Litigation Funding and Group Proceedings: Terms of Reference

On 16 December 2016, the Attorney-General asked the Commission to report on access of justice by litigants who seek to enforce their rights using the services of litigation funders or through group proceedings.

Below are the terms of reference:

The Victorian Law Reform Commission is asked to report on the following issues to ensure that litigants who are seeking to enforce their rights using the services of litigation funders and/or through group proceedings are not exposed to unfair risks or disproportionate cost burdens.

The Commission is asked to report on:

1 . Whether there is scope for the supervisory powers of Victorian courts or Victorian regulatory bodies to be increased in respect of proceedings funded by litigation funders, in particular:

a. whether clearer disclosure requirements should be imposed on litigation funders and lawyers representing funded plaintiffs in respect of advice about the progress, costs and possible outcomes of proceedings; and

b. whether any limits should be placed on (or approval process required in respect of) the success fees that can be charged by a litigation funder to plaintiffs when a decision or settlement results in a payment to the plaintiffs by a defendant; and

c. whether the obligation to disclose funding arrangements in proceedings supported by litigation funders should be extended beyond class action proceedings, and if so, what other types of proceedings should be covered by the obligation.

2. Whether removing the existing prohibition on law firms charging contingency fees (except in areas where contingency fees would be inappropriate, including personal injury, criminal and family law matters) would assist to mitigate the issues presented by the practice of litigation funding.

3. In respect of group proceedings commenced under the provisions of Part 4A of the Supreme Court Act 1986 and similar proceedings that involve a number of disputants being represented by an intermediary, whether there should be further regulation of such proceedings, including the possibility of:

a. a certification requirement before such proceedings are allowed to continue, either in respect of all such proceedings, or proceedings that are supported by litigation funders; or

b. specified criteria for the Court’s approval of a settlement under section 33V, and what such criteria might be.

In preparing its report, the Commission is asked to consider among other matters:

a. the implications of any reforms for the workload and resource requirements of the Supreme Court; and

b. relevant provisions and potential reforms in other jurisdictions.

The Commission is asked to provide its final report by 30 March 2018.

NB: The term “litigation funder” is not intended to apply to an insurer funding the litigation

costs of an insured under a pre-existing policy, nor to a solicitor acting on a “no win, no fee” or

conditional basis.