Class actions can be very expensive. Certification motions are hotly contested. Trials can be long and expensive. In Ontario, at every step of the process, the representative plaintiff (and any law firm that agrees to indemnify the representative plaintiff) can be liable for significant adverse cost awards. For many years, the Class Proceedings Fund (the Fund) was the only option available for plaintiffs requiring financial assistance. In exchange for 10 percent of any settlement or judgment, the Fund would agree to provide funding for disbursements and to be liable for any adverse cost awards. More recently, other options have become available to plaintiffs requiring financial assistance to bring class actions. Third party companies have offered equivalent arrangements to the Fund, at cheaper cost. While the Fund’s assistance is permitted by statute, there is no equivalent statutory framework to regulate third party financing of class actions. The issue potentially engages questions of champerty and maintenance, as well as other issues, including the amount of control the funder should have over the litigation itself. The paper reviews the historical approach to third party funding of class actions in Ontario and the more liberal approach to these arrangements in recent years. It examines how courts in other jurisdictions such as the United Kingdom, the United States, and Australia have sought to regulate and address third party financing of class actions. The paper draws on these approaches to suggest a framework for third party financing of class actions in Ontario.
Jean-Marc Leclerc (Sat,) studied this question.