Litigation funding reforms introduced in Parliament
The Government has introduced legislation into Parliament that aims to enhance court oversight of the distribution of class action proceeds between litigation funder and members of a class action litigation funding scheme.
In an announcement, Treasurer, Josh Frydenberg, said the Corporations Amendment (Improving Outcomes for Litigation Funding Participants) Bill 2021 allowed courts to be empowered to approve or vary the method for distributing claim proceeds to non-members of the scheme, to ensure the distribution is fair and reasonable in light of the interests of scheme members.
“To further protect class members, the bill will establish a rebuttable presumption that the distribution of claim proceeds is not fair and reasonable if more than 30% is to be paid to entities who are not scheme members, including funders and lawyers,” the announcement said.
“In addition, the bill will require plaintiffs to consent to become members of a class action litigation funding scheme before funders can impose their fees or commission on them. This will encourage ‘book building’ and ensure that actions involving litigation funders are commenced with the genuine support of plaintiffs.”
The bill followed previous changes that required litigation funders to hold an Australian financial services licence and comply with the managed investment scheme regime
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