Australian Federal Government Proposes Major Class Action Law Reforms

In Short

The Situation: The Australian Federal Government has released a draft exposure bill, the Treasury Laws Amendment (Measures for Consultation) Bill 2021: Litigation funders ("Draft Bill"), that proposes significant changes to Australia's class action regime. The Draft Bill adds to earlier class action regulatory reforms, including regulations which require litigation funded class actions to comply with the 'managed investment scheme' ("MIS") requirements in the Corporations Act 2001 (Cth) and litigation funders to hold an Australian financial services licence.

The Result: The Draft Bill aims to further regulate litigation funding in the class action context through the MIS regime. If passed by Federal Parliament, the Draft Bill would effectively cap the fees paid by class members to lawyers and litigation funders at 30% of any settlement or award of damages. The Draft Bill would also give courts the power to vary a proposed distribution to ensure it is