A new blog on Justice Not Profit looks at how litigation funders are trying to stop the Australian federal government from reforming their industry.
The funders are fighting against the suggestion that class members should receive a fair share of their compensation rather than giving the lion’s share to the funders and the claimants’ lawyers. The funders are also fighting reforms that would require them to be regulated as part of the Australian financial services industry. They argue that they can be trusted to ‘self-regulate’ and do the ‘right thing,’ despite a growing body of evidence to the contrary.
One example that illustrates exactly why the industry needs reform came recently from a class action before the Federal Court. The Vocation litigation dragged on for five years before eventually settling for $50 million, of which the funders and claimants’ lawyers received $23.65 million. In other words, the class members received just 52% of the settlement, while the funders and lawyers took 48%.