“It’s atrocious, really, how inaccessible a lot of litigation can be without litigation funding,” says Emilie Maxwell, Investment Manager with Augusta Ventures. Photo: Augusta Ventures
Litigation funding by Augusta Ventures was approved by Ontario Superior Court Justice Paul Perell in the case of Heller vs. Uber on August 9th, 2021.
Justice Perell’s decision concerned not only the merits of the case and certified it to move forward; it also approved a third-party funding agreement with Augusta Ventures Limited. Augusta is what is known as a litigation fund, which is supported by investors who believe the lawsuit will be successful and are willing to commit funds to enable the suit to proceed.
Emilie Maxwell, Investment Manager with Augusta Ventures in Canada, says litigation funding was available in the United Kingdom since the early 2000s, but did not take off in Canada until about 2012. As a business model, litigation funding in the judicial environment can be compared to venture capital in technology industries.
“Canada is a small but fast-growing part of Augusta’s portfolio,” Maxwell says. “It started as a niche risk-management tool for class action cases, but now it is gaining use in other kinds of cases.
“It’s atrocious, really, how inaccessible a lot of litigation can be without litigation funding.”
“We provide litigation and dispute funding. Our solutions assist companies and individuals in managing the cost and risk of litigation. Our funding is non-recourse, which means we fund all, or part, of the costs of a dispute and will only collect a return on our investment in the event of a successful outcome. If the case is lost, the loss is ours alone.”Augusta Ventures’ website
Litigation funds like Augusta Ventures are not charities: investors expect a fair return on the funds they contribute and the risks they take.
In describing the elements Augusta’s investors look for in a potentially successful case, Maxwell lists three things:
- The legal merits of the case: to ensure the claim is solid;
- The Economic merits of the case: will any potential award be significant enough to ensure the claimant will receive enough money to make it worthwhile? “It would not make sense if all of the money had to go to expenses,” Maxwell says. “Our goal, roughly, is for the claimant to keep at least 50 per cent of the funds in a commercial case (and more like 60-70 per cent in class actions). The lawyers and Augusta’s investors are paid from the rest.”
- Chance of monetary recovery: whether any money can actually be recovered from the defendant.
Newer areas in which litigation funding is being accessed include bankruptcy and insolvency, as Maxwell notes: “Nobody has money to bring a claim if they are bankrupt. You may have a solid legal claim that could generate proceeds for your creditors, but, what are you going to do? Litigation funding can help a client get a case off the ground.
“Litigation funding is not appropriate for all cases, of course,” Maxwell points out, “and hiring the right law firm or lawyer is an important part of the process.”
Areas in which litigation funding would generally be considered inappropriate include:
- Family law: “Litigation funding should not be used in any area in which, frankly, litigation should not be encouraged. Family law is one of those areas.”
- Criminal law: “Most of the time, with a very few exceptions, a criminal case is not a suitable candidate for litigation funding.”
- Unknown or uncertain litigation funders: “Because this field is relatively new and there are funds emerging seemingly overnight, claimants should be aware that if the litigation fund that is supporting their case collapses financially, they could well be back on the hook for costs and expenses. That could be a nightmare. Do your research on litigation funders before you commit to a firm.”
In Ontario in 1992, an amendment under the Law Society Act established the Class Proceedings Fund and the Class Proceedings Committee. This fund provides services similar to firms like Augusta Ventures, without the profit motive that inspires private sector lawyers and investors. It approved funding for 10 new cases in 2020.
What is litigation funding?
From Augusta Ventures’ website:
“We provide litigation and dispute funding. Our solutions assist companies and individuals in managing the cost and risk of litigation. Our funding is non-recourse, which means we fund all, or part, of the costs of a dispute and will only collect a return on our investment in the event of a successful outcome. If the case is lost, the loss is ours alone. We are also able to offer access to After the Event (ATE) insurance, protecting the claimant from adverse costs risk.
“At Augusta, we understand that the early stages of case development can be costly and are able to provide clients with early-stage funding. This covers the risk and burden of getting a case to full funding, allowing you to act more decisively and strategically. Our win rate of over 70% provides comfort on the merits of your funded claim and in collaboration with your lawyer, assists in the project management of the claim. Our funding is available immediately and Augusta’s team of experts will work with you to deliver the most appropriate solution for your specific situation.
What are the steps to get started with the litigation funding process?
- The client contacts a class action law firm or a class action lawyer; OR
- Contact Augusta Ventures directly to have a preliminary conversation.
- Work on the case: what are the causes of action – why are you suing? What are the damages compared to the expected budget for the case?
- If the case looks promising, Augusta will prepare a short case summary and present funding terms for approval by the relevant internal committee.
- If approved, Augusta will draft a “term sheet” to distribute to the client and their lawyer(s).
- If there is agreement on the terms, Augusta does more extensive “due diligence” on the legal and financial aspects of the case. This can take days, weeks, or months.
- Augusta presents the case to its Investment Committee.
- If the Investment Committee approves the case for funding, Augusta creates an investment/funding agreement.
- This funding agreement MUST BE APPROVED BY THE COURT before it can have effect.
- Once the funding agreement is approved, Augusta will receive regular reports from the client/legal team but cannot interfere with the litigation.
Augusta’s approval in the August 9, 2021 Court Decision (Click to expand)
 On this motion, the Plaintiffs request an Order, among other things:
a. approving the third-party funding agreement entered into by the Plaintiffs, Class Counsel, and Canada-based Augusta Pool 1 Canada Limited and its parent, Augusta Ventures Limited, based in the United Kingdom (collectively, “Augusta”).
b. providing that the Plaintiffs may post security for costs by Augusta providing an undertaking to Uber.
c. permitting the Plaintiffs and Class Counsel to disclose documents produced by Uber in this proceeding that would be subject to the deemed undertaking in subrule 30.1.01(3) as if it were a party to this proceeding; and
d. stipulating that all communication and documents passing between Augusta, the Plaintiff and Class Counsel and any additional plaintiffs in this proceeding shall be kept confidential and are not subject to disclosure to a third party.
 In December 2016, Mr. Heller, engaged Samfiru Tumarkin LLP pursuant to a Retainer and Fee Agreement. This agreement was revised in August 2020 when Wright Henry LLP became co-counsel. Ms. Garcia engaged Wright Henry LLP and Samfiru Tumarkin LLP (“Class Counsel”), to prosecute the action in December 2020, pursuant to the Retainer.
 Under the Retainer, the Plaintiffs agreed to a contingency fee of 30% of the total amount recovered, subject to Court approval, and that Class Counsel would indemnify the Plaintiffs for any adverse costs awards. The Retainer also contains provisions which address the conduct, control, and prosecution of the action, including: (a) the Plaintiffs have the right to instruct counsel and will assist, discuss, and instruct counsel as need be; and (b) Class Counsel is entitled to seek and secure an offer from a litigation funder, subject to court approval.