Class action claimants across Australia would be more likely to keep more of their award if Victoria’s ‘group costs orders’ (GCO) model was replicated in other states and territories, according to a new report by The McKell Institute.
The new report, ‘A Model for the Nation? Four Years of Victoria’s Section 33ZDA,’ analyses the impact of Victoria’s GCO model which allow law firms to receive a fee contingent on, and proportional to, the final damages award or settlement awarded in class action. Victoria’s model differs from other states and territories in which independent litigation funders are typically the only means through which claimants can fund often expensive class actions.
The report finds the Victorian model has been a success, and that those injured by mass wrongs are more likely to keep more of their award under GCO than under a standard litigation funding arrangement.
“While Victoria’s GCO regime is still relatively young and comprehensive data is not yet available, the limited data that is available shows a model that is more beneficial for claimants and vindicates the arguments in favour of contingency fees generally,” said report author and McKell Institute Policy Analyst Max Douglass.
“Since its commencement in July 2020, the Supreme Court of Victoria has seen a much larger number of filings indicating it is now the jurisdiction of choice for claimants. Better yet, the GCO regime in Victoria seems to have engendered much greater competition between law firms and litigation funders, with funding rates dropping across the country after the commencement of s 33ZDA.
“What is more, GCO rates approved by the Supreme Court of Victoria are similar to prevailing litigation funding rates, yet constitute the only deduction from the final award or settlement. This leaves claimants much better off compared to a typical model involving both law firms and litigation funders. GCO rates fall further when there is greater competition between law firms to bring a claim.
“Despite being operational for not even four years, the results of Victoria’s GCO regime speak for themselves. They fundamentally advance the purpose of the class action regime by providing for more competitive and transparent returns to claimants. While GCOs are not a panacea, they are an important tool for advancing access to justice, and should be available to lawyers and their class action clients and group members in cases deemed appropriate by the court.
“There is no reason in practice or principle to prevent law firms from charging on a contingency basis in class actions under a GCO model.
“Victoria’s GCO model should, in the interests of access to justice, be replicated across all of the Commonwealth’s class action regimes. Claimants would have almost nothing to lose, and plenty to gain by having access to another option for pursuing mass wrongs.”
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