Class Actions Reform: For Better or For Worse?
26 Pages Posted: 16 Sep 2021
Date Written: August 2019
The Australian Law Reform Commission's ('ALRC') proposed class actions reforms have resulted in both evolutionary and revolutionary proposals. The ALRC’s proposals to create express statutory powers to make common fund orders and to resolve competing representative proceedings are largely evolutionary, as the Federal Court has already been developing practices to resolve the adverse consequences resulting from free riders and competing class actions. Their recommendation to amend the Practice Note to allow for appointment of referees and tendering of settlement administration is also largely evolutionary. Conversely, their recommendation to lift the ban on contingency fees is entirely revolutionary, as it presents a significant contrast to the traditional time-based billings adopted by most law firms. As with all revolutionary suggestions, there are great dangers associated with lifting the ban and extreme caution must be taken to ensure that the integrity of the legal profession and the class actions regime is not jeopardised by implementing this recommendation. The ALRC’s dramatic change of position relating to the licensing of litigation funders was also an unexpected development with potentially far-reaching consequences for the largely unregulated litigation funding industry and the class actions industry more broadly, as international funders are encouraged to invest in a poorly regulated Australian market. The recommendation to initiate all class actions as open class is also highly questionable, given the fact that it does not seem to further the ALRC’s aim of protecting vulnerable group members. Ultimately, it appears that the former president of the Law Council of Australia, Stuart Clark, was correct in his assertion that the ALRC’s class actions reforms was a victory for litigation funders and plaintiff law firms who ‘hit the jackpot at the expense of consumers’.
Keywords: class actions; law reform; litigation funding; contingency fees
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