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Common Fund Orders’ (CFOs) have had a significant effect on Australian third party-funded class actions by requiring all class members to make a contribution to the third-party litigation funder’s fee in the event of a successful outcome. This altered past practice whereby only class members who had contracted with the litigation funder would be liable for such a contribution. However in a 5:2 decision in BMW Australia Ltd v Brewster in 2019, the High Court cast some doubt on CFOs, determining that neither s 33ZF Federal Court of Australia Act 1976 (Cth) nor s 183 Civil Procedure Act 2005 (NSW) provided a legal basis for making CFOs at the outset of proceedings so as to secure litigation funding support. In late 2020, the Commonwealth Parliamentary Joint Committee (PJC) on Corporations and Financial Services recommended that legislation be enacted to ‘address uncertainty’ in Brewster in a manner that would enable CFOs to be made at settlement or judgment. The authors canvass normative arguments as to the merits of CFOs and compare the alternative practice of making Funding Equalisation Orders (FEOs). They also consider the related issue of courts setting overall funding commissions. Given the possibility of legislative intervention, they also review arguments as to the potential constitutional validity of CFOs, a matter that was raised, but received very limited treatment from the High Court in BMW.

The submission recommends against subjecting litigation funding to the managed investment scheme regulations comprised in Chapter 5C Corporations Act 2001 (Cth) and the Australian Financial Services Licensing Requirements comprised in Chapter 7 Corporations Act 2001 (Cth)

Purpose Drawing on “Strategic Alliance” literature and qualitative research methods, the purpose of this study is to examine the initiation and operations phases of the relationship between Australian litigation funders and class law firms. The initiation phase examines factors such as complementarity between needs and assets compatibility between the funder and the class law firm goals of the alliance trust and alliance structure. The operations phase considers factors such as governance, communication and risk management and accountability. Because of its focus on the fairness of settlement, case law provides limited understanding of the drivers of the class law firm and funder relationship. An “inside look” of how the funder-law firm is initiated and made operational provides a more accurate picture and has important implications for the management of the ethical issues that arise during the course of that relationship. Design/methodology/approach This paper is a content analysis and contains qualitative interviews. Findings The strategic alliance between class law firms and litigation funders has evolved within an institutional climate that has acknowledged the benefits that the alliance can bring to the conduct of class actions. That same institutional environment has led to an alliance which is informal and transactionally oriented, where each of the parties maintains a demarcation in function. Although they share aspects of the strategic management of class actions, funders continue to be diligent monitors of class law firms, and class law firms continue to advance the legal rights of class members. Research limitations/implications It is observed that the size of the sample is small driven by a number of market participants. Practical implications The paper confirms that the litigation funder–law firm strategic alliance works well as a result of institutional constraints. Social implications Each of the alliance partners was keen to ensure that neither they nor their partner acted in a way which might attract judicial disapproval. Each also believed that they played a positive role in promoting class member interests, albeit that their primary motivation was to earn fees or a commission. The success of the alliance between class law firms and litigation funders has substantially improved access to justice in Australia for small claims holders. Originality/value The paper provides insight into a strategic alliance which is formed primarily for the benefit of third parties. This is one of the first papers to consider the litigation funder–law firm relationship through the lens of strategic alliance literature.

In an effort to ensure access to justice, Australian courts have fashioned a unique hybrid opt in-opt out process known as “closed classes.” The rationale that underlies closed classes is to prevent free-riding that may undercut the position of funders and class action law firms reliant upon entering into agreements with a critical mass of class members. However, multiple closed classes also pose problems for respondents seeking the comfort of finality. To secure settlement and thus ultimately benefit participating class members, Australian courts have formulated a procedure whereby the closed class is opened and nonparticipating class members are invited to either register their claims or opt out so that thereafter those who do not register and those who opt out are effectively precluded by res judicata from making further related claims. We argue that Australian courts’ support of closed classes, while driven by pragmatism, has produced unintended consequences. Many relate to the ethical dilemmas faced by class action law firms and litigation funders seeking to advance the interests of participating class members over and above those of nonparticipating class members. The Full Federal Court has recently approved an alternative common fund approach. However, questions remain as to whether Australian courts are appropriately equipped to measure and compare the alternative transaction costs associated with the current and proposed approach, and whether they are appropriately equipped to determine the commercial rectitude and fairness of litigation funding agreements.

The bogey of US style actions has dominated public thinking and policy formulation regarding the design of collective redress mechanisms in the United Kingdom. As a result, the UK Government has chosen a sector-by-sector approach rather than a generic class action regime. The spectre of US-style litigation has also been influential in the drafting of the costs provisions for the country’s first sector-specific opt out class action regime governing class actions filed before the Competition Appeal Tribunal. The purpose of this article is to make a contribution to the debate as to the most satisfactory means of addressing the costs and funding of class actions (whether brought pursuant to a generic class action regime or regimes in specific sectors or industries only) by providing an evaluation of this dimension of Australia’s federal class action regime which has been in operation for over 24 years. Refereed/Peer-reviewed

The Class Actions Bill and Rules recently drafted by the Rules Committee envisage for New Zealand a sophisticated and comprehensive class action regime, which confers on trial judges the power to supervise the involvement of commercial litigation funders in class action proceedings. The aim of this article is to provide an evaluation of this proposed regime by exploring the Australian and English experience with litigation funders. The review of the Australian landscape will be based, to some extent, on the findings of the first empirical study of the operation of the Federal and Victorian class action regimes that the first-named author is currently conducting. Refereed/Peer-reviewed