Class actions are growing in Australia. We’re hardly in the American league, but we’re seeing some of their options emerging, like litigation funding and disclosure based issues. The market is changing, so our strategies need to as well.
American lawyers laugh when we talk about the growth of class actions in Australia. About 250 class actions have been filed in Australian litigation history. About that many shareholder class actions are filed every year in the United States. But the class action environment has changed recently in Australia. The High Court has given the green light to litigation funding. The Supreme Court has just changed its rules to enlarge the scope for class actions and plaintiff law firms and litigation funders are getting better at identifying and prosecuting class actions. The reality is you cannot read the newspaper today without reading about the next big class action.
Amid these developments some interesting questions are emerging. For one, is there a need to regulate litigation funding? Only recently the Federal Court considered but did not decide whether it had power to intervene in the proposed settlement of a funded class action if it formed the view that the funder’s cut would be too much. Many lawyers are wondering just how the courts will resolve causation issues which typically arise in disclosure based class actions. Is inferred reliance sufficient to establish causation in Australia? What if any role does the American theory of fraud on the market have to play in Australian law? Time and perhaps the High Court will tell.
Many of our clients are adjusting to this new environment. With a nudge from us, they are coming to realise that traditional litigation strategies are not necessarily the best strategies for avoiding, managing and defending class action litigation.