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A-G to proceed with class actions parliamentary inquiry
An examination of the impact of litigation funding on justice outcomes, originally announced earlier this year, is to be brought before Parliament this week.
Jerome Doraisamy
In March 2020, Attorney-General Christian Porter announced his intention to establish a parliamentary committee to determine whether or not Australians “are receiving their fair share” from class action settlements and look at the “extraordinary profits being made by the booming litigation funding industry”.
“There is growing concern that the lack of regulation governing the booming litigation funding industry is leading to poor justice outcomes for those who join class actions, expecting to get fair compensation for an injury or loss,” Mr Porter said.
“In many cases, funders are taking up to 30 per cent of legal settlements, leaving the members of the action to fight over the scraps that remain once legal fees and other costs are paid. In fact, the Australian Law Reform Commission found that when litigation funders were involved in a class action, the median return to class members was just 51 per cent, compared to 85 per cent when a funder was not involved.”
This amounts to “clear evidence”, Mr Porter submitted, that the system is not delivering fair and equitable outcomes for “those mums and dads who join class actions”, and demonstrates why, he argued, an inquiry into all aspects of the system is needed.
“Justice is not a business and the primary focus of those who work in the legal system should always be on getting the best outcomes for their clients, not on maximising returns for hungry shareholders,” Mr Porter said.
“I hope this inquiry will generate useful insights that will enable us to develop policies that will ensure the interests of Australians are better protected.”
The department also noted that it would release its response to the AHRC inquiry “shortly”.
At the time of the initial inquiry announcement, Augusta Ventures managing director Neill Brennan said there is “no additional benefit from a further study” into the class action space.
Jerome Doraisamy
Jerome Doraisamy is the editor of Lawyers Weekly and HR Leader. He has worked at Momentum Media as a journalist on Lawyers Weekly since February 2018, and has served as editor since March 2022. In June 2024, he also assumed the editorship of HR Leader. Jerome is also the author of The Wellness Doctrines book series, an admitted solicitor in NSW, and a board director of the Minds Count Foundation.
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