For Justice, Not Profit: Public Funding of Collective Redress

In the absence of rules permitting lawyers to charge a contingency fee, 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, 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. While the commercial Third Party Litigation Funding (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.” In this brief paper, I aim to contribute to discussions about TPLF in Europe by highlighting a viable alternative to commercial funding entities: not-for-profit litigation funders. In Canada, two such public funders have existed for decades. In the first part of this paper, I explain the purpose of Ontario's Class Proceedings Fund and its historical impetus. I then describe the structure and functioning of the Fund. In the third part of the paper, I explore some of the satellite litigation that has involved the Fund. Finally, I discuss both its successes and its limitations. In the end, the Fund serves both as inspiration and cautionary tale for potential not-for-profit funding entities in EU Member States.