Canadian Lawyer

cannot accept contingency fees or afford funding their own cases. That prompted Maurice Blackburn to look further afield to capitalize on its class action expertise, according to Peter Koutsoukis, a principal at the firm and managing director of CFI. "We saw an opportunity for a much better return on investment. As a funder, you get a reward that's not just based on hourly rates, which is all you can get in Australia," he says. By funding the entire litigation, including lawyers' fees and disbursements, Australian third-party funders can expect a cut as large as 30 per cent from a settlement, a model CFI has mimicked in a many European cases. That dwarfs the seven- to 10-per-cent range emerging in Canada. "Canada is in some ways a limited opportunity, because you can only really provide adverse costs cover," says Koutsoukis. "There are greater rewards elsewhere, but it's still a good business opportunity for us, and you have the ability to earn a commission that is greater than doing it for your hourly rates." With so much more at stake, Australian funders have taken on a more active role, but Koutsoukis says he has no problem with Perell's approach, which emphasizes deference to class counsel and representative plaintiffs. So far, CFI has only negotiated agreements with Siskinds LLP of London, Ont. "In any litigation, it's important to choose the right case and the right lawyer. We like to deal with the leading firms in the area, and that's certainly how we regard Siskinds. We're quite happy to sit back and let them run the case as they see fit. They have an amazing record," he says. "They don't take instructions from us, but they advise us of significant issues." John Rossos, a principal at BridgePoint Financial Services Inc., a homegrown litigation funder, says he needs no encouragement to hold back from interfering with litigation decisions taken by class counsel. "If you put counsel at a conflict of interest, that is going to imperil your ability to get the right result," he says. However, he is troubled by Ontario judges' approach to privilege in third-party funding agreements. BridgePoint was the funder in 2009 when an Alberta judge approved the country's first litigation funding agreement in a class action. The motion for approval was heard on an ex parte basis, but Ontario judges have moved in the opposite direction, opening up agreements in open court and inviting submissions from defendants. "I personally think Ontario has got it plain wrong, and I'd like to see what the Court of Appeal would say about it," says Rossos. "What business is it of the defendant to determine how the plaintiffs are managing their affairs?" Eric Hoaken, of Toronto's Lax O'Sullivan Scott Lisus LLP, says some of his class action clients were initially suspicious of thirdparty funders when they arrived on the scene. "I think much of that concern has been alleviated with the passage of time," he says, in part because of the level of judicial scrutiny agreements are subject to, and also because of the reassurance an indemnity offers for defendants when collecting on costs judgments. But with the cost regime for class actions in Ontario coming into question altogether, third-party litigation funding "may be a short-lived phenomenon," according to Siskinds partner Charles Wright. "There may still be a role for some expenses and fees, but the need would likely be a lot less," Wright says. "I think a no-costs rule is probably better for plaintiffs. They'd rather not pay seven per cent to a funder." While some viewed Perell's judgment in Bayens as a veiled endorsement of a no-costs regime, Ontario Superior Court Justice Edward Belobaba nailed his colours more explicitly to the no-costs mast in a trio of certification costs judgments released Nov. 8 decrying the expense of class action litigation. Claiming that "most members of the class action bar" agreed a no-cost rule would be "more sensible" for Ontario, the judge wrote: "Like them, I also wish that the recommendations on costs as set out in the Ontario Law Reform Commission's  Report on Class Actions had been accepted. Instead, the provincial legislature decided to adopt the views of the Attorney-General's Advisory Committee  and continue the 'costs follow the event' convention for the very different world of class actions as well. I was a member of that Advisory Committee. I now realize that I was wrong. . . . Hopefully, our mistake will be corrected." Jasminka Kalajdzic, a professor at the University of Windsor's law school, says amendments to the Class Proceedings Act to reflect the emergence of third-party funders would be preferable to the current piecemeal rulemaking by judges. "There are fundamental policy issues involved here . . . everyone talks about access to justice and the state of crisis the civil justice system is in. Third-party litigation funding is potentially one of the solutions, but it comes at a pretty steep cost, and it is so far an unregulated practice," she says. Kyla A. Baxter, CSSC PRESIDENT, BAXTER STRUCTURES What do your clients need? The means to move on. Guaranteed . ™ Baxter Structures customizes personal injury settlements into tax-free annuities that can help your clients be secure for life. Need more information? Contact us at 1 800 387 1686 or baxterstructures.com www.CANADIAN ntitled-1 1 L a w ye r m a g . c o m Jan uary 2014 47 13-09-16 2:53 PM

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