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Crowdfunding Guidance Note

18 December 2019
 

There has been an increased public awareness of crowdfunding in recent years, following the advent and proliferation of web-based platforms that allow people to access social and fundraising networks previously out of reach. Ordinary people with limited influence can now campaign for a cause, promulgate a message, take a stand and, pertinently, seek the financial support to do so; whether in the name of a broader public policy or otherwise.

In the legal context, crowdfunding facilitates access to justice- particularly for those with limited financial resources and for cases too small to attract the interest of third-party litigation funders seeking a return on their investment.

To the extent that the availability of crowdfunding provides an additional means of funding litigation, it potentially expands the number of persons experiencing legal problems who can seek a legal resolution. However, the potential use of crowdfunding comes with enhanced risk for clients and their legal advisers, which need to be balanced when assessing whether there is any benefit in pursuing crowdfunding. It also may raise concerns for the public standing of the profession if there is perception that crowdfunding is being inappropriately used by some practitioners for revenue raising, or that it tends to make the affordability of justice dependent upon media or popular appeal.

The purpose of this Crowdfunding: Guidance for Australian legal practitioners (Guidance Note) is to draw the relevant ethical and professional issues to the attention of practitioners, to improve understanding of this modern phenomenon and allow practitioners to undertake appropriate risk management. By highlighting these issues for consideration, the Law Council of Australia hopes to improve the profession’s management of the crowdfunding of legal expenses and for the protection of the public.
 

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