Loser-Pays: Problems and Solutions
Hiring a lawyer to help navigate Canadian’s justice system can cause financial distress on most middle-class Canadians. This effect is exacerbated by the loser-pays cost system. Many are calling for reform.
The loser-pays system began as an effort to improve “access to justice” by reimbursing the winner for the legal costs incurred. Today, it only worsens “access to justice” and creates a cumbersome possibility that in and of itself wards off many seeking justice. A British-judge has described cost awards as the “Achilles heel” of justice.
There is an upside, however, to a loser-pays system: it deters people from bringing baseless claims against others and consuming state resources paid for by tax-payers. Moreover, without it, the risk and financial burden doesn’t disappear – It simply shifts back onto the winner. If there was no chance of the winner being able to offset expenses through an award, the successful party can still face severe financial losses.
Some possible solutions to this problem include: a predictable fixed-cost system, legal-cost insurance, and no-costs notice.
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