Litigation funders IMF Australia are funding the 72-plaintiff members in the matter, which includes charities, churches and councils throughout Australia. They claim the failed investment bank squandered around $600 million in collateralised debt obligations (CDOs), with the suit seeking to recover between 40 and 50 cents in the dollar on behalf of its members.

"Attempts to settle this in mediation have been unsuccessful," IMF Australia managing director John Walker told Lawyers Weekly.

"Our expectation is that it will proceed to judgment and if that happens, it will be the first judgment on CDOs internationally."

Piper Alderman is acting for the plaintiffs, with dispute resolution and litigation partner Amanda Banton leading. Blake Dawson is acting for Lehman Brothers Australia, with Sydney-based partners John Emmerig and James Marshall involved.

Walker said that the Federal Court action alleges that Lehman Brothers acted in their own interests rather than in the interests of plaintiff members who made investments through the bank.