Hostname: page-component-cd9895bd7-mkpzs Total loading time: 0 Render date: 2024-12-24T13:31:34.408Z Has data issue: false hasContentIssue false
  • English
  • Français

Law’s Financialization: Litigation Finance and Multilayer Access to Justice in Canada

Published online by Cambridge University Press:  28 September 2018

Michael Molavi
Michael Molavi*
Affiliation:
The Legal Education Foundation Postdoctoral Research Fellow Bonavero Institute of Human Rights, University of [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

In the aftermath of the Global Financial Crisis, states around the world have experienced sustained growth in the emerging industry of litigation finance in light of the perceived insularity of courtrooms from the instabilities and fluctuations of financial markets. In Canada, this nascent industry has been dominated by class actions given the high costs, risk exposures, and attractive rewards associated with collective redress. Such investments have been legitimated as promoting access to justice, a fundamental human right. This paper traces the historical and contemporary development of this legal dynamic of financialization by documenting the progressive liberalization of maintenance and champerty laws from the nineteenth century to the current period through a series of case studies, before exploring the legal economics of the emerging industry in Canada. In so doing, this paper critically examines the impacts of law’s financialization on multilayer access to justice.

Résumé

Au lendemain de la crise financière mondiale, des États du monde entier ont été le théâtre d’une croissance soutenue de l’industrie émergente du financement de litiges, une croissance tributaire de l’insularité perçue des salles d’audience ainsi que des instabilités et des fluctuations des marchés financiers. Au Canada, cette industrie naissante a été dominée par les recours collectifs eu égard aux coûts élevés, à l’exposition aux risques et aux récompenses attrayantes qui sont tous associés auxdits recours collectifs. De tels investissements ont d’ailleurs été légitimés au nom de l’accès à la justice, un droit humain fondamental. Avant d’explorer l’économie juridique de cette industrie émergente au Canada, cet article illustre le développement historique et contemporain de la dynamique juridique de la financialisation en documentant la libéralisation progressive des lois sur le soutien abusif et la champartie entre le XIXe siècle et la période actuelle, et ce, à travers une série d’études de cas. Ce faisant, cet article examine, d’une manière critique, les impacts de la financialisation du droit sur l’accès à la justice à de multiples niveaux.

Keywords

financializationaccess to justicelitigation financeclass actionsthird party litigation fundingfinanciarisationaccès à la justicefinancement de litigesrecours collectifsle financement de litiges par un tiers
Type
Articles
Information
Canadian Journal of Law and Society / La Revue Canadienne Droit et Société , Volume 33 , Issue 3 , December 2018 , pp. 425 - 445
Copyright
Copyright © Canadian Law and Society Association / Association Canadienne Droit et Société 2018 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

The author would like to thank the anonymous reviewers for their valuable comments and suggestions to improve the quality of the paper.

References

References

An Act Respecting Champerty, R.S.O. 1897 (c. 327).Google Scholar
Applebaum, B. 2010. Investors Put Money on Lawsuits to Get Payouts. The New York Times. November 14. https://www.nytimes.com/2010/11/15/business/15lawsuit.html (accessed 4 April 2017).Google Scholar
Bakker, I., and Gill, S., eds. 2003. Power, Production, and Social Reproduction. New York: Palgrave Macmillan.CrossRefGoogle Scholar
Beisner, J. H., and Rubin, G. A. 2012. Stopping the Sale of Lawsuits: A Proposal to Regulate Third-Party Investments in Litigation. US Chamber of Commerce Institute for Legal Reform. Accessed 11 November 2016. http://www.instituteforlegalreform.com/uploads/sites/1/TPLF_Solutions.pdfGoogle Scholar
Bodkins, E. H. 1935. The Law of Maintenance and Champerty. London: Steven and Sons.Google Scholar
Bhojraj, S., and Libby, R.. 2005. Capital Market Pressure, Disclosure Frequency-Induced Earnings/Cash Flow Conflict, and Managerial Myopia. The Accounting Review 80 (1): 1–20.CrossRefGoogle Scholar
Brown, W. 2015. Undoing the Demos: Neoliberalism’s Stealth Revolution. New York: Zone Books.Google Scholar
Burch, E. C. 2012. Financiers as Monitors in Aggregate Litigation. New York University Law Review 87: 1273–338.Google Scholar
Cameron, C., and Kalajdzic, J.. 2014. Commercial Litigation Funding: Ethical, Regulatory and Comparative Perspectives. Canadian Business Law Journal 55 (1): 1–16.Google Scholar
Class Proceedings Act, 1992, S.O. 1992, c. 6, s.29(2).Google Scholar
Dallas, Lynne L. 2011. Short-Termism, the Financial Crisis, and Corporate Governance. Journal of Corporation Law 37 (2): 264–363.Google Scholar
Dayen, D. 2016. Peter Thiel and the Rise of Casino Justice. The New Republic. Accessed 4 February 2017. https://newrepublic.com/article/133791/peter-thiel-rise-casino-justiceGoogle Scholar
Dennis, A. H. 1890. The Law of Maintenance and Champerty. Law Quarterly Review 6 (2): 169–88.Google Scholar
De Morpurgo, M. 2011. A Comparative Legal and Economic Approach to Third-Party Litigation Funding. Cardozo Journal of International & Comparative Law 19: 343–412.Google Scholar
Epstein, G. A. 2005. Introduction: Financialization and the World Economy. In Financialization and the World Economy, ed. Epstein, G. A., 3–16. Northampton: Edward Elgar Publishing.Google Scholar
Gill, S. 2015. Market Civilization, New Constitutionalism and World Order. In New Constitutionalism and World Order, ed. Gill, S. and Cutler, A. C., 23–44. Cambridge: Cambridge University Press.Google Scholar
Hodges, C., Peynser, J., and Nurse, A.. 2012. Litigation Funding: Status and Issues. Oxford Legal Studies Research Paper No. 55. Accessed 15 July 2016. https://ssrn.com/abstract=2126506Google Scholar
Kalajdzic, J., Cashman, P., and Longmoore, A.. 2013. Justice for Profit: A Comparative Analysis of Australian, Canadian and U.S. Third Party Litigation Funding. American Journal of Comparative Law 61 (2): 93–148.CrossRefGoogle Scholar
Mizik, N. 2010. The Theory and Practice of Myopic Management. Journal of Marketing Research 47: 594–611.CrossRefGoogle Scholar
Molavi, M. 2015. Beyond the Courtroom: Access to Justice, Privatization, and the Future of Class Action Research. Canadian Class Action Review 10 (1–2): 7–32.Google Scholar
Ontario Law Reform Commission (OLRC). 1982. Report on Class Actions. Toronto: Ministry of the Attorney General.Google Scholar
Puri, P. 1998. Financing of Litigation by Third-Party Investors: A Share of Justice? Osgoode Hall Law Journal 36 (3): 515–66.Google Scholar
PYMNTS. Lexshares: Diversification and Access to Justice. Accessed 10 August 2016. http://www.pymnts.com/news/investment-tracker/2016/lexshares-litigation-crowdfunding/Google Scholar
Radin, M. 1935. Maintenance by Champerty. California Law Review, 24 (1): 48–78.CrossRefGoogle Scholar
Sebok, A. J. 2011. The Inauthentic Claim. Vanderbilt Law Review 64: 61–139.Google Scholar
Sebok, A. J. 2014. Litigation Investment and Legal Ethics: What are the Real Issues? Canadian Business Law Journal 55: 111–32.Google Scholar
Senkpiel, P. 2009. Three’s a Crowd: Third-Party Litigation Funding of Class Actions in Canada. Canadian Class Action Review 5 (2): 294–329.Google Scholar
Spiro, P. S. 2014. The Problem of Cost Awards and Third Party Funding in Class Proceeding. CanLII Connects. Accessed 1 September 2016. http://canliiconnects.org/en/commentaries/30012.Google Scholar
Steinitz, M. 2011. Whose Claim is this Anyway? Third Party Litigation Funding. Minnesota Law Review 95 (4): 1268–338.Google Scholar
Steinitz, M., and Field, A.. 2014. A Model Litigation Finance Contract. Iowa Law Review 99: 711–72.Google Scholar
Stiglitz, J. 2013. The Price of Inequality: How Today’s Divided Society Endangers Our Future. New York: W.W. Norton & Co.CrossRefGoogle Scholar
Stiglitz, J. 1989. Using Tax Policy to Curb Speculative Short-Term Trading. Journal of Financial Services Research 3: 101–15.CrossRefGoogle Scholar
Streeck, W. 2016. How Will Capitalism End? Essays on a Failing System. New York: Verso Books.Google Scholar
Trebilcock, M., and Kagedan, E.. 2014. An Economic Assessment of Third-Party Litigation Funding. Canadian Business Law Journal 55 (1): 54–84.Google Scholar
Triedman, J. 2016. Arms Race: Deep-pocketed litigation funders are throwing investor dollars into lawsuits. Is that really such a good thing? American Lawyer 38 (1): 1–6.Google Scholar
Wendel, W. B. 2014a. Alternative Litigation Finance and Anti-Commodification Norms. DePaul Law Review 63 (2): 655–96.Google Scholar
Wendel, W. B. 2014b. A Legal Ethics Perspective on Alternative Litigation Financing. Canadian Business Law Journal 55: 133–64.Google Scholar
Winfield, P. H. 1918. The History of Maintenance and Champerty. Law Quarterly Review 34: 50–72.Google Scholar
Wrbka, S., Van Uytsel, S., and Siems, M.. 2012. Access to justice and collective actions. In Collective Actions: Enhancing Access to Justice and Reconciling Multilayer Interests? ed. Wrbka, S., Van Uytsel, S., and Siems, M., 1–20. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
Yeazell, S. 2001. Refinancing Civil Litigation. DePaul Law Review (51): 183–217.Google Scholar
Dugal v. Manulife Financial Corporation, [2011] ONSC 1785.Google Scholar
Campbell’s Cash and Carry Pty Ltd. v. Fostif Pty Ltd [2006] HCA 41 (Aus. H.C.).Google Scholar
Hollick v. Toronto (City), 3 S.C.R. 158 [2001] S.C.C. 68.Google Scholar
McIntyre Estate v. Ontario (Attorney General) [2002], 61 O.R. (3d) 257 (C.A.).Google Scholar
Metzler Investment GMBH v. Gildan Activewear Inc. [2009] OJ No. 3315 (SCJ).Google Scholar
Money Max Int Pty (Trustee) v QBE Insurance Group Limited. [2016] FCAFC 148.Google Scholar
Persona Digital Telephony Ltd v. The Minister for Public Enterprise. [2017] IESC 27.Google Scholar
Rosen v. BMO Nesbitt Burns Inc. [2012] ONSC 6356.Google Scholar
Rumley v. British Columbia, 3 S.C.R. 184 [2001] S.C.C. 69.Google Scholar
Western Canadian Shopping Centres v. Dutton, S.C.J. 63, [2001] 2 S.C.R. 534.Google Scholar
Dugal v. Manulife Financial Corporation, [2011] ONSC 1785.Google Scholar
Campbell’s Cash and Carry Pty Ltd. v. Fostif Pty Ltd [2006] HCA 41 (Aus. H.C.).Google Scholar
Hollick v. Toronto (City), 3 S.C.R. 158 [2001] S.C.C. 68.Google Scholar
McIntyre Estate v. Ontario (Attorney General) [2002], 61 O.R. (3d) 257 (C.A.).Google Scholar
Metzler Investment GMBH v. Gildan Activewear Inc. [2009] OJ No. 3315 (SCJ).Google Scholar
Money Max Int Pty (Trustee) v QBE Insurance Group Limited. [2016] FCAFC 148.Google Scholar
Persona Digital Telephony Ltd v. The Minister for Public Enterprise. [2017] IESC 27.Google Scholar
Rosen v. BMO Nesbitt Burns Inc. [2012] ONSC 6356.Google Scholar
Rumley v. British Columbia, 3 S.C.R. 184 [2001] S.C.C. 69.Google Scholar
Western Canadian Shopping Centres v. Dutton, S.C.J. 63, [2001] 2 S.C.R. 534.Google Scholar