We have provided a submission to the Australian Law Reform Commission’s (ALRC) Inquiry into Class Action Proceedings and Third-Party Litigation Funders. As a global law firm, our submission draws on our local and international experience in acting in class action proceedings. A number of our Australian partners are experienced insurance law litigators and are uniquely placed to address some of the issues raised by the ALRC Discussion Paper.1
We have acted in many of the most significant class actions in Australia in both the Federal and State courts. These include Australia’s largest natural disaster class action to date, arising from the 2011 Queensland floods, and the class actions emanating from the 2009 Victorian Black Saturday bushfires, which resulted in the largest settlement in Australian class action history. We have acted in defence of parties and as advisors to directors and officers (D&O) insurers in securities class actions (both Australian and London market). We have also acted in some of the most significant product liability class actions in Australia in recent years, particularly actions relating to healthcare products, and on instructions from local and London market insurance underwriters in a number of class actions involving financial and regulatory services.
In our 2016 Litigation Trends Annual Survey, we asked corporate counsel2 to rank what they considered to be the greatest risks to their organisations. Class actions ranked in their top five risks. In our 2017 Litigation Trends survey,3 class actions had become the second most concerning issue on US corporate counsel’s radar, principally because of the significant financial exposure that class action litigation posed. Similar concerns have also been apparent for some time in the Australian market.
While we acknowledge that the incidence of class actions in Australia needs to be considered in perspective, as cautioned by Professor Morabito in his recently published report,4 it is apparent that the overall level of class action litigation continues to rise, and the value of settlements is increasing.
There has been broad support for reform to the laws and regulations relevant to class actions for many years. In light of the trajectory of class actions in Australia, both in number and value, we consider that the ALRC’s inquiry has come at an opportune time to holistically review the class action and funding framework in Australia, and to consider changes that are aimed at balancing the competing policy drivers underpinning the regime. The integrity of Australia’s capital markets, the protection of consumer interests, the promotion of access to justice and the efficiency and fairness of our civil litigation procedures must be balanced.
While we have responded to the majority of the ALRC’s proposals, our focus has concentrated on the following issues:
- The extent to which increases in the cost of D&O insurance have been driven by class action settlements and the risk of class actions being brought against Australian businesses;
- Whether there are other ways to address business concerns regarding securities class actions than amending continuous disclosure laws;
- Whether there is a need for greater regulation of funders, through both financial services regulation and through the procedural means available to the Federal Court;
- Recognising the growing demand for alternative fee arrangements such as contingency fee arrangements in commercial litigation, and the potential for greater access to alternative sources of funding for class actions if contingency fees were introduced, balanced with the need for adequate safeguards for group members; and
- Alternative means of funding class actions and resolving disputes.
We are grateful for the opportunity to make this submission.