As the birthplace of third party litigation funding (TPLF), Australia has not only become a global center for TPLF, but it has also developed a model of funded, opt-out class actions for the rest of the world. According to a study conducted by NERA, TPLF’s rise is a significant contributor to the recent increase in class actions in Australia.

In early 2018, the Australian Attorney General commissioned the Australian Law Reform Commission (ALRC) to review the federal class action rules and the practice of TPLF. In January 2019, ALRC published a final report Integrity, Fairness and Efficiency — An Inquiry into Class Action Proceedings and Third Party Litigation Funding (ALRC Report 134).

Following the release of the ALRC report, Attorney General Christian Porter announced in early 2020 that the federal government would consider federal legislation to regulate the litigation funding industry. To this end, the federal government launched an extensive Parliamentary investigation into Australia’s class action system and TPLF industry in March 2020.

The Parliament’s Joint Committee on Corporations and Financial Services will examine the enormous profits being made by funders and the impact of funding on justice outcomes. The inquiry is expected to shed light on some of the worst aspects of the funding industry. The Committee will also look at all aspects of the class action system and assess the impact of the increase in class actions on the Australian economy.

Submission to the Parliament investigation, including ILR’s comments, can be found here.

This inquiry will issue an official report on December 7, 2020. They may propose legislation based on their report in early 2021.

More information about third party litigation funding can be found here.