Law Times

Law Times • march 14, 2016 Page 9 www.lawtimesnews.com Aussie litigation funding company comes to Canada BY YAMRI TADDESE Law Times A n Australian-based, in- ternationl litigation fund- ing company has made a foray into the Canadian market with an office in Toronto. Bentham IMF's Toronto ex- ecutives say they saw an opportu- nity in Ontario as once-reluctant judges are becoming more will- ing to accept third-party litiga- tion funding arrangements to make way for access to justice. "We've been watching what's happening. Slowly, the case law has started to accept and legiti- mize what our business model is so it just seemed like the perfect time to come here and open our office," says Tania Sulan, chief in- vestment officer at Bentham IMF in Toronto. "We're the first inter- national commercial litigation funder to [open an office here]; it's very exciting for us." A former Australian com- mercial litigator, Sulan moved to Toronto to open the Bay Street office in January. The company has 10 offices worldwide, includ- ing in cities in the U.S., Europe, Africa, Asia, and Australia. "Canada represents a great opportunity for us to innovate and work out ways that we can help clients and lawyers to re- duce the risk of litigation, and particularly where clients are concerned, to manage cash f low issues," Sulan says. Unlike most litigation fund- ing companies currently in On- tario, Bentham IMF says its core practice isn't consumer-focused. It will instead fund what it deems "meritorious" actions between businesses large and small. Bentham IMF doesn't lend money to parties in commer- cial litigation; it funds them. The terms of the funding arrange- ment will vary by the case, says Sulan. The company could bank- roll the entire litigation, with lawyers' fees and disbursements included, if those are the terms to which it agrees. If the case is suc- cessful, the company could take a 25- to 40-per-cent cut from the cash awarded to the plaintiff. If the case is unsuccessful, it will ab- sorb the adverse costs against the party it is funding. Until recently, Canadian courts frowned upon the in- volvement of third-party litiga- tion funders that stand to benefit from a specific outcome in litiga- tion. But they've started relenting in personal injury or class action matters involving individuals who could not afford litigation on their own. Naomi Loewith, a litigation funding investment manager at Bentham IMF's Toronto office, says her company's presence in the Canadian market is good for access to justice. "As you know, access to jus- tice has become an increasing concern for not just individu- als but [also] for companies that can't afford to advance their case in court," says Loewith, a former lawyer with Lenczner Slaght LLP. "They often have meritorious cases but can't find lawyers who will take the cases because there's a lot of law firms that don't offer any sort of contingency arrange- ments. So this will enable those meritorious cases to go forward and the client can hire the law- yers they want." The company says in the U.S. it's found that lawyers who take on cases on a contingency basis have been willing to "share risk" with it. But Bentham IMF says its business model works even if lawyers are not experienced, or comfortable, with contingency fees since lawyers can be paid in full, if that's what they choose. "Our feeling is that people are interested in understanding more about what we do. We've certainly had a lot of referrals to look at cases, but we're quite se- lective in what we fund. We prob- ably only fund about five per cent of what we look at," Sulan says. "We think that's important for a sustaining funding industry because we only want to be in- volved in cases that we think are robust and deserving of using the court," she adds. But to some, the legitimiza- tion of such businesses in Ontar- io is a sign of problems with the civil justice system. It is, in fact, "a tacit admission that the litigation system is broken," says Jordan Furlong, a legal industry analyst at Edge International. "If we are conceding that it is impossible even for legitimate claims to get to the court sys- tem without getting third-party investment involved, then let's give up all pretence that we have a functional litigation system," Furlong says. Furlong, who says he's typi- cally "the innovation guy" who champions new ideas, is a skeptic when it comes to the concept of litigation funding. "I find it a little interesting that in a profession that rejects the ownership of law firms and legal enterprises by non-lawyers and for-profit companies that we're open to the idea that these [litiga- tion funding] companies and en- tities can take a free hand in the financing of lawsuits," he says. Furlong says while litigation funders may not intentionally al- ter the course of litigation to lead to an outcome that's in their best interest, the mere appearance that they do is problematic. "If you're investing in a law- suit, you have interest in how that lawsuit is going to be engaged," he says. If, for example, a settlement is proposed in the case, it may not justify the funders' investment in the case even if the settlement is "perfectly fine" from the point of view of the party being funded, Furlong says. "There's an inher- ent conf lict of interest." While judges have made ex- ceptions in the case of individu- als who cannot afford litigation, it's harder to make out the case for access to justice when com- panies are being funded, he says, adding that lawyers would rarely decline to take a case they believe is meritorious. LT FOCUS 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. » Pre- and post- settlement consultation and support » Caring professionalism for over 30 years » No fee to you or your clients Need more information? Contact us at 1 800 387 1686 or baxterstructures.com Kyla A. Baxter, CSSC PRESIDENT, BAXTER STRUCTURES Baxter_LT_Oct7_13.indd 1 13-10-01 4:03 PM Tania Sulan says Canada represents a great opportunity to work out ways her company can help clients and lawyers reduce the risk of litigation.

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