Tag Archive for australia

01 May 2013
Legal Funding 101

Record Breaking Growth in Australian Litigation Funding Space; WSJ Covers the “Payday Lawsuit Lending” Industry

litigation funding in Australia experiences record growthAustralia has been one of the most accepting markets for litigation funding since its inception. It was one of the first territories to embrace the industry, and for those involved, it has been quite lucrative. An article in Bloomberg Businessweek recently stated that litigation funders in Australia have reported record profits. Yet even with this tremendous growth, many in the third party financing space feel they are just scratching the surface.

On April 28th, The Wall Street Journal did a story about possible state legislation that may impact what the author referred to as the “payday lawsuit lending” industry. According to the story, there are several states looking to cap the rates certain companies charge when they provide funding to plaintiffs (commonly referred to as pre-settlement plaintiff financing). *

In reading the article, it seems that many of the legislators quoted do not understand the basics of lawsuit funding. Legal finance companies take on significant risks, as the funding they provide is generally non-recourse. This means that if the plaintiff’s lawsuit does not result in a favorable outcome, the plaintiff owes the funding company nothing. Furthermore, pre-settlement funding is not a loan as the article describes, but an advance against future proceeds of a lawsuit.

In the past, there has been legislation against legal funding. The practice was even temporarily banned in certain states, including Ohio and North Carolina. Currently, lawsuit lending is legal in all 50 states. The United States Chamber of Commerce has been pushing for legislation to again ban the practice or cap the rates funding companies are allowed to charge. Supporters of legal finance say this would severely harm the industry.

*DISCLAIMER: RD Legal exclusively focuses on post-settlement funding and does not support nor endorse the pre-settlement finance industry.

Written by Lulaine Compere

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26 Sep 2012
Legal Funding 101

An Empirical Look at Third Party Litigation Funding

litigation funding in AustraliaDavid S. Abrams and Daniel Chen wrote the article A Market for Justice: A First Empirical Look At Third Party Litigation Funding for the University Of Pennsylvania Law Review. The article focuses on the claims that third party litigation funding means an increase in litigation and court cases.

They explain the process of how the industry emerged and the actual process of determination funding companies make before funding a case. The authors particularly focus on how Australia became a bastion for third party funding.

Abrams is an Assistant Professor of Law, Business, Economics, and Public Policy at the University of Pennsylvania. Chen is the Chair of Law and Economics at ETH Zurich in Switzerland. He was the Assistant Professor of Law, Economics, and Public Policy at Duke University.

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28 Aug 2012
Legal Funding 101

Approval of Litigation Funding Agreements

The Kemp Strang law firm in Australia recently published an article about a case concerning litigation funding agreements. In this article they talk about how the Federal Court in Australia handled a liquidators request on the approval of a funding agreement and the checklist that was used in evaluating if the agreement held water.

Written by Lulaine Compere.

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14 Aug 2012
Legal Funding 101

Australian Court to Tighten Rein on Litigation Funding

The Australian published a story on the high court in Australia possibly looking to tighten their rein on litigation funding. The story, which reads more like an editorial, denounces litigation funders as high end ambulance chasers who care more about their stock price than the people. This of course is not true, since the free market rates are set to what the market can bear.

The litigation funding industry is growing and if investors feel it can do well in the stock market, they take the company public. The article reads like it was written by one of the sector’s critics who refuse to see the benefits of such an industry-such as providing underfunded plaintiffs a fighting chance at taking on deep pocketed corporations-and online see what they perceive to be negative.

Written by Lulaine Compere.

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03 Aug 2012
Legal Funding 101

Regulation Added to Australian Litigation Funding

Australia looks like they have put some regulation on their litigation funding sector. According to The Australian, litigation funders will not be able to control the direction of the case for their profit. There have been calls to add certain rules like requiring adequate financial resources to meet their obligation to all the cases funded.

In addition, requiring a license to fund was added to the list of new regulations towards the industry. The new regulations are made to solve the issue of conflicts of interest. The article was written by Michael Legg who is an associate Professor of Law at the University of New South Wales and is a partner at Clayton Utz in Australia.

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20 Jul 2012
Legal Funding 101

Class Action Funding in Australia

The Allens law firm based in Australia and Asia published a post on their website about class actions in Australia. This post focuses on the Australian Federal Government allowing class actions to be funded without an Australian Services License, which could open the door for more litigation funding companies to enter the market. It was written by Allens law firm partners Ross Drinnan, Jenny Campbell, and lawyer Andrew Ta.

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11 Jun 2012
Legal Funding 101

The Regulation of Third Party Litigation Funding in Australia

The Office of Legal Services Commissioner helps regulate the legal industry in Australia with the Law Society Of NSW and the NSW Bar Association. Together, they are responsible for the conduct of the lawyers, or as they call them in Australia, solicitors and barristers.

Steve Mark and Tahlia Gordon, both of the Offices of Legal Services Commissioner, wrote an extensive paper entitled The Regulation of Third Party Litigation Funding in Australia. In this article, they explain the effects regulation would have on the industry. It was published in the Centre for Law, Markets, and Regulation in Australia.

You can download the 33 page paper at the University of New South Whales website.

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04 Jun 2012
Legal Funding 101

Informative article about litigation funding in Australia

The below paper was presented at the Law Society of New South Wales Young Lawyers’ Annual Civil Litigation Seminar in March of 2010. It talks about litigation funding in Australia, including its development and proposals for regulation.

You can read the article in its entirety here.

Some information about the authors: Michael Legg is an Associate Professor at the University of New South Wales. He is also a specialist in the areas of class actions, regulatory and commercial litigation. Louisa Travers is an Associate at Tress Cox Lawyers. Nicholas Turner is a Senior Consultant at Macro View Business Technology.

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