Litigation Financing - Untangling the Gordian Knot - The Future of Law Reform

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Abstract

Litigation funding is used to increase access to justice for those otherwise unable to prosecute a claim to uncover and remedy incompetence, reckless or egregious behaviour. Litigation can also be misused, perhaps as a strategic tool, and in the formulation of legal tactics in class action litigation. The financing of shareholder and other class actions has created substantial media interest. Media reporting can have a negative feedback loop acquiring influential global momentum of its own (for instance in director’s insurance) whereas legal scholarship, even when reported, does not. Legal scholarship is not replete with empirical analysis so in the present debate, published empirical analysis by this and other authors should be heeded. Reforms to date illustrate how the confluence of class action law, other litigation funding law, and managed investment scheme (MIS) law is problematic and unresolved ― a Gordian Knot which in the absence of exemptions can only be untied by significant reform of the legal architecture. There are three constituent elements of litigation financing ― (a) promotion of the MIS (or alternative litigation financing which may constitute a MIS) to general members, being mostly ‘retail’ financial consumers; (b) The class action, being a registered MIS with a ‘wholesale’ representative plaintiff; and (c) the litigation financing and associated stakeholders. Some proposed reforms are politically contested. Australian present and proposed practice deviates from preferred practices in other jurisdictions emulating divergences seen in comparative fiduciary and best interest law which generate additional director risk where there are cross-border investments. Law reform options to better provide for the interests of general member plaintiffs are proffered for debate.
Original languageEnglish
Pages (from-to)15-51
Number of pages38
JournalBond Law Review
Volume34
Issue number3
DOIs
Publication statusPublished - 6 Oct 2022

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