“Champerty” — A form of contingency arrangement, with an improper purpose, in which an action is funded by a non-party, usually the legal representative of a plaintiff or defendant, in exchange for a share of any proceeds.
Champerty was illegal in Canada until the 1950s. It remains actionable in tort in Ontario upon proof of special damages.
Ontario courts have found that a fee agreement that “so over-compensates a lawyer such that it is unreasonable or unfair to the client” and has an improper purpose, is champertous.
Rules against champerty were introduced more than 700 years ago in response to abusive interference in the legal system by powerful officials. The concern is that such arrangements could lead to actions with underlying improper motives that disadvantage vulnerable clients — “officious intermeddling or stirring up strife” — with American-style “ambulance-chasing.”
McIntyre Estate v. Ontario (Attorney General), 2002 CanLII 45046 (ON CA)
In this case, the fees were “not related to the amount of time spent by the lawyers, the quality of the legal services or the many other factors that would normally be taken into consideration when determining the appropriateness of a lawyer’s fees.”
Maureen Boldt v. Law Society of Upper Canada, 2010 ONSC 3568 (CanLII)
A pre-licensing paralegal alleged champerty on the part of a law association.