Henderson Heinrichs LLP

Investing in Divorce? Not here.

Kevin Heinrichs

Written by: Kevin Heinrichs (View All Posts • View Bio) Published: December 8, 2010

Categorized: Case Analysis, Common Law, Finances.
Tags: , , , , .

Sometimes a new idea comes along which reaffirms our faith in what we already have.

company has been formed in California with the sole purpose of financing divorce litigation.  The firm justifies itself by suggesting that spouses of the ?ber-wealthy (the firm in question specializes in cases with assets valued north of $2 million) require financing to level the playing field.  Its altruism diminishes, however, when it comes to remuneration, treating the parties family problems as an investment.  The company is paid with a percentage of the ‘winnings’ on the completion of trial or on settlement.

In BC, lawyers in divorce cases are prohibited from being paid on contingency; that is, by taking a percentage of money ‘won’.  The parties’ and the children’s interests rather than the potential capital return should be the motivation for the parties’ decisions. The prohibition against contingency billing removes the potential that lawyers will seek to serve their own interests by advocating litigation which that may not be in the interests of those involved.

In regards to the involvement of third parties in the financing of litigation for profit, the common law in British Columbia maintains that this is improper.  Such investment in litigation, or champerty, is discussed more fully in Farley v. Pearlson, 2001 BCSC 1237.

While there is always the potential for abuse within a system, B.C. has dealt specifically with the problem of for-profit litigation financing and it seems unlikely that similar investment schemes will appear any time soon in the province.

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