Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021
The submission to the Parliamentary Joint Committee on Corporations and Financial Services in response to the inquiry into the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021 (Bill), which proposes amendments to the Corporations Act 2001 (Cth) (Corporations Act) was prepared by the Law Council of Australia.
The Law Council acknowledges the assistance of the Class Actions Committee of the Federal Litigation and Dispute Resolution Section (Class Actions Committee), the Financial Services Committee of the Business Law Section, and the Law Institute of Victoria in the preparation of this submission.
The Law Council notes that the Bill is aimed at improving outcomes for class action plaintiffs by seeking to ensure that group members receive a share of the claim proceeds which is fair and reasonable.
The Law Council strongly supports that underlying purpose.
The courts already have powers to oversee and control legal and funding fees in class actions. It is a robust, independent framework of powers and discretions to protect the interests of group members. But it can be improved. The Law Council has previously submitted to the Committee that additional oversight by the courts to ensure fair and reasonable outcomes should be considered.1 The Law Council considers that clarifying and widening the powers of the courts is the best mechanism to protect group members, without imposing regulations that stifle competition, create uncertainty and other cost for plaintiffs and defendants, and reduce the availability of funding for meritorious claims. The reforms as proposed do not improve the powers of the courts to achieve the stated purpose of the legislation. In some respects, they impose undue limits on the courts’ powers.
In addition, the reforms proposed by the Bill are particularly complex and are likely to have a range of unintended consequences to the detriment of both group members and respondents, as well as the public interest.
In the Law Council’s view, the Bill should not proceed in its current form. Rather, it should be the subject of comprehensive consultation with stakeholders to ensure that reform of the regulation of litigation funding can meet the intended purpose of the Bill without impacting on access to justice and generating significant uncertainty.
1 Law Council of Australia, Submission No 67 to Parliamentary Joint Committee on Corporations and Financial Services, Parliament of Australia, Inquiry into Litigation funding and the regulation of the class action industry (16 June 2020).