“Today’s announcement of a Commonwealth Parliamentary inquiry into class actions and contingency fee arrangements is yet another reason why the Victorian Parliament should not rush through legislative changes that will in effect overturn a 200 year prohibition on lawyers charging commissions,” Tim Piper, Victorian head of the national employer association Ai Group, said today.
“The introduction of contingency fees in Victoria through the Justice Legislation Miscellaneous Amendments Bill 2019 (Vic) Bill will not improve access to justice. It will only benefit lawyers at the expense of plaintiffs and the Victorian community. At this stage, the Bill has not even been considered by a Victorian Parliamentary Committee inquiry.
“Not surprisingly, the plaintiff law firms that stand to gain so much from the legislative amendments are attempting to convince Parliamentarians to rush the Bill through. These attempts need to be rejected. The Bill would lead to major changes to Victoria’s legal system and the effects of the amendments need to be understood before the Bill is passed.
“The Bill would make Victoria the only State in Australia to permit lawyers to charge contingency fees in class action proceedings. Contingency fees are fees charged as a percentage of the amount recovered if the claim is successful. At present, lawyers can only charge a fair fee for the work they actually do.
“The Victorian Bill is in direct conflict with the approach recommended by the Victorian Law Reform Commission. The VLRC recently carried out a major inquiry into Victoria’s class action laws. In its March 2018 final report Access to Justice—Litigation Funding and Group Proceedings, the Commission did not recommend that Victoria go it alone on the implementation of contingency fees. Rather, it concluded that ‘the challenge of how to improve access to justice by permitting lawyers to charge contingency fees, with appropriate regulation, should continue to be pursued nationally’. It went on to recommend that the issue should be addressed through the Council of Australian Governments.
“The changes in the Bill would lead to many more class actions being filed in Victoria. Law firms are likely to pursue far more speculative claims, given the super-profits that they will be able to potentially earn. Many more class actions are likely to be filed in Victoria rather than Federally or in other States. The clogging of the Victorian Courts that will undoubtedly result, will reduce access to justice, not improve it.
“The recent explosion in the number of class actions in Australia has led to the cost of business insurance going through roof. These wasted millions would have been better spent on employment and investment, rather than increasing the profits of law firms and litigation funders.
“The impacts of contingency fees need to be fully explored. The Commonwealth Parliamentary inquiry presents a valuable opportunity for this to occur. It is essential that the Victorian Parliament does not rush through the Bill. The sensible approach is to wait for the outcome of the Commonwealth Parliamentary inquiry, particularly given the VLRC’s recommendation that Victoria not go it alone on contingency fees,” Mr Piper said.
