"What Happened to Canada?" MBC Legal's Founder Mariana Bracic Asks

Increased Litigiousness Taking a Toll on Small Businesses in Canada
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My family escaped a totalitarian dictatorship and moved to Canada in 1974. I vividly recall flying over Toronto into Pearson airport as a six-year-old in wide-eyed awe of the bright lights and beauty of our new country. (My daughter says I've never managed to lose my "confused, foreign-exchange student look"!) I was so proud to study and work hard and become a member of the legal profession, the most important job of which in a democracy, is to guard the country from the tyranny of totalitarianism my family left behind.

It's incredible how much has changed in the country in the last decade, sadly for the worse. The one change I'd like to focus on here is the increased litigiousness of Canadian society and the devastating impact that is having on the doctors we serve across the country. The doctors, dentists and veterinarians who constitute over 95% of our clients are small business owners. And small business owners are the lifeblood of any market economy like ours.

When I served as Advisory Counsel to the Law Society of Upper Canada (as it then was) in the early aughts, there was much hand wringing in the profession about the advent of contingency fees and class action lawsuits. Many of us were concerned that the effect of both of those things would be to introduce an ugly and less than reputable ambulance-chasing-style litigiousness. Those fears have turned out to be very well founded. Both contingency fee arrangements (client doesn't pay unless they recover) and class actions encourage frivolous and abusive lawsuits, what we at MBC Legal call "extortion by litigation". Our clients are regarded as having deep pockets and are therefore targeted in what are often little more than shakedowns.

Last year, fully 70% of Canadian small businesses reported having had to deal with at least one legal dispute in the preceding three years; this represents a whopping 230% increase from the prior survey in 2015 (just eight years earlier), according to research from ARAG Legal Solutions. A single lawsuit, even if frivolous and without merit, can cost a business owner many, many thousands of dollars to defend (not to mention reputational damage and personal stress).

Similarly, another survey of Canadian human resource professionals found that 69.5% believe that employees are more likely to start a lawsuit against a former employer now than they were five years ago; moreover 79.8% felt the situation will get even worse five years from now.

According to economists, we should incentivize the behaviour we want to see; but what we have incentivized is the proliferation of an enormous amount of unmeritorious litigation that would never previously have clogged the courts.

What happened to Canada?
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