The vitality and continued growth of litigation funding is still incredibly dependent on the evolution of government policy. As a result, we have seen regulations implemented by governments in recent years that have restricted access to third-party funding. However, a recent announcement by the Australian government has indicated that regulators are open to reform and liberalisation.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
The vitality and continued growth of litigation funding is still incredibly dependent on the evolution of government policy. As a result, we have seen regulations implemented by governments in recent years that have restricted access to third-party funding. However, a recent announcement by the Australian government has indicated that regulators are open to reform and liberalisation.
Reporting in LaywersWeekly highlights last week’s announcement by the Treasury to provide an exemption for litigation funders from the Managed Investment Scheme (MIS) and the Australian Financial Services License (AFSL). This would be a reversal of the previous government’s policy, which had sought to cap a funder’s return on investment to 30 per cent of any settlement. This change reflects a judicial ruling in federal court (LCM v Stanwell) that stated a litigation funding scheme should not be considered an MIS.
The announcement has been welcomed by funders and law firms alike, with Jan Saddler, head of class actions at Shine Lawyers, stating that these changes will widen access to justice and provide claimants with the necessary funds to fight back against corporate wrongdoing. A statement by Omni Bridgeway suggests that the funder supported the reforms, but clarified they did believe funders should hold an AFLS.
