Canadian Lawyer

January 2012

The most widely read magazine for Canadian lawyers

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letters to the editor Send your letters to: gail.cohen@thomsonreuters.com dilemma of a full-recourse loan as pointed out by Ron Kalish in your article. Lexfund processes its loans through the plaintiffs' lawyers More perspectives on litigation loans I would like to offer some additional perspective to statements made in the article on third-party litigation loans, ["The Loan Arrangers," November/December 2011] especially with regard to the approach used by Lexfund. The debate over litigation funding as a response to the esca- lating cost of litigation took place in common law jurisdictions such as the U.K. and Australia over a decade ago with the result that in 2000 the Access to Justice Act in the U.K. was amended, obliging lawyers to discuss with their clients the existence and availability of third-party funding for legal costs. At an interna- tional conference on litigation funding held in March 2008 in London, former English High Court judge Sir Gavin Lightman went further and stated that access to justice is today recog- nized as a fundamental human right which has no meaning unless there is access to litigation funding. In Canada, litigation funding and the debate thereon is more recent, with Chief Justice Beverley McLachlin declaring in August 2007 that the high cost of litigation presented an "urgent" problem. Since then, the Canadian courts have recog- nized, in several instances, third-party litigation funding and allowed recovery of the cost of borrowing from the defendants. Lexfund's "Owe nothing if the case is lost" offers plaintiff borrowers peace of mind. When Lexfund entered into the field of litigation funding, it concluded that it made no sense for loans to be on a full-recourse basis. If plaintiffs lost their case, their financial situation was not improved and they had the added burden of paying off the litigation loan. That is the to ensure the ultimate decision about whether a litigation loan is right for the plaintiff remains between the plaintiffs, their lawyers, and/or their independent legal advisers, since litigation funding is a strategic resource to be used appropriately. Lexfund's team, with experience in litigation and insurance risk assessment, independently assesses the merits of each claim. Since Lexfund assumes the financial risk of the litigation, Lexfund is conservative in its underwriting and, in most cases, Lexfund's security ranks behind the lawyer's fees. Most of the bodily injury cases funded by Lexfund on a non-recourse basis were between 18.5-per-cent and 24-per-cent interest (com- pounded monthly), while the full-recourse loans referred to in your article mention a maximum of 24-per-cent interest, com- pounded semi-annually. The rate in Bourgoin v. Ouellette for a full-recourse loan was 32.9 per cent. Loan statements, pro- jecting out several years, are given to the plaintiff and lawyer before and at the time of entering into the loan agreement and annually, so that the parties know the cost of this borrowing. Catastrophic cases require multi-disciplinary expert evi- dence and small loans of $7,500-$10,000 will not meet the needs of these plaintiffs who rarely have sufficient assets to sell nor deep-pocketed relatives or friends from whom to bor- row in order to fund these cases. Litigation funders prepared to meet the needs of these plaintiffs are few and far between because of the challenges they face in underwriting these cases, be they liability, quantum, spread of risk, and others. The fictional character on your cover, the Lone Ranger, fought for justice. Third-party litigation funding is not a panacea for Canada's legal ills but it does allow many plain- tiffs to have their day in court. PIERRE P. GRÉGOIRE President, Lexfund Management Inc. Waterloo, Ont. welcomes letters to the editor but reserves the right to edit for space, taste, and libel considerations. Please include your full contact information. UNCOVERING FRAUD ANNUAL CORPORATE COUNSEL SURVEY FIRM FIRST November/December 2011 $7.00 Comments from canadianlawyermag.com Excellent article. Well balanced and well researched. ONLINE COMMENT FROM JOSEPH PILEGGI are they necessary for access to justice or simply a th f that end up hurting more than helping victims? CL_NovDec_11.indd 1 11-10-25 11:51 AM www.CANADIAN Lawyermag.com JAN UARY 2012 7 Did we do away with Maintenance and Champerty? I've always wondered how these services got around these age old restrictions. ONLINE COMMENT FROM IAN SMITH R ember/Dec e: The L No v C anadian L a wy er oan A rr an g ember 2011 ers WILD WEST C ASH GRAB LITIGA TION LO ANS: PUBLICATIONS MAIL AGREEMENT # 40766500 LOAN THE ARRANGERS

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