Litigation ‘getting larger and more complex’

By Jerome Doraisamy|20 January 2021

2021 is shaping up to be a year of “drastic change”, and litigators are going to have to operate in a different way, says award-winning partner Jason Betts.

Speaking recently on The Lawyers Weekly ShowHerbert Smith Freehills partner Mr Betts – who, late last year, won the Litigation Partner of the Year and Excellence Award at the Partner of the Year Awards – said that there hasn’t ever been a time in Australia “where there’s been more opportunities to do difficult and challenging work”.

Now is the time to be a litigator

“Litigation’s always been a big part of our legal sector in Australia, but we’ve moved into a new phase where litigation is getting larger and more complex, and it’s tapping into real world issues more. When you look at class actions, it involves thousands if not millions of consumers. It involves issues that may affect the Australian economy or in the social justice space issues that affect our social conscience. It involves the media and involves the government. It involves listed Australian entities. It involves their owners. No one would ever wish for our clients to be involved in litigation, but if your client is gracious enough to give you the opportunity to do it, there’s never been a better time from a pure career satisfaction perspective to be a litigator than it is now,” he reflected.

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“It’s that confluence of a radically changing and emerging an active class action market, with the rise of consumerism and an increasingly activated regulator seeking, perhaps, to align itself with regulators in other parts of the globe and feeling the need for change as a result of what happened in the last three or four years to our financial markets.

“I’m excited, I guess, about seeing the larger cases coming through the pipeline that we might have the opportunity to stand in front of. And, one footnote to that is that, in the class action space in particular, there’s been one very big change over the last two or three years, which is the traditional rule that most or all class actions will settle is no longer a rule.

“It’s still a statistical truth historically, but we’re seeing – because of things like the evacuation of insurance market, the change in the tone of corporate Australia and how they feel about class actions – more opportunities for these cases to go to trial, and we’re looking at a 12-month period in which our team might be looking at four or five trials happening over the year. That’s pretty rare in class actions, but I think it’s moving towards the norm. And so, for lawyers coming through, who really love litigation, the regulatory class action space, you really couldn’t pick a better area to hone your talents.”

A year of change looming

This year, Mr Betts proclaimed, is set to be one of “drastic change”. In the class actions and in the regulatory spaces, he said, there will be “potentially substantial reforms” at the legislative level introduced as a result of the parliamentary committee’s findings, which will focus on how our litigation funding market works, which he called “the lifeblood for class actions”.

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“What are the returns to group members? Are they appropriate? Are contingency fees the right answer? How do we deal with multiplicity of proceedings where same defendants being sued in different jurisdictions over the same subject matter? There’s a groundswell of change coming,” he posited.

“It may not all land in 12 months, but it will be the start of a journey of change. For lawyers looking to succeed over the next period of time, my sense is that this will be a time to try to rise above and continue to focus on the things that make lawyers successful in the past, which is simply prioritising the client experience.”

Clients, too, will find it interesting to understand how the class action regulatory markets are changing, Mr Betts continued, but noted that ultimately, what they are really interested in is problem-solving.

“The challenge as we emerge from the pandemic is a litigator’s biggest tool and biggest strength, which is communicating solutions and advocacy. And those things are really difficult when you’re not sitting in the room. For the lawyers that are prepared to continue focusing on prioritising what their clients want to achieve, and not what you want to achieve, and they’ll have to be doing things differently, and not doing things the way we did in the past, just because they worked previously,” he said.

Litigators, he surmised, are “going to have to do things in a different way”, particularly in the context of shareholder class actions, corporate governance and regulatory investigations, “in which there’s already so much latent change through these reforms coming through our pipeline”, he said.

“Doing things differently to the way we’ve done them in the past will be critical. Those would be the two areas I think of critical focus for litigators: remembering your client is the most important stakeholder and not just doing things in the cookie-cutter way because they worked in the past, because chances are that it won’t work in the future,” he said.

Predictions for change

When asked what changes he sees coming down the pipeline, and how best litigators can safeguard their clients against an evolving landscape, Mr Betts said there will likely be changes to the processes by which class actions are brought to court and how they’re managed once in the court system.

“I think, increasingly, we’re looking at the promulgation in Australia of a certification procedure by which multiple class actions can be regularised and some refreshed standards for whether the class action that’s left standing is an efficient way to bring the matter forward. I think we’ll see a serious debate about those issues emerging, coupled with [consideration of whether we are] getting the balance right between the money that’s ultimately going to those that promote the class action and those that are going to the group members are on whose behalf the proceedings are brought,” he opined.

In the regulatory space, Mr Betts hypothesised, there will be “an increasingly litigious regulator”.

“If what’s emerged out of the royal commission is a guide, we know that our marketplace is characterised by a number of active and ongoing investigations. We’ve got regulators through all layers of the regulatory sphere that are actively looking to increase their governance standards. We’ll see more litigation in that space as a result,” Mr Betts deduced.

“Both of those areas are difficult to think of as areas that one can immunise or protect yourself from, because they’re such a critical function of doing business now in the Australian economy.

“When you look at major boards around the country, so much of their time is being devoted to compliance issues as opposed to entrepreneurial efforts. That’s not because they want to be in that space, but because that’s what the law is doing to them.”

This said, there will be a return to fundamentals “like bullet-proofing to the extent possible the corporate governance mechanisms within the listed entity”, Mr Betts noted.

“Ensuring that when you’ve got interfaces with customers and stakeholders that are uniform, that they’ve been pressure tested, both contractually, legislatively to ensure that they’re not creating unnecessary or uncontrolled risk. And, in the regulatory space, there’ll be an increased focus on ensuring a healthy and engaged relationship with the regulator,” he said.

“That doesn’t mean that one would assume regulatory obligations when the law doesn’t require it, but it does mean a proactive and transparent relationship with the regulator because that’s what the regulator is increasingly looking for, particularly post-royal commission.”

To listen to the full conversation with Jason Betts, click below:

Litigation ‘getting larger and more complex’
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