On 6 October 2021, the AICD lodged a submission to Treasury’s consultation on its Exposure Draft Treasury Laws Amendment (Measures for Consultation) Bill 2021: Litigation funders (Exposure Draft).
The AICD acknowledges the important role that litigation funding can play in providing access to justice, through financing the often high costs of litigation. However, the AICD has long held concerns about the regulatory settings and commercial incentives driving Australia’s attractiveness for securities class actions, and the high percentage of judgement and settlement proceeds flowing to litigation funders and plaintiff lawyers.
The AICD supports the intent of the reforms proposed in the Exposure Draft to rebalance these regulatory settings, which in our view, will promote proportionate litigation funding arrangements and equitable returns to class members.
In particular, the AICD supports proposals to:
- enhance the powers of the Court to:
- approve the method of distribution to members of the scheme and a litigation funder as fair and reasonable for a litigation funding agreement to be enforceable; and/or
- ovary the litigation funding agreement to ensure the method is fair and reasonable.
- enable the Court to assess whether the distribution method is fair and reasonable, with a rebuttable presumption that returns less than 70 per cent of the total claims proceeds for class members, which the Court can set aside if it considers the alternative method fair and reasonable; and
- enable the Court to have regard to the report of a fees assessor and representations of a contradictor in determining whether to approve or vary a litigation funding agreement.
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