The Australian government’s bid to reform class actions, and by extension third-party litigation funders, is nearing its climax. A parliamentary committee assembled to examine the bill has expressed support. A key argument in favor of increased legislation is that funders ostensibly make profits that are out of proportion to the risk taken and the costs incurred.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
The Australian government’s bid to reform class actions, and by extension third-party litigation funders, is nearing its climax. A parliamentary committee assembled to examine the bill has expressed support. A key argument in favor of increased legislation is that funders ostensibly make profits that are out of proportion to the risk taken and the costs incurred.
Australian Financial Review explains that while this may seem reasonable on its face, the new legislation failed to consider some vital aspects of funding and class actions. The haste inherent in the consultation process seems unnecessary, even suspicious. Non-government members of the committee had less than one day to read and respond to the 68-page report.
The report is expected to be put before the chamber for debate. The response from the Labor and Green parties, who have combined their efforts to block the bill, suggests concerns about the constitutionality of the bill. Legal firm Phi Finney McDonald was quoted in the report from the Labor party, describing the government’s efforts to paint this reform bill as a consumer protection win as “Orwellian gaslighting.”
The fate of the bill seems to rest on a a few swing votes, including Stirling Griff, Jacqui Lambie, Pauline Hanson, and Rex Patrick. Patrick has already stated that his position is emphatically in support of access to justice. As such, he is unlikely to support the bill.
The Green party also submitted a dissenting report, which claims the bill is designed to attack the business model of litigation funders in order to lower the number of class actions. Greens insist that the intention of the new bill is to protect the wealthy and empowered, while reducing the ways in which ordinary people can access justice.
Aside from the ethical aspects, there are numerous questions of the constitutionality of the bill. If it is passed, there would likely be a spate of litigation to parse constitutional questions—which most believe is a poor solution to an already complex issue.
