On January 24 2019, the Attorney-General for Australia tabled in Parliament the Australian Law Reform Commission (ALRC) report, Integrity, Fairness and Efficiency—An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (Report 134, 2018).
The Terms of Reference for this Inquiry asked the ALRC to consider whether, and to what extent class action proceedings and third-party litigation funders should be subject to Commonwealth regulation, and whether there is adequate regulation of: conflicts of interest between third-party litigation funders, lawyers and class members; prudential requirements and character requirements of funders; and the proportion of settlement available to be retained by lawyers and litigation funders in class action proceedings. In short, the terms of reference required the ALRC to consider two overarching issues of the class action regime: the integrity of third-party funded class actions and the efficacy of the class action system.
The ALRC conducted over 60 consultations with stakeholders and received over 75 submissions to advance Report 134 and its 24 recommendations for reform. The recommendations aim to promote fairness and efficiency in class action proceedings; protect litigants from disproportionate costs; and assure the integrity of the civil justice system, and include recommendations to:
- provide mechanisms in statute and legal frameworks for the Federal Court to deal effectively with competing class actions;
- provide mechanisms by which the Federal Court can appoint an independent costs referee to establish the reasonableness of legal costs in class action matters, and by which the Court can tender for settlement administration services;
- increase transparency and open justice for class action settlements;
- decrease the risk of ligation funders’ failing to meet their obligations or exercising improper influence through a statutory presumption in favour of securities for cost, and greater Court oversight of funding agreements which must indemnify the lead plaintiff against an adverse costs order;
- enhance access to justice and decrease costs to litigants through the introduction of a limited percentage-based fee model for solicitors; and
- introduce a voluntary accreditation scheme for solicitors acting in class action proceedings.
The ALRC recommends a Government review of statutory enforcement regimes for regulators so to facilitate effective and consistent statutory redress schemes—to fill gaps and create an alternative to some class action proceedings.
The ALRC also recommends a Government review of the legal and economic impact of the operation, enforcement and effect of federal statutory continuous disclosure obligations and those relating to misleading and deceptive conduct. This recommendation recognises that further investigation of the interaction between the substantive law that supports shareholder class actions and the class action regime is warranted.
For further inquiries contact: sallie.mclean@alrc.gov.au
Speaking at the Australian Academy of Law lecture in Brisbane, 4 Oct 2018, the Hon Justice S C Derrington, President of the ALRC, provided some background to Litigation Funding and Class Actions in Australia, and around the world.
“Against this background, I turn to consider the overarching principles by which the ALRC has been guided in formulating its proposed recommendations.
Principle One: It is essential to the rule of the law that citizens should be able to vindicate just claims through a process characterised by fairness and efficiency to all parties, that gives primacy to the interests of the litigants, without undue expense or delay.
Principle Two: There should be appropriate protections in place for litigants who wish to avail themselves of the class action system and the variety of funding models that facilitate the vindication of just claims.
Principle Three: The integrity of the civil justice system is essential to the operation of the rule of law.”
Read her Honour’s full speech here- Litigation Funding: Access and Ethics
On January 24 2019, the Attorney-General for Australia tabled in Parliament the Australian Law Reform Commission (ALRC) report, Integrity, Fairness and Efficiency—An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (Report 134, 2018).
Australian Law Reform Commission Seminar on Class Action Proceedings and Third-party Litigation Funders Reform
The Australian Law Reform Commission held three seminars where the ALRC presented the various responses to the proposals of the Discussion Paper on Class Action Proceedings and Third-party Litigation Funders, and sought views on amended and new ideas for reform. The presentation slides from the final seminar in Brisbane (and Perth) and a supplementary note to the discussion on leave are available for download here.
seminar_series_2018_10_september_2018.pdf
supplementary_note_for_consultation_leave_to_proceed_13_sept_2018.pdf
The ALRC welcomes any further comments on the material discussed at the seminars to class-actions@alrc.gov.au before September 30, 2018. As per the ALRC submission policy, unless confidentiality is requested, responses to the presentation slides will be published on the ALRC webiste.
Welcome to the Inquiry
On 11 December the Attorney-General provided Terms of Reference to the ALRC for an Inquiry into class actions and third party litigation funders.
The aim of the inquiry is to ensure that the costs of class actions are ‘appropriate and proportionate and that the interests of plaintiffs and class members are protected’. The Attorney has asked the ALRC to consider ‘whether and to what extent class action proceedings and third party litigation funders should be subject to Commonwealth regulation, with reference to specific matters that have arisen including the proportionality of lawyers’ costs and the lack of ethical constraints on their operation such as those binding legal practitioners’ (A-G media release, 15 Dec 2017).
In preparing a Discussion Paper, the ALRC will draw on the recent body of work on third party litigation funding in Australia, including that of the Productivity Commission in its 2014 report, Access to Justice Arrangements, and that of the Victorian Law Reform Commission inquiry into Victoria’s class action regime.
ALRC President, the Hon. Justice S C Derrington, is leading the Litigation Funding Inquiry. Consultations have commenced, and the ALRC will continue to meet with stakeholders over the next few months with a view to releasing a Discussion Paper containing proposals for law reform at the end of May. At that stage we will call for submissions, with a closing date in mid September.
The ALRC will deliver its Report, with recommendations for reform, to the Attorney-General by 21 December 2018.
On 9 April, the Hon. Justice S C Derrington will be a keynote speaker at a Monash Business School event – Increased Regulation of Litigation Funding Seminar.