Omni Bridgeway’s Paul Rand, centre, Chief Investment Officer-Canada, Naomi Loewith, right, Investment Manager, Legal Counsel, and Geoff Moysa, left, Investment Manager, Legal Counsel.<\/span>Fred Lum\/The Globe and Mail<\/span><\/p>\n<\/div>\n<\/div>\n<\/figcaption><\/figure>\n In the downtown Toronto office of Omni Bridgeway\u2019s Canadian operation there are two meeting rooms: Maintenance and Champerty.<\/p>\n For a company that funds commercial litigation in exchange for a percentage of the payout, the room names are a cheeky reference to centuries-old common law doctrines that made it illegal to interfere in someone else\u2019s lawsuit \u2013 and do so for a profit.<\/p>\n Maintenance and champerty were criminal offences in Canada until 1953. In recent decades, a series of court decisions \u2013 particularly in the past six or seven years \u2013 has opened the door to third-party litigation funding. Today, this emerging industry has drawn the attention of investors, who are enticed by the promise of returns disconnected from the market. But it has also been heralded as an essential tool for access to justice.<\/p>\n \u201cIn a fight of David against Goliath, we make sure David has what he needs,\u201d said Omni Bridgeway\u2019s managing director in Canada, Paul Rand.<\/p>\n A powerful example is an $8-billion class-action lawsuit brought by the publisher of a small-town Alberta newspaper against two of the world\u2019s most powerful companies \u2013 Google GOOGL-Q<\/a> and Meta META-Q <\/a>\u2013 which is being heard in federal court this week. Omni Bridgeway is partially bankrolling the plaintiff\u2019s claim.<\/p>\n The statement of claim, which has not been proven in court, alleges that the tech giants colluded in a complicated conspiracy to rig online advertising. Spokespeople at both tech companies did not respond to requests for comment.<\/p>\n To make their case, the plaintiff\u2019s legal team has had to tap some of the world\u2019s leading economists and data experts.<\/p>\n \u201cIt\u2019s very expensive,\u201d said the plaintiff\u2019s lawyer, David Sterns of Sotos Class Actions. \u201cWe\u2019d be blowing in the wind without deep-funded partners like this willing to put up capital for experts.\u201d<\/p>\n In the arrangement, Sotos is acting on a contingency basis, while Omni Bridgeway is funding the disbursement costs \u2013 things such as expert witnesses \u2013 as well as adverse costs, which means that in the event of a loss, it will be liable for the other side\u2019s fees. Many Canadian jurisdictions operate on this loser-pays system.<\/p>\n In this model, Sotos and Omni Bridgeway only make money if they win. Mr. Rand says this means the company only invests in cases with merit; it isn\u2019t throwing its weight behind frivolous lawsuits. (With maintenance and champerty, the law evolved in part because judges drew a distinction between financing a case and interfering for an improper motive, such as weaponizing the courts to make an adversary\u2019s life difficult.)<\/p>\n Browning West says Gildan Activewear failed to vet CEO, calls latest allegations a publicity stunt<\/a><\/p>\n Lisa Sygutek, the owner and publisher of the Crowsnest Pass Herald, the Alberta newspaper, says she has spent years watching Big Tech pull away her advertisers. She now delivers the paper herself, because she can no longer afford to pay someone to do it.<\/p>\n \u201cI really felt that somebody needed to step up and say: You know what, you guys \u2013 Google and Meta \u2013 you\u2019re wrong,\u201d Ms. Sygutek said. \u201cI may be a tiny little newspaper in Crowsnest Pass, but this matters.\u201d<\/p>\n But without funding support, she wouldn\u2019t have been able to bring the lawsuit forward.<\/p>\n Elsewhere in the world, regulators and government agencies have gone after<\/a> Big Tech for alleged improper advertising practices, but the Canadian regulator has been slow to act. In 2020, the Competition Bureau opened an investigation into Google\u2019s advertising, but that probe is continuing.<\/p>\n Sotos\u2019 Mr. Sterns said that when regulators don\u2019t have the resources or inclination to go after corporations, the private bar can step in. But regular people can\u2019t take on deep-pocketed Goliaths alone. This is the dynamic that led Canadian courts to soften on maintenance and champerty.<\/p>\n In 2011, the Ontario Superior Court of Justice was asked to consider a funding agreement in which an Irish company, Claims Funding International, would agree to indemnify the plaintiffs in the event of a loss in exchange for a 7-per-cent share of any award up to a certain point.<\/p>\n Justice George Strathy approved the deal, noting that adverse costs can be \u201castronomical\u201d for anyone besides the rich and powerful: \u201cThe grim reality is that no person in their right mind would accept the role of representative plaintiff if he or she were at risk of losing everything they own.\u201d<\/p>\n
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