SLATER & GORDON is preparing to tackle the next stage of its shareholder class action against Opes Prime, with a little help from private litigation funders Commonwealth Legal Funding (CLF).
Private litigation funding has courted controversy in Australia, but now seems set to become a reality, with Slater & Gordon securing funding for upcoming class actions against Opes Prime and Centro.
Slaters partner James Higgins said that his firm has been inundated by enquiries about Opes Prime, some of which the firm will represent on a fee-for-service basis.
“In Opes Prime we’ve been contacted by a lot of people of different shapes and sizes and we’ve made it clear, through our bulletins that we released to that large group of people, that we were going to act on a fee-for-service [basis] for people who wished us to do so,” he said.
“If people weren’t able to pay fees, then they could express an interest as to whether they wished their fees to be funded by litigation funder and whether they were interested in Slater & Gordon going and trying to get the best possible litigation funding deal they could,” he said.
Of those potential plaintiffs unable to pay fees, 80 registered as being interested in having their fees funded by a private litigation funder.
Slater & Gordon then commenced a tender process, and Commonwealth Legal Funding put together the most “commercial offer”. According to Higgins, CLF gained the competitive edge over other funds such as IMF by waiving management fees, and offering the lowest commission rate in the market.
In the final arrangement, Slater’s hourly fees will be met by CLF, CLF bears the financial risk of the litigation, and Slater’s clients are fully indemnified from any adverse cost order, or any unsuccessful outcome in the case.
“The [shareholders] are not guaranteed of being successful in recovering their losses, but they are guaranteed that they’ll be in no worse position,” Higgins said.
Higgins says litigation funding is a “reality” that is here to stay, despite some concerns expressed by regulators about following the American model of litigation funding.
“Litigation funding has obviously now been given approval by the High Court, so it’s a reality in Australia. It’s something which the State’s Committee of Attorney General are looking at, but all have indicated that they’re not going to regulate funding out of existence.
“It has a place and will continue, albeit under some regulatory arrangement which they’re currently considering,” he said.
Higgins said the “no win no fee” approach to litigation will become increasingly rare in such cases in the future.
“Whereas these cases would once have been run on a no-fee basis with experts and barristers delaying their fees and charges, and trying to run them as leanly as possible, when you’ve got a litigation funder in the market, that’s not how the market works anymore,” he said.
“So if people want to get the best lawyers involved running their cases, it’s inevitable that they’ll need litigation funding to pay themoney along the way.”
With funding secured, Higgins and his team will now focus on the mammoth task of running multiple actions on behalf of individuals caught in the Opes Prime mire, with simultaneous actions to be lodged against brokers, Opes Prime and ANZ bank.
Despite the complexity of the action, Higgins anticipates a “speedy resolution” to the Opes Prime saga.
“It’s going to be pretty apparent what ANZ’s knowledge of the Opes Prime business model [was] and what they were telling clients will be [clear] after discovery. We think that will bring the matter to a quick and swift conclusion,” he said.