Is third-party litigation funding available for contract disputes in Ontario?

Third-party litigation funding has become increasingly accepted in Canada, including Ontario, particularly for high-value commercial disputes. Under this model, an outside funder pays some or all of a party's litigation costs in exchange for a share of any damages recovery if the case succeeds. If the case fails, the funder typically bears the loss.

Ontario courts have approved third-party funding agreements in class actions, and their use in commercial litigation more broadly is growing. Courts will scrutinize these arrangements to ensure they do not create a conflict of interest, undermine the funder's client's independent judgment, or amount to an abuse of process — but properly structured agreements are permissible.

Third-party funding is typically available only for significant-value claims where the funder can assess a realistic chance of recovery. It is not generally accessible for small-dollar disputes. The funder's return is negotiated and can be substantial.

A more accessible alternative for smaller or medium-sized commercial disputes is a contingency fee arrangement with a litigation lawyer — where the lawyer takes a percentage of the recovery rather than being paid by the hour. Contingency fees are available for civil claims in Ontario under the Solicitors Act.