Canadian Lawyer

48 J A N U A R Y 2 0 1 7 w w w . C A N A D I A N L a w y e r m a g . c o m he first statutory restric- tions against mainten- ance and champerty were enacted in England in 1305, as a result of royal offi- cials and nobles lending their names to dubious legal claims in exchange for a portion of any proceeds. The medieval-era statutes were repealed in 1967 and, for most in the profession today, the doctrines are likely a long-ago law school memory. However, the concepts are being addressed again in courts in Canada in the 21st century, in connec- tion with third-party funding agree- ments for litigation. The practice has been in place in countries such as Australia and the United States for several years. One of the most high-profile examples is the funding by Silicon Valley billionaire Peter Thiel of the successful lawsuit by Hulk Hogan against Gawker over the publishing of a sex tape involving the former pro wrestler. In Canada, it is still a new phenomenon involving less salacious subject matter and primarily used in class action litigation. In exchange for providing a financial hedge against expenses, the outside fund- ers may receive as much as 40 per cent of any award, depending on the extent of the resources advanced and whatever is in the terms of the agreement. Proponents say it is a way to increase access to justice given the current real- ities and costs involved in complex litiga- tion. Those who are wary of the funding deals raise concerns about whether the client is best served by this type of fund- ing arrangement and that it can raise eth- ical issues for the plaintiff-side lawyers. While there may be debate about the practice of an outside investor covering costs awards, experts' fees, disburse- ments or even the full expense of the litigation, the relatively few decisions in Canada in this area have all said that there is no prohibition against it. Where there have been differences have been in the specifics of the agreement, what is needed for court approval and what must be disclosed to a defendant. Third-party litigation funding is almost certainly likely to increase, says Howard Borlack, a litigator and found- ing partner of McCague Borlack LLP in Toronto. "This should not just be limited to class actions. The companies doing this are very sophisticated. This is what they do for a living. They are not fishing for cases," says Borlach, who L E G A L R E P O RT \ L I T I G AT I O N JEANNIE PHAN T Third-party litigation funding Canadian courts are increasingly being asked to scrutinize outside funding arrangements By Shannon Kari

• Cover