Class action myths exposed: Productivity Commission submission
15 November 2013
Media Contact - Cam Scott
A competitive litigation funding market will create greater economic certainty for defendants and help boost economic productivity by promoting proper corporate disclosure, according to the head of the nation's largest Class Actions plaintiff law firm Maurice Blackburn.
Andrew Watson, Principal of the firm's class actions practice, said his firm had outlined an evidence-based case to the Productivity Commission that killed off some popular myths about the Australian class actions regime, now in its 21st year.
"Over the course of the last 21 years Australia's class action system has provided victims of mass wrongs with real remedies without US style excess," Mr Watson said.
Mr Watson said opportunities now exist for the government to enhance the scope of litigation funding by opening it to new competition.
"The economic benefits of allowing greater access to justice are obvious - already there is undeniable proof that costs to the consumer have been driven down with increased competition in the litigation funding arena," Mr Watson said.
"If allowed to prosper, litigation funding of class actions will help sharpen corporate disclosure practices promoting the efficient allocation of capital whilst providing defendants with greater certainty that any adverse costs awarded will be paid."
Mr Watson said research proved that class actions constitute only about 0.1 per cent of all litigation in Australia, with only 14 class actions on average commenced per annum, with only about half of these supported by litigation funders.
"So when tested against actual information, fears of an American style proliferation of cases are easily exposed as little more than hysteria," Mr Watson said.
"Acceptance of the class action regime is evident in the increasing participation of institutional investors in shareholder class actions and in comments from both the ACCC and ASIC accepting the role of class actions as a complementary private enforcement activity to their own regulatory role.
"Quite simply, if directors and corporations fulfil their proper duties and act lawfully in their transactions on behalf of shareholders, then they have nothing to fear from a robust class actions regime.
"If you're running a big business that affects many people's livelihoods, and you're running a financial and ethical business, you deserve to prosper, and it is to your benefit that rogue operators are held to account. Our actions achieve that."