Harbour travelled to Australia to meet our long-term strategic partners and attend key events. Ellora MacPherson speaks to Stephen O’Dowd, Senior Director of Litigation Funding and J-P Pitt, Director of Litigation Funding about their trip and their views on the Australian market.
Stephen, can you tell me if there are any trends emerging that you learned on your trip or anything new on the funding landscape our readers should be aware of?
Class actions and litigation funding are more in the spotlight than ever before. In January, the Australian Law Reform Commission (ALRC) completed its extensive inquiry into this space, tabling a number of key recommendations in Parliament. In February, a Royal Commission concluded its inquiry into misconduct in the banking, superannuation and financial services industry, leading to the commencement of a number of high-profile class actions. And the Court’s general management of competing class actions and settlement approvals has made numerous headlines.
How is funding currently regulated in Australia?
Currently there is no licensing regime and the ALRC did not recommend that one be put in place. Funders are required to manage conflicts and demonstrate that they have adequate processes to enable them to do so.
What we are seeing, however, is an increasing trend towards Court-led regulation of funded class actions, particularly in the Federal Court. This ranges from enhanced disclosure of funding arrangements to increased judicial scrutiny of litigation funding charges and legal costs, and management of competing claims.
J-P, perhaps you could develop this point around competing claims?
Certainly, one of the cases that I oversee involved a competing claim. The Court made it clear, at the first case management conference, that in light of the similarity between the two claims it was preferable for only one to proceed. Ultimately, the Court ordered consolidation of the two claims and avoided the kind of “beauty contest” we have seen of late in Australia. It is an interesting solution to the challenge of competing class actions and demonstrates a clear focus by the Court on the speed of justice.
Coming back to the ALRC inquiry, can you tell us more about the biggest change that is proposed?
As matters currently stand in Australia, lawyers are prohibited from charging contingency fees. However, the ALRC has recommended that contingency fees be permitted in limited circumstances for class actions, subject to close oversight by the Federal Court.
Do you see contingency fees as a threat to litigation funders?
No, I don’t see it that way, just as they haven’t been following their introduction into the UK market. The ALRC is trying to provide class members with more options and better access to justice and attempting to remove economic barriers facing medium-sized actions. But such actions will remain expensive to run, and I expect funders to continue to play a key role in the market.
Stephen, you mentioned funders continuing to play a key role. What is Harbour’s role in the market and how do you see it developing in future?
We are a global leader in the funding market and our experience and expertise is second-to-none. Our funding provides Australian claimants with an important connection to their justice system, giving them the freedom to bring good claims without the burden of litigation risk.
That freedom extends to law firms as well, with which we develop risk-management solutions so that their practices can adapt and grow in an increasingly competitive marketplace. We are fortunate to have strong relationships with several strategic partners in Australia. I expect those relationships to grow even stronger, and for Harbour, working alongside its strategic partners, to continue to play a key role in the development of the litigation landscape in Australia.
J-P, a final word from you about your specialist area of enforcement. What is the landscape for enforcement proceedings in Australia and do you see this changing in the near future?
Enforcement is reasonably quiet in Australia at the moment, mainly due I suspect to a relatively strong economy. It means we are not seeing the same sort of opportunities that we see in other jurisdictions, arising from insolvencies. Another aspect is that Australia is not an easy jurisdiction through which to move assets, where a defendant is seeking to dissipate them. That of course could change in the coming months, and is something that we at Harbour will be monitoring with interest.
Harbour Litigation Funding Limited (“Harbour") - Reg. No 06426478 - is authorised and regulated by the Financial Conduct Authority and acts as the sole investment sub adviser to Harbour Litigation Investment Fund, L.P., Harbour Fund II, L.P., Harbour Fund III, L.P. and Harbour Fund IV, L.P. (the "Harbour Funds”).