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OP I N ION BY PHILIP SLAYTON LEGAL ETHICS It's time to embrace champerty Access to justice is a huge issue and third-party financing of lawsuits can help overcome certain obstacles. means, in exchange for some of the proceeds. The related doctrine of main- tenance means interfering in a lawsuit in some way other than financially. Nice people don't do champerty (or maintenance). Upstanding lawyers don't get involved. It's not ethical. So some would say. Champerty is illegal in Canada, C although the law is, guess what, com- plicated and increasingly uncertain. In Ontario, champerty is unlawful by stat- ute (the Champerty Act, passed in 1897 and not touched since), and in the other provinces by common law which classi- fies champerty as a tort. A champertous contract — an agreement to finance a lawsuit — is most likely unenforceable. hamperty. It's a nasty sounding word. It means financing someone else's lawsuit for improper motives, whatever that The prohibition of champerty, designed originally to guard against bad (i.e. rich and powerful) people meddling with the justice system, has eroded somewhat in recent times, particularly since the courts decided that contingency fees charged by lawyers (a form of inves- tor financing) are OK. Some Canadian investors have lately stuck a toe in the litigation financing waters. But negative attitudes about champerty linger on and legal problems with it remain. It's time to embrace champerty with enthusiasm, "improper motives" and all. Access to justice is the gravest prob- lem facing the legal system. Everyone says so, including Chief Justice of Canada Beverley McLachlin, who says so repeatedly. A big part of the access problem is the expense of hiring law- yers and pursuing a claim. Crippling costs put the legal system beyond the reach of all but the rich. Why would 16 FEBRUA R Y 2011 www. CANADIAN Lawyermag.com we, for some obscure ethical reason, turn our back on a source of financ- ing? I think it is hypocritical for the legal system to make itself prohibitively expensive and then deny would-be par- ticipants money that could be available to them. One way to finance litigation is to borrow money. In the United States, third-party lending to litigants has become widely accepted. Binyamin Appelbaum recently reported in The New York Times, "large banks, hedge funds and private investors hungry for new and lucrative opportunities are bankrolling other people's lawsuits, pumping hundreds of millions of dol- lars into medical malpractice claims, divorce battles and class actions against corporation. . . ." ("Investors put money on lawsuits to get payouts," Nov. 15, 2010.) One hedge fund, for example, lent money to a lawyer who represented DARCy MUENChRATh