ALRC reference: Class actions + litigation funders

On 11 December 2017 the Attorney General (Cth) made a reference to the Australian Law Reform Commission (ALRC) asking it to “inquire into class action proceedings and third party litigation funders, to maximise access to justice for ordinary Australians”.

The ALRC will report by 21 December 2018.

The media release reads:

With class actions becoming more common in courts across Australia, the Turnbull Government wants to ensure the costs of such proceedings are appropriate and proportionate and that the interests of plaintiffs and class members are protected.

There is a significant risk, in such proceedings, that members of plaintiff groups may be required to pay lawyers’ fees which are exorbitant and unjustifiable.

Unlike lawyers, third party funding entities are not bound by professional ethical obligations, despite playing a significant role in enabling and maintaining class action proceedings.

Third party litigation funders are not subject to any comprehensive Commonwealth or state and territory regulation to address the structure, operation and terms on which they participate in the Australian legal system.

I have 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.

The ALRC will consult widely with institutions and individuals with experience in litigation, class action proceedings and access to justice issues including the legal profession, courts and tribunals, litigation funding entities and the academic community.

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