3rd-Party Investors are Funding Canadian Litigation, Too
It isn’t just Australia and the United Kingdom where investors are making inroads into litigation-funding practices that once were the exclusive province of lawyers and, in individual cases, their clients.
Third-party investors are paying for litigation, including commercial cases, in Canada, too, as at least one bar group takes a wait-and-see approach to the potential ethical issue, according to the Financial Post. In theory, at least, the availability—or lack—of investor funding could also eventually have a significant effect on the cases that are and are not brought by Canadian lawyers, and even the litigation tactics they use.
Although Bridge-Point Financial Services is best-known for funding personal injury cases, the Toronto firm will also cover up-front litigation costs in commercial cases, the newspaper writes. “When we saw the way law firms were financing themselves, we thought this was an incredible opportunity,” principal John Rossos, an attorney and merchant banker, tells the Post. “Contingency-fee practices often can’t get traditional financing. This is an innovative solution that advances access to justice and has significant social policy implications.”
The Law Society of Upper Canada is awaiting further developments before taking any position on the issue. But Alan Lenczner, a well-known Canadian litigator, is “apoplectic” that lawsuits are now considered an investment vehicle, the Post reports. “This will turn our courts into a stock exchange,” he says, pointing out that the approach could, for instance, put “the lawyer in the position of being beholden to a third party expecting a return. What happens when there’s a settlement proposal? What if the funders want to settle and the client doesn’t?”
As discussed in earlier ABAJournal.com posts, major London firms are now actively helping clients secure third-party funding for their cases. Last year, an Australian plaintiffs firm also made headlines when it went public, selling shares in the law firm on the open market to non-attorneys in order to fund a significant expansion.
