Access to Justice—Litigation Funding and Group Proceedings: Consultation Paper

Adverse costs order

A court order requiring one party in legal proceedings to pay the other party’s reasonable costs.

‘After the event’ insurance

Insurance taken out for the benefit of one party in legal proceedings against the risk of having to pay the other side’s costs if they lose. The policy can be purchased at the commencement of, or during, proceedings and payment of the premium can be postponed until the conclusion of the matter.

Champerty

An old common law crime and civil wrong. A form of maintenance in which something of value (such as a share of the proceeds of the litigation) is given in return for assistance given without lawful justification.

Class action

See group proceedings.

Contingency fee

A fee that is calculated as a share of the amount recovered if the litigation is successful. No fee is charged if the litigation is unsuccessful. Litigation funders charge on this basis, but lawyers are prohibited from doing so. Also called a ‘proportionate fee’, ‘percentage-based contingency fee’ and ‘damages-based billing’.

Contradictor

A person that is appointed by the court to represent the interests of unrepresented parties, such as class members in class actions.

Conditional fee (‘no win, no fee’)

A legal fee that is conditional upon a successful outcome. No fee is charged if the litigation is unsuccessful. The fee is calculated by reference to the usual fee for work and may also include an ‘uplift fee’ of up to an additional 25 per cent.

Disbursements

Costs incurred by a lawyer on behalf of a client, such as the fees charged by a barrister or expert witness and court fees.

Fiduciary

A relationship of trust and confidence between two people, such as that of trustee and beneficiary, in which one person has a duty to act in good faith for the benefit of the other.

Funded class member

A class member who has entered into a funding agreement with a litigation funder. Under this agreement, the litigation funder will typically meet the costs of bringing the proceedings in return for a percentage of the amount recovered if the class action succeeds.

Funded plaintiff

A plaintiff—either a person or an entity—who has entered into a funding agreement with a litigation funder to finance a claim against a defendant.

Funded proceedings

Proceedings financed, in part or in whole, by a litigation funder.

Funding agreement

The contract between a litigation funder and a plaintiff or, in a class action, a class member.

Funding fee

The fee set out in a litigation funding agreement that a litigation funder will charge a funded plaintiff for financing the litigation if it is successful. It is generally charged as a percentage of any amount recovered for the funded plaintiff.

Group proceedings

Proceedings whereby a single representative brings or conducts a claim on behalf of a group of seven or more members in the same, similar or related circumstances. In Victoria, group proceedings are commenced under part 4A of the Supreme Court Act 1986 (Vic). Equivalent Commonwealth and New South Wales legislation refers to proceedings of this type as ‘representative proceedings’. The commonly used term is ‘class actions’.

Legal costs

The amounts charged for legal services.

Litigant

A person, company or organisation that is a named party to legal proceedings. A defendant or plaintiff.

Litigation funder

A commercial entity that agrees to meet the costs (including any adverse costs) of the litigation in return for a share of any amount recovered if the litigation is successful. A litigation funder is not a party to the proceedings and does not otherwise have an interest in the litigation.

For the purpose of this reference, ‘litigation funder’ does not include an insurer funding the litigation costs of an insured under a pre-existing policy, or a solicitor acting on a ‘no win, no fee’ basis.

Maintenance

An old common law crime and civil wrong of providing financial assistance, directly or indirectly, to a litigant without lawful justification. It was abolished as a common law crime and civil wrong in Victoria in 1969.

‘No win, no fee’

See conditional fee.

Representative plaintiff

A person or entity bringing a class action on behalf of others in the same, similar or related circumstances under part 4A of the Supreme Court Act 1986 (Vic).

Security for costs

Application by the defendant under Rule 62.02 of the Supreme Court (General Civil Procedure) Rules 2005 that seeks security from the plaintiff where there is reason to believe that the plaintiff has insufficient assets to pay the costs of the defendant if ordered to do so.

Unfunded class member

A class member who has not entered into a funding agreement with a litigation funder that is financing a class action.

Unlike a funded class member, an unfunded class member is not contractually obligated to pay the litigation funder a percentage of the amount recovered if the class action is successful, to meet the costs of bringing proceedings.

Unrepresented class member

A class member who does not have legal representation in a class action.

Uplift fee

An amount added to the lawyer’s regular fees for legal services, under

a conditional cost agreement, if the litigation is successful. The amount is currently capped at 25 per cent of the regular fees. Also called a ‘success fee’.