The Australian Institute of Company Directors (AICD) has welcomed moves to establish a new parliamentary committee inquiry to examine the impact of litigation funding.
Attorney-General Christian Porter will move to establish the Parliamentary Joint Committee on Corporations and Financial Services inquiry which will be asked to report back to Parliament on 9 November 2020.
Matters to be explored include factors driving the increasing prevalence of class action proceedings in Australia.
The AICD has previously encouraged the Government to consider stronger regulation of litigation funders and implement the ALRC’s recommendation to conduct a thorough review of the legal and economic consequences of the continuous disclosure and class action regimes.
Mr Porter acknowledged that, since 2013, “…the number of class actions filed in Australia has tripled, with the overwhelming majority bankrolled by litigation funders.”
AICD Managing Director and CEO, Angus Armour, said, “We consistently hear that this increase in class actions is leading to a risk-averse culture in Australian boardrooms which is bad for investment and the broader economy. The proliferation of securities class actions in particular has led to a crisis in Australia’s directors and officers insurance market.
“While class actions are a very important means for people to access justice, litigation funders from around the world clearly consider Australia a prospective market where there are good returns to be made by funding litigation.
“Complete transparency around the returns to litigation funders against the returns to plaintiffs would go a long way to re-establishing confidence in the equity of the system.
“Given the economic challenges confronting the nation currently, it is good to see the Government addressing this issue”, Mr Armour said.
The AICD looks forward to making a submission to the Parliamentary inquiry.
Media Contact: Maegen Sykes 0439 167 56