The Rise and Regulation of Litigation Funding in Australian Class Actions

Abstract

Litigation funding has become synonymous with class action litigation in Australia with third-party funders being a key source of financing. This article addresses the rise and regulation of litigation funding in Australia through three pathways: judicial oversight of litigation funding, government regulation of litigation funding and competition from lawyers. Initially, litigation funding was subject to minimal regulation in an effort to promote access to justice. However, concerns about the size of profits made by funders which in turn impacted Australian businesses and reduced the compensation available for group members saw the adoption of a more detailed and restrictive regulatory approach. Further regulation has been proposed and criticised for hampering funding of class actions. This article concludes with a middle or compromise position that recommends a base level of regulation and empowers the courts to act as a check on excessive fees.