Commission says yes to contingency fees in class actions report

19 Jun 2018

The law in Victoria should be changed to allow lawyers to charge a percentage of the settlement in a successful class action, with the approval of the Supreme Court, the Victorian Law Reform Commission has recommended in its latest report.

Currently, lawyers are not allowed to claim a share of the settlement, known as a ‘contingency fee’. The Commission says that the reform would enable more people to gain access to justice through class actions, as it would provide another avenue of funding for clients who may otherwise be unable to pursue a claim because of the cost.

Currently, class actions usually proceed only if the law firm agrees to act on a ‘no win, no fee’ basis, or if another company, knows as a litigation funder, agrees to cover the financial costs of the action.

The recommendation is contained in the report Access to Justice: Litigation Funding and Group Proceedings,which was tabled in the Victorian Parliament today.

The Victorian class action regime commenced in 1986, and since then more than a billion dollars has been paid out to more than 28,000 class members. The two largest settlements involved the Black Saturday bushfires in 2009.

The Attorney-General had asked the Commission to report on whether Victorian courts and regulators should have more power to regulate class actions (‘group proceedings’) and litigation funders, to ensure that people involved in class actions don’t face unfair risks and excessive costs, and whether contingency fees should be permitted in limited circumstances.

The Commission has also recommended that the Supreme Court of Victoria’s powers to supervise class actions should be strengthened and clarified in legislation. The Court’s powers include making sure that the fees charged by lawyers and litigation funders are reasonable, that class members are informed about litigation funding arrangements, and that the outcome is fair and reasonable by approving where the money goes after settlement.

The Commission says that regulation of litigation funding should be at a federal level, rather than a state level, to ensure national consistency.

The Chair of the Victorian Law Reform Commission, The Hon. Philip Cummins AM, said: “The Commission proposes a pathway that should improve access to justice, provide appropriate regulation of litigation funders, maintain proper ethical conduct by lawyers, and not involve unfair burdens on litigants.”

For more information or an interview with the Hon. Philip Cummins AM contact Nick Gadd, communications manager, 0425 862 119 or email nick.gadd@lawreform.vic.gov.au.

 

 

 

Date published: 
19 Jun 2018

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