Litigation funding in focus update

Wednesday, 8 August 2012

Since that post, on 12 July 2012, the Corporations Amendment Regulation 2012 (No 6) was introduced to deal with this issue. Whilst the new amendments do add requirements for litigation funders to disclose any conflict of interest, they fail to provide any requirements for licensing and capital adequacy of litigation funders.

So what does this mean for the litigation funding industry? Even after this new regulation, the litigation funding industry remains largely unregulated. There remains potential for unlicensed funders to participate in the industry, and the lacklustre rules for compliance mean that plaintiffs may not be adequately protected from any unscrupulous funders. On the other hand (and perhaps the purpose of the de-regulation of the industry), given the less stringent requirements for litigation funders, these changes provide greater access to the courts for individuals who do not have the resources to fund litigation themselves.
 
What remains to be seen is whether these benefits will outweigh the disadvantages in the longer term.
 
An interesting article on this topic was published in The Australian and by Clayton Utz here.

KordaMentha’s March article on litigation funding can be found here