The Australian Law Reform Commission (ALRC) has issued its long-awaited report on suggested improvements to the class action legal climate in Australia. Class actions are on the rise – specifically shareholder actions – thanks in part to broad regulations imposed on public corporations by the government, as well as the rise of litigation funding which is helping fuel law firms that build large-scale cases against alleged corporate malfeasance. Now the ALRC wants to implement measures that it says will “promote fairness and efficiency in class action proceedings, protect litigants and assure the integrity of the civil justice system.”
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
The Australian Law Reform Commission (ALRC) has issued its long-awaited report on suggested improvements to the class action legal climate in Australia. Class actions are on the rise – specifically shareholder actions – thanks in part to broad regulations imposed on public corporations by the government, as well as the rise of litigation funding which is helping fuel law firms that build large-scale cases against alleged corporate malfeasance. Now the ALRC wants to implement measures that it says will “promote fairness and efficiency in class action proceedings, protect litigants and assure the integrity of the civil justice system.”
The ALRC has released a report outlining two dozen recommendations aimed at reforming the Australian class action ecosystem. The report, which is called: Integrity, Fairness and Efficiency—An Inquiry into Class Action Proceedings and Third-Party Litigation Funders, is the result of over 60 consultations with various stakeholders.
Some highlights of the ALRCs report:
- The implementation of a percentage-based fee model for solicitors would enhance access to justice and decrease associated costs to litigants. Additionally, a voluntary accreditation scheme for solicitors should be established.
- A security for cost award would reduce the risk of ligation funder influence over a case, or of a funder’s failure to meet its financial obligations. Likewise, the Court should maintain broad oversight of any funding agreements, and ensure that they indemnify lead plaintiffs against an adverse costs order.
- Standardized mechanisms should be put in place that enable the Federal Court to properly manage competing class actions.
- The Federal Court should appoint an independent costs referee to ascertain the reasonableness of legal costs in class action proceedings.
- In general, transparency in class action settlements should be promoted and increased.
The ALRC recommends government reviews of the statutory enforcement regimes, as well as the legal and economic impact of the regulatory implementations, with special emphasis placed on continuous disclosure obligations, given how broadly that allegation can be leveled against corporations whose stock prices suddenly plummet.
The ALRC does recognize that further investigation of class action regulation is warranted, and that these recommendations are just that – recommendations, not laws. That said, those looking to drastically reform the class action system now have a viable framework which which to promote their ongoing agenda.
We’ll have to wait and see to what extent the ALRCs recommendations are implemented by the Australian government.
