Commenting further, Blair McNamara said the report makes various recommendations including regulation of third party litigation funding in Australia and proposing the prohibition on lawyers charging contingency fees to be lifted.

He added, this will impact current conditions. At present, legislation which regulates the legal profession in Australia prohibits lawyers charging legal fees being a percentage of a recovery.

“I do not see contingency fees being for lawyers as a drastic or alarming development so long as the change is supported by appropriate safeguards”, said Blair McNamara. 

“Whilst, corporate Australia may not universally see such a change as positive, it is important to note that;

• the ALRC recommendation is limited to class action litigation only that are filed in Australian courts.
• a lawyer’s percentage-based fee should absorb all legal costs and disbursements (including an after the event insurance premium and security for costs). 
• percentage-based fee agreements be permitted only with leave of the Court, which provides a further safeguard. 

“Further, third-party litigation funders are not bound by the same legal duties as lawyers to charge contingency fees could be less costly overall and in the interests of class members.” 

It’s important to appreciate that this is a Law Reform proposal at Federal level and any change to removing prohibitions on contingency fees will need to transpire at state and territory level where lawyers are regulated. 

 Hence Blair McNamara’s belief that even with broad support such a change will be some way off. 

“I think the more interesting question will be, if allowed, what impact will contingency fees have on the third-party litigation funding business model”, concluded Blair McNamara?

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