This government is a crony capitalist enterprise run for the oligarchs. One of its primary reasons for being is to fix markets for the benefit of its mates. This Bill is the latest example of this practice.
This Bill would cap the percentage of proceeds from a successful class action that can be paid to litigation funders. The Explanatory Memorandum of the Bill explains that this is so as to avoid litigation funders obtaining “windfall profits”.
This government’s interest in curbing windfall profits is very selective. The entire for-profit financial industry is the living definition of economic rent. Which is why the government is only interested in price caps for a financial product that provides funding for class actions against corporations, including class actions against the rest of the financial industry.
For this government: if you’re making windfall profits exploiting consumers, small business or workers, or trashing nature or cooking the planet, then that’s OK. But if you’re making windfall profits protecting consumers, small business or workers, or helping preserve nature and our climate, then that’s a problem.
The Explanatory Memorandum explains why the government wants to stymie litigation funders:
Without the support of a litigation funder, the representative plaintiff may not have the financial resources to fund the action. Further, without an indemnity for costs provided by a litigation funder, the representative plaintiff would be exposed to liability in the event of an adverse cost order made during the proceedings.
In other words, litigation funders are the only reason some class actions get off the ground.
In justifying this Bill, the Explanatory Memorandum draws heavily upon the report of this committee into litigation funding, stating that the committee report has
… been certified as independent … which involved a process and analysis equivalent to a Regulation Impact Statement.
As much as the Greens respect and appreciate the work of this committee, this is poppycock. This committee is constituted by members of parliament. To say that the recommendations of this committee, on which the government currently has the numbers, is independent of the government is an Orwellian inversion of the truth.
The Explanatory Memorandum also draws heavily from the report of the Australian Law Reform Commission (ALRC) into litigation funding. Yet, as Maurice Blackburn points out in their submission, the two recommendations of the ALRC report that would most assist in providing a just outcome for plaintiffs have not been acted upon. Specifically:
...the Federal Court should be legislatively empowered to make common fund orders (Recommendation 3) and lawyers in class actions should be able to enter into percentage-based fee agreements (Recommendation 17).
More damning for the government is the contention from the Law Council that the Bill might end up having the opposite effect of what is supposedly intended, including by encouraging multiple smaller class actions, and the pursuit of higher settlement amounts, including a reduced willingness to settle.
But that’s all merely collateral damage for this government.
As has also been pointed out in a number of submissions, this Bill has been hastily concocted, from an Exposure Draft released for consultation on 30 September 2021, to a Bill being tabled in the House on 27 October 2021, and, most unusually, referred to this committee for inquiry, rather than being considered by the Senate through its legislation committee referral processes.
Clearly, the government is making a play to ram this Bill through the last sitting week of the year. And it cares little for any informed opinions on how best to structure litigation funding, let alone whether the Bill will be of any benefit to any particular plaintiff or defendant.
The purpose of this Bill is at the macro level. It is designed to attack the business model of litigation funders to reduce the quantum of class actions. Access to justice and fair remedy are of no concern. The intention is pure and simple: to protect the power and wealth of the government’s corporate mates.
Recommendation
That the Bill be opposed.