Evolution of class actions and litigation funding: ALRC report offers a mixed bag

  • The ALRC report makes 24 recommendations directed at changes to the federal class actions regime and the regulation and charging models of litigation funders and lawyers involved in bringing class actions.
  • The recommendations offer mixed benefits for plaintiffs, defendants and funders.
  • Legislative reform to incorporate the ALRC's recommendations will likely take some time, however the Federal Court of Australia is already working on a revised Class Actions Practice Note.

Lollies spilling out of lolly bag

All stakeholders in the class actions market will be affected if the recommendations in the Australian Law Reform Commission (ALRC) Report: Integrity, Fairness and Efficiency — An Inquiry into Class Action Proceedings and Third-Party Litigation Funders (report), are adopted. Given that more consultation will be undertaken in the next few months, it is important for interested parties to carefully consider the recommendations and engage in the Government's consultation process.

The report's recommendations are a mixed bag for those in the plaintiff, defendant and litigation funding camps. Plaintiff lawyers will welcome the proposal to permit contingency fees and defendants will welcome moves to combat competing class actions. Litigation funders have seen little change to the regulatory environment that has enabled third party litigation funding to thrive in this country but will be watching very closely how the courts and potentially the legislature respond to recommendations to expressly empower courts to vary the terms of funding agreements and common fund orders and to address competing class actions.

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