An Evidence Based Approach to Class Action Reform in Australia

In late January 2019, Professor Morabito published his latest empirical paper on the class actions regime. The paper, published in response to the ALRC’s recent report on class action proceedings and litigation funding, focused on three main areas – Funding Fees, Common Fund Orders and Reimbursement Payments

Professor Morabito's headline conclusions in respect of Funding Fees were as follows:

  • for funded class actions, the median percentage deduction from the gross settlement sum for a funder is approximately 25% (in contrast to the figure of 31% cited by the ALRC in its report)
  • in approximately two thirds of funded class actions, after deductions for legal and funding costs, group members received in excess of 50% of the gross recovery, and funding fees comprised more than 40% of the gross recovery in less than 5% of cases.

In respect of Common Fund Orders, Professor Morabito concluded that:

  • in many cases where a common fund order has been made, the percentage amount of the common fund (of the gross settlement) has been less than the historical median for funding fees
  • common fund orders made in competing class actions (citing the BHP and GetSwift proceedings) have 'worked particularly well'.

As to reimbursement payments to lead representatives, subgroup representatives and sample group members, Professor Morabito observed that:

  • in recent years Supreme Courts have begun to follow the Federal Court's practice in making reimbursement payment orders
  • a total of approximately $2.6 million in reimbursement payments have been made in 61 class actions to a total of 114 persons, at an average of approximately $23,000 per recipient.
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Andrew Watson

National Head of Class Actions, Class actions, Melbourne

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Principal Lawyer, Class actions, Sydney

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