself ought not to do.
We are not disposed, however, to enter any formal order of censure against the respondent while others similarly situated remain untouched in the wings because the question has hitherto not been formally raised.
Nevertheless this result is not to be taken as leading either to the conclusion or to the inference that the Court subscribes to the attenuated form of reasoning which presumes to assert that what has been done in the past by others under similar arrangements with the same Association, or indeed with any other organization, corporate or otherwise, or with any lay individual, can be done with impunity because the question of its propriety has never been formally raised. Such past conduct does not clothe the fault itself in the habiliments of professional rectitude. Nor is good faith or the lack of bad faith an exculpatory circumstance.
the "heir finder" creates not a potential but an actual and present conflict of interest. Among other things, the first obligation of a lawyer acting truly and wholly in the interests of the heir might well be to advise his heir-client (a) that the contingent fee contract between the "heir finder" and the heir was void; (b) that he, the lawyer, already represented and owed primary duties to the "heir finder"; (c) that in all but rare instances where a contest over heirship existed, the heirs might not need either a lawyer or the Archives Association, and that a contingent fee might be inappropriate; (d) that at most the services of a lawyer, barring a challenge to the heir's rights, would be minimal and that representation should be for a fee measured by the time necessarily devoted to collection of heir's claims. Here, however, the prime duty of Appellant arose out of a prior contract with the "heir-finder" to "represent its interests under assignments which it had secured from" the very same heir. This prior contract with the "heir-finder" would tend to silence any urge to give such advice to the new client.
These propositions are so clear and plain that it is difficult to see why lawyers needed to await the action of the Committee on Admissions and Grievances and the decision of the District Court. However, it appears that repetition of this pattern of conduct had dulled the perception and professional sensibilities of some members of the bar to the point the District Court felt that in fairness to this Appellant he be warned rather than disciplined.
A major premise of our opinion, issued March 3, 1967, was that a conflict of interest is present when a lawyer representing an heir-finding association claiming rights in an estate as assignee of the heirs also represents those heirs. The question of conflict arises because the assignment, procured from the heirs as “payment” for divulging information about their possible inheritance, may well be unenforceable, and a lawyer acting as counsel for the heirs may well have an affirmative duty to advise them of that possibility.
The facts and charges lodged in the Pennsylvania Disciplinary Board’s action in Office of Disciplinary Counsel v. Jeffrey E. Piccola, 85 DB 2012, are very similar to those in Sullivan v. Committee of Admissions, supra.
In Keen Estate, 56 Pa. D.&C.2d 470 (Phila. O.C. 1972), an heir searcher hired by an executor presumed to be on a contingency fee agreement refused to disclose the name and address of a beneficiary until such beneficiary signed the fee agreement.
In consideration of the agreement of Gwirtz-Davis Genealogical Service, a corporation, to provide me with information with respect to certain assets in which I may have an interest, arising from the above source, and in consideration of your agreement to continue your efforts and investigation to determine the extent thereof through genealogical research, I, for myself, and my heirs, executors, administrators and assigns, herewith and hereby assign and grant to you an undivided twenty-five (25%) interest in every portion of the said property or assets to which I may be entitled, and I hereby agree to cooperate fully with you in this matter.
It is understood that in the event I receive nothing from the abovementioned property and assets, I shall not be under any obligation to you under this agreement.
I understand that you are not undertaking to do any legal work whatsoever, and that I am to employ an attorney of my own choice to represent my interest in this matter, whose fee shall be paid by me.
On his return home, Mr. Allen telephoned Mr. Meigs and later wrote to him. Mr. Meigs agreed to take this case. Mr. Allen arranged to pay his counsel “(f)ive percent of what I received,” and he “would receive nothing” in the event Allen did not receive anything.
2. I entered into a contract with Gwirtz-Davis … and I have determined that the contract is fair and reasonable …I object to any efforts by any Court to take up the matter of my arrangements with Gwirtz-Davis. I consider these arrangements to be my private business….
The courts in England and in the United States have long looked with disfavor upon the evils inherent in heir hunting. This activity is conducted by heir searchers or genealogists who have learned that unknown or missing heirs may exist in an estate in process of administration, and endeavor to locate an heir by exploration of genealogical information and public records. The expectant heir, in due course, is informed that he has a claim against the unsettled estate and is promised or provided with genealogical and other essential information by which his claim may be established, on condition that he contracts with the heir hunter to agree to pay a substantial portion of his inheritance to the genealogist.
... Further, counsel [for the estate] “started him on his search,” and Davis agreed that if Davis was successful, he would make appropriate arrangements  with any heir or heirs. This was so, notwithstanding it was the duty of the administrator to search for and locate heirs, [citations omitted], and to report in writing to the court, detailing his investigation and the relevant facts: [citations omitted].
There can be no question that all of the expenses of the search for an heir of Harold Atkinson and of preparing and presenting evidence of kinship of Franklin A. Allen to the orphans’ court, were initially to be borne by Davis, whose sole vehicle for recovery of the expenses was the agreement of February 20, 1978: that is, by Allen’s granting to Davis of “an undivided twenty-five (25%) percent interest in every portion of the said property or assets to which I (Allen) may be entitled.” Such a bargain to share in the proceeds contingent on the success of the litigation is illegal, if it is also part of the bargain that the party seeking to enforce the claim shall pay the expenses incident thereto: Ames v. Hillside Coal & Iron Co., supra, at 272; McIlwain’s Estate, supra, at 622.
“… [I]n every such conveyance or contract with an heir, reversioner, or expectant, a presumption of invalidity arises from the transaction itself, and the  burden rests upon the purchaser or other party claiming the benefit of the contract to show affirmatively its perfect fairness, and that a full and adequate consideration was paid. …” 3 Pomeroy, Equity Jurisprudence §953a (5th ed. 1941).
Questionable activity by Mr. Davis continued in his meeting with Mr. and Mrs. Allen on February 20. Here, inquiry should be made as to the good faith or unconscionability of Mr. Davis’ conduct, the relative position of the parties in the bargaining process, the nature of the contract, and the manner in which the contract clauses were brought to the attention of Mr. Allen.
It is clear that Davis, having knowledge that Allen appeared to be the only heir of Harold Atkinson, withheld that information from Allen until Allen signed the letter in which he agreed to assign to Davis “an undivided (sic) twenty-five (25%) percent interest” in the property to which Allen might be entitled (Trustee’s Exhibit 3). Davis told Allen, when they met at the Tampa airport, that, if he did not sign the contingent fee contract, “that was it.” Nevertheless, Davis waved the “six figures” at Allen, in effect saying that if Allen did not sign, he would not disclose any information. Allen understood that he would not be told the name of the person from whom he might have inherited if he did not sign.
Davis’ part in the selection of Allen’s nominal counsel is reflected in the bizarre drafting and execution of the affidavit of April 16, 1979.
It is not surprising that Mr. Meigs’ senior associate and co-counsel stated “that Mr. Allen has somewhat completed disavowed the affidavit,” apologized for it and requested permission to withdraw  it. But the affidavit speaks dramatically of the relationship of Davis, Allen, and Allen’s counsel. This court finds that counsel’s retainer was at the instance of Mr. Davis and that Mr. Meigs ambiguously, at least, represented Mr. Davis in this matter.
That Davis was in control is evident in that here and in each estate presently under review by this court in which Davis recommended counsel to the putative heir, counsel’s contingent fee for legal services amounted to five percent of the recovery, although Davis’ compensation ranged from 25 percent to 40 percent. [Citations omitted.] In none of these cases did Davis, before asking the possible heir to execute the contract, ask him whether he had counsel. Although Davis never undertook to pay counsel for the heir, in those estates where Davis’ share was in excess of 25 percent he reduced his own compensation by five percent where the heir accepted counsel suggested by Davis.
The primary, if not the only role of counsel for the heir was to call Mr. Davis as a witness to introduce proof of kinship.
In arguing in a manner that indicated advocacy of Davis rather than Allen, counsel treated the agreement as a fait accompli: As noted above, Mr. Davis had entered into a contract with the claimant before Mr. Meigs or his office became involved. Thus, compensation had already been agreed upon before claimant secured a lawyer and by the time counsel was retained, any question of payment on Mr. Davis’ contact had already been concluded.
2) Brandywine Heights Area School District v. Berks County Board Of Assessment Appeals, 821 A.2d 1262, 1265 (Pa. Cmwlth. Ct. 2003) (“In order to establish a prima facie case of champerty, three elements must exist. Those elements are: 1) the party involved must be one who has no legitimate interest in the suit; 2) the party must expend its own money in prosecuting the suit; and 3) the party must be entitled by the bargain to share in the proceeds of the suit. [Citations omitted.] Additionally, "[t]he activity of champerty has long been considered repugnant to public policy against profiteering and speculating in litigation and grounds for denying the aid of the court."” [Citation omitted.]).
3) Fleetwood Area School District v. Berks County Board Of Assessment Appeals, 821 A.2d 1268 (Pa. Cmwlth. Ct. 2003).
“COUNSEL: … Jeffrey E. Piccola, Harrisburg, for Strader, Hatfield and Munley, participating parties.
We locate missing heirs to estates. You are one such heir. A substantial inheritance awaits heirs who make timely claims.
We are so sure of your stake in an existing estate that we are willing to prove your interest at our own expense. All we need is your assurance, [Mrs. Hatfield], that we will be rewarded when your inheritance is paid to you. Please read the enclosed agreement.
As you can see, if you receive no money, you owe us nothing. I promise you will have no expenses at any time. We disclose details about estates only after receiving agreements. This shields us from heirs who would take advantage of our genealogical achievements.
After we receive your agreement we will be able to obtain further information such as the expiration date for claims, or when you may expect to receive your inheritance (after we validate your claim). Such information is unavailable to us without your cooperation, so I urge you to send your agreement today … A post-script states “I would not have wasted time locating you if I was not 99% certain of your opportunity to collect an inheritance.” The agreement includes a partial assignment of rights and provides FRI’s fee is 35% of the inheritance obtained. Only upon signing and returning the assignment agreements did the appellees discover in a June 11, 1990 letter from FRI that their first cousin Donald Jones had died intestate.
Approximately 27 states have retained the doctrine of champerty and 3 additional states do so with the added element of ‘officious intermeddling.” Paul Bond, “Making Champerty Work: An Invitation to State Action,” 150 U. Pa. L. Rev. 1297, Appendix, pages 1333-1341 (2001-2002).
Traditionally, heir finders, particularly the more unscrupulous ones, attempt to collect contingency fees as high as 50 per cent from beneficiaries or the estates. As will be seen, courts often look with disfavor on such contracts.
n22 See Mohn v. Hahnemann Medical College & Hospital, 357 Pa. Super. 173, 515 A.2d 920 (1986), app. den. 515 Pa. 582, 527 A.2d 542 (1987); Reed v. Philadelphia Transp. Co., 171 Pa. Super. 60, 90 A.2d 371, 33 A.L.R.2d 1166 (1952).
n23 Atkinson Estate, 20 Pa.D.&C. 3d at 715 & 728; McIlwain's Estate, 27 Pa.D.&C. 619 (Phila. O.C. 1936).
n24 Atkinson Estate, 20 Pa.D.&C. 3d at 715.
Pursuant to the rules of court, Pennsylvania decisions have consistently imposed a duty upon personal representatives or their counsel to perform a reasonable investigation for missing and unknown heirs, to provide notice to such possible heirs before audit, and to report the results of the investigation to the court. In re Estate of Rosen, 2003 Pa. Super. 96, 819 A.2d 585 (2003); In re Estate of Alexander, 2000 PA Super 206, 758 A.2d 182 (2000); Annotation, Duty and Liability of Executor with Respect To Locating and Noticing Legatees, Devisees, or Heirs, 10 A.L. R.3d 547 § 2 (1966).
As in Pa. Dept. of Banking v. NCAS of Delaware, where public policy nullified a choice-of-law clause, the same rule should apply in cases of champerty. “While there has been some relaxation in the application of the common-law doctrines of champerty and maintenance in this, as well as in other jurisdictions, champerty, repugnant to public policy, is still ground for denying the aid of the court.” Ames v. Hillside Coal & Iron Co., 314 Pa. 267, 171 A. 610, 612 (1934); accord as to champertous action being contrary to the public policy of the Commonwealth of Pennsylvania: Atkinson Estate, 20 Pa.D.&C. 3d 700, 715, 2 Fid Rep. 2d 79 (Phila. O.C. 1981); (“The activity of champerty has long been considered repugnant to public policy against profiteering and speculating in litigation …”); Clark v. Cambria County Board of Assessment Appeals, 747 A.2d 1242, 1245 (Pa. Cmwlth. Ct. 2000); Brandywine Heights Area School District v. Berks County Board Of Assessment Appeals, 821 A.2d 1262, 1265 (Pa. Cmwlth. Ct. 2003); Fleetwood Area School District v. Berks County Board Of Assessment Appeals, 821 A.2d 1268, 1273 (Pa. Cmwlth. Ct. 2003).

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