For Justice, Not Profit: Public Funding of Collective Redress

Third-party litigation funding (TPLF) is widely viewed outside of Canada and the United States as indispensable to a viable collective litigation regime. Australia, for example, has a robust TPLF industry that has funded hundreds of class actions.² TPLF has been addressed by the European Commission in its Recommendations on collective redress³ and is the subject of much discussion in European academic circles.⁴ In the absence of rules permitting lawyers to charge a contingency fee,⁵ complex, expensive litigation on behalf of litigants with small value claims requires external funding. Even where contingency fees are permitted, as is the case in all Canadian jurisdictions and in a handful of EU member states,⁶ the possibility of adverse costs and varying levels of risk tolerance and financial capacity among law firms still leave a gap for external funding. Legal expense insurance has had limited success.⁷ While the commercial TPLF industry continues to grow in many EU collective redress regimes, its not-for-profit cousin has received far less attention. Yet, the latest EU Directive envisions the possibility of public funding "to ensure that the costs of the proceedings related to representative actions do not prevent qualified entities from effectively exercising their right to seek [injunctive and redress] measures."⁸