The Litigation Finance Industry in Australia

Evolving courts in Australia now endorse the positive role litigation finance can play in litigation. The Australian litigation finance industry began around 1995 when insolvency practitioners were legally sanctioned to contract for the funding of lawsuits characterized as company property. Even more recently in Australia, litigation finance companies have funded and managed class actions.

In Australia, litigation finance companies usually contract with potential plaintiffs to pay the plaintiffs’ costs and accept the risk of paying opposing counsel’s costs if the lawsuit fails. In Australia, however, the litigation finance companies typically control the lawsuit. Ordinarily, litigation finance companies often receive 25 to 40 percent of the lawsuit’s recovery. In some cases, companies have sought up to 75 percent.

Australian courts have supported the practice of litigation financing by third-parties. For instance, the Federal Court of Australia acknowledged the role litigation finance companies play in planning budgets and improving the efficiency of litigation.

Overall, Australian litigation finance companies have enjoyed freedom to operate and encountered little judicial resistance where financing agreements have been challenged when compared to litigation finance companies in the United States and the United Kingdom.

Topics: litigation finance, Australian litigation finance

Work Cited: Nicholas Dietsch, LITIGATION FINANCING IN THE U.S., THE U.K., AND AUSTRALIA: HOW THE INDUSTRY HAS EVOLVED IN THREE COUNTRIES, Northern Kentucky Law Review (2011).