Productivity Commission supports litigation funding and foreshadows regulation of funders

The Productivity Commission has been examining the private funding of litigation in Australia, as part of a wider review into Australia’s civil justice system and access to, and the quality of justice. The Commission has published a draft report which strongly supports litigation funding and recommends a licence regime, a position we have long advocated.
Full story

A global litigation funding capability – a joint venture in UK and Europe

Bentham IMF Limited is in the process of expanding its funding capability internationally. It has entered into co-funding and joint venture arrangements with subsidiary entities of funds managed by Elliott Management Corporation, a US-based investment advisory firm.
Full story

The US Supreme Court considers the “fraud on the market” theory but does not overturn 1988 precedent

Recently, the US Supreme Court rejected an attempt to overturn a 1988 precedent in which the US Supreme Court recognised the "fraud on the market" theory, a rebuttable presumption of shareholder reliance on a listed company’s material public misrepresentations, recognised by US courts since 1988. Had the decision been decided differently, this may have been influential on courts in Australia.
Full story

Follow on actions and settlement dynamics

One trend which has emerged in the last 12 months is listed entities being faced with a second, and sometimes a third, class action. These actions can be parallel actions arising from the same disclosure events, or actions against the same entity but arising from different disclosure events. However, where there is a risk of a follow on action, a certain and final settlement will be difficult to achieve.
Full story

A new class action model – but will it last? Melbourne City Investments and various class actions

Melbourne City Investments Pty Limited (MCI) commenced a number of representative actions in early 2014. MCI is controlled by Mr Mark Elliott who is also the solicitor for MCI in each of the claims. Consequently Mr Elliott has been prevented from continuing to act for MCI in some of those claims.
Full story

Our new cases: Bottles of wine, power stations and traffic forecasts ....

Since our last issue of The Shareholder, Bentham IMF Limited has announced shareholder class actions against Treasury Wines Estates and construction firm, Forge Group, and that it proposed to fund claims against Arup Pty Limited by former and current Brisconnections Unitholders.
Full story

Some new faces and moves at Bentham IMF Limited

John Walker has been appointed the Managing Director of Bentham Europe and Simon Dluzniak from our Melbourne office has relocated to London to work with Bentham Europe. We have a new Investment Manager in Melbourne, Matthew Kennedy, and Simon Weeks has also joined us and is responsible for relationships with Bentham IMF’s institutional clients.
Full story

Welcome to the Portal and IMF's new website

IMF launched both a new client PORTAL and completely redeveloped website in July 2013. The client PORTAL is a secure online tool for IMF’s clients to be able to view important notifications, download IMF's conflicts management policy and other key documents relating to their action(s) being funded by IMF.
Full story

New regulations on conflicts of interest

The government has introduced regulations requiring funders to have written procedures for managing any conflicts of interest that may arise in litigation they fund in Australia. The regulations came into force on 12 July 2013 and are the first, and so far only, form of regulation applying to all litigation funders operating in this country. While we would have preferred the government to fully regulate the litigation funding sector in Australia, the regulations are at least a step in the right direction.
Full story

John Gay insider trading conviction

Following a prosecution by ASIC in the Supreme Court of Tasmania, John Gay, former Chairman of Gunns Ltd, now in liquidation, has been convicted and fined in relation to a single charge of insider trading.
Full story

Security for costs in class actions

In a class action being heard in the Federal Court in Victoria, individual group members, who are not backed by a litigation funder, have been ordered to provide substantial security for costs in the proceedings. This is an interesting development, in as much as the adverse costs risk in a class action is borne by the representative for the class, and not by the class or group members themselves.
Full story

IMF’s founders named as “Top 50 Innovators for Big Law in the Last 50 Years" by The American Lawyer magazine

IMF’s Hugh McLernon and John Walker have both been chosen by The American Lawyer magazine in its list of “Top 50 Innovators in Big Law in the Last 50 Years”. The magazine’s research and reporting teams spent six months looking for the people “whose ideas, policies, and practices have left an indelible mark on the legal industry".
Full story

Ensuring funders remain independent of lawyers

The policy considerations for requiring the traditional fiduciary duties of lawyers to their clients to be unfettered by any third party funding are compelling. Protection of this fiduciary relationship from commercial influences is a primary consumer protection mechanism. Any fettering of these duties will diminish the structural protections enjoyed by clients in equity that have stood the test of time; protections that are at the front line when clients confront the need for litigation funding.
Full story

Settlement in the GPT class action - the court's role in approving legal costs

Settlement of the class action commenced by Modtech Engineering against GPT Management Holdings Limited was reached in May 2013. The settlement occurred after a four week hearing had concluded and the judge, Justice Gordon, had reserved her decision. As with all class actions, the settlement was subject to court approval. As part of the settlement, Justice Gordon was asked to approve the costs and expenses incurred by Modtech’s lawyers. The role of the court in this regard is protective of the interests of group members to ensure that the lawyers do not act oppressively or unreasonably.
Full story

Recent class action settlements - the court's role in ensuring a settlement operates fairly and reasonably among group members

The court will not simply “rubber stamp” a settlement which has been proposed in a class action. The settlement must operate fairly and reasonably in all respects as between group members. This is an important feature of the Australian class action framework and the recent decision by the Federal Court to overturn a settlement in the Storm and Macquarie Bank class action, and to refuse to approve a settlement in the Vioxx class action, show that it is operating robustly to protect the interests of group members.
Full story

Litigation funding regulation for consumers – not the big end of town

Calls from the big end of town and their agents for regulation of litigation funding needs to be kept in perspective. They amount to a call not to enforce existing market protection laws, rather than any paternalistic sympathy for consumer protection. When litigation funders interact with prospective clients, who can retain independent, competent lawyers on the basis that the funders are able to fund the open-ended costs of both claimants and (if the case is lost) defendants, there is little room for concern. Nevertheless, regulation is needed in four key areas: capital adequacy and other issues addressed by the AFS licence regime; ensuring funders remain independent of lawyers, with claimants being owed unfettered fiduciary duties, disclosure and duties to the court; and disclosure and duties to claimants.
Full story

News In Brief

IMF's annual results were announced on 24 August 2011.
Full story

New York Office

In August 2011, IMF announced the establishment of an office in New York which will be operated through a wholly owned subsidiary under the name Bentham Capital. The new venture will be led by one of the most experienced commercial litigation funders in the US, Ralph Sutton.
Full story

Calculating Loss in Shareholder Claims

One of the most fertile areas for debate in shareholder claims is in how to calculate loss caused by the contravention. Two options are what are known as the "constant percentage" method and the "constant dollar" method; the former measures "inflation" caused by the contravention as a constant percentage of the company's share price through the relevant period, while the latter measures "inflation" in constant dollar or cents terms.
Full story

New Commonwealth Pre-Litigation Requirements

The Commonwealth Civil Dispute Resolution Act 2011 came into force on 1 August 2011. The Act requires parties to civil proceedings in the Federal Court of Australia and the Federal Magistrates Court to take genuine steps to resolve or reduce issues in dispute prior to the commencement of proceedings. Recently, the NSW Attorney-General has announced that New South Wales would follow Victoria and postpone the introduction of mandatory pre-litigation requirements.
Full story