Litigation funder JustKapital is considering bailing on the Westpac claim, after the Australian Supreme Court overturned common fund orders.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
Litigation funder JustKapital is considering bailing on the Westpac claim, after the Australian Supreme Court overturned common fund orders.
As the Geelong Advertiser reports, the Aussie High Court recently ruled that common fund orders are a no-go. A common fund order enables a litigation funder to collect payment from all class members, regardless of whether they actually sign on with the funder. Now that such orders have been rescinded, funders must resort to old fashioned book-building, where they sign up thousands of claimants in order to collect their fees from each.
The process is long, arduous and costly, but without a requisite number of claimants to recoup from, cases aren’t worth the financial risk. That’s what JustKapital is contending, as the funder considers pulling out of the Westpac claim, now that a common fund order is no longer in place.
The underlying case involves allegations that Westpac sold expensive insurance policies to customers – policies which cost more than similar ones on the market. Claimants also allege that insurance brokers pushed Westpac policies over other less expensive ones, and duped customers to whom they had a fiduciary responsibility.
Shine Lawyers, the firm representing the claimants, has announced that the claim may no longer go forward, given JustKapital’s reservations about continuing. Currently there are 88,000 potential claimants, and while neither Shine nor JustKapital put a number on the amount needed to continue the case, it is clear that some old fashioned book-building is in order if this case is to continue.
