Update on recent developments regarding the funding of class actions

The rapid growth of the litigation funding industry and a number of recent significant class action settlements has placed the spotlight on the funding of class actions in Australia.

CAN LAWYERS HAVE A FINANCIAL INTEREST IN THE ACTION?

In 2014, a number of securities class actions were commenced in the Supreme Court of Victoria by Melbourne City Investments Pty Limited (MCI) as lead plaintiff against, among others, Treasury Wine Estates Limited (TWE) and Leighton Holdings Limited (LHL).

On the day of its incorporation, MCI purchased 140 shares in TWE for $693. MCI also purchased 39 shares in LHL for $684.06 and small parcels of shares costing less than $700 in various other publicly listed companies. The sole director and shareholder of MCI (Mr Elliott) was also the legal representative for the plaintiffs and was funding the litigation on a no win-no fee basis.