Evidence destroys empty rhetoric against class actions
1 August 2018
Any moves to make it easier for mass corporate wrongdoing to evade justice should be avoided at all costs, according to a submission to the Australian Law Reform Commission made by the country’s leading class action law firm, Maurice Blackburn Lawyers.
The evidence-packed submission reinforces the work of the Productivity Commission and the Victorian Law Reform Commission, which have both endorsed contingency fee billing in order to ensure greater returns to victims of wrongs and greater clarity around legal costs.
National Head of Class Actions at Maurice Blackburn, Andrew Watson, said the ALRC review was well-positioned to consider reforms in a factual context, to make a good enforcement system even better, especially in regards to lowering costs for victims.
“We’ve always been more concerned with what the actual facts tell us, and the facts are clear in demonstrating that the rate of class actions is low in Australia, with less than 0.3 of one single per cent of all ASX-listed companies facing a shareholder class action in any year,” Mr Watson said.
“In addition to telling us that our system works well and has adequate controls and checks and balances in place, the facts also highlight that there are sensible options to deliver even more support, certainty and clarity to victims of mass wrongs.
“On a sample of 16 of our cases alone, we know that $169 million extra would have been returned to clients’ pockets had we been able to run those cases on a modest 25 per cent contingency fee arrangement. That’s a big difference for victims and shouldn’t be ignored.”
Co-author of Maurice Blackburn’s submission, Class Action Principal Lawyer Julian Schimmel, said that calls from some vested business interests to water down the continuous disclosure obligations of ASX-listed companies ignores the fact that in other jurisdictions with weaker disclosure laws there is often a higher incidence of class actions.
"It is hard to look at the litany of corporate misconduct issues coming out of the Banking Royal Commission and conclude that the way to instil greater integrity in the market is to demand lower disclosure standards from corporate Australia,” Mr Schimmel said.
“This is the inherent danger in just accepting the empty rhetoric of powerful business interests rather than acting on the evidence – you can end up being lured into an illusory circumstance and making bad policy for issues that don’t exist.
“We support much of what has been put forward by the ALRC, and we welcome clarity on the ongoing complexities of competing class actions and issues relating to the taxation of settlement monies that we contend should be in the hands of victims of mass wrongs, not the Australian Tax Office.”
Maurice Blackburn’s submission is available to view online.