Litigation funding and the regulation of the class action industry
The submission to the Parliamentary Joint Committee on Corporations and Financial Services (Committee) regarding the inquiry into litigation funding and the regulation of the class action industry (Inquiry) was prepared by the Law Council of Australia.
The Law Council considers that the class action regime in Australia has been reliable and has given users certainty in most aspects of its implementation. However, as discussed throughout this submission, the Law Council suggests that there is opportunity for improvement.
To assist the Committee, the Law Council has developed a table providing a broad overview of class action settlements in the 2001-2020 period (see Attachment A). This table demonstrates that of the class actions identified, costs and disbursements to lawyers have averaged approximately 15 per cent of the settlement amount, while commissions charged by third-party funders have averaged approximately 27 per cent. In many cases these costs are arguably reasonable.
However, incidences of excessive fees or commissions suggest that there is a case for greater court oversight. The Law Council suggests several steps that could be taken to place downward pressure on costs to class members.
The Law Council recognises that there are varying arguments in favour of, and against, permitting lawyers to charge on a contingency fee basis. The Law Council has concluded that, on balance, contingency fees arrangements should not be supported.
You can read the full submission below.