The national employer association, Ai Group, has urged the Victorian Parliament’s Upper House to this week reject legislation which has the potential to turn the State into a ‘honeypot’ for class actions and lawyers into ‘bounty hunters’.
Ai Group Chief Executive, Innes Willox, said: “This is a national issue. The Bill would make Victoria the only state in Australia to give lawyers access to contingency fees which would gift them a share of class action wins. At present, they can only charge a fair and proper fee for the work they actually do.
“This Victorian Bill would only profit lawyers at the expense of plaintiffs and the community and create a honeypot for jurisdiction-shopping legal firms who would file numerous class action claims in the State.
“Legal firms in Victoria have pre-empted the Upper House vote by referencing the potential provisions for ‘contingency fees’ in cases recently filed. This assumes the Upper House will be a rubber stamp for what remains a contentious Bill.
“Overseas litigation funders have also signalled that they are looking at setting up law firms in Australia to take advantage of the further windfall super profits the Bill will potentially deliver.
“This Bill has enormous unintended consequences and it has the potential to turn law firms into bounty hunters.
“For example, the Bill will likely do the opposite of improving the access to justice it is claimed it will deliver. It could create a perverse incentive for firms to abandon no-win-no-fee work in favour of high profits. If this happened, it would reduce access to justice, increase costs and leave the community much worse off.
“The Bill would incentivise law firms to pursue cases of marginal merit for profit which would be costly for business and the community and drive up insurance costs which no doubt would eventually be passed on to consumers.
“This Bill is not in the community’s best interests and we encourage the Victorian Upper House to reject it outright, or at the very least to refer it to a committee for much-needed further scrutiny,” Mr Willox said.
Ai Group has urged the federal government to move against the explosion in class actions and has made a number of detailed proposals which can be found here and here. See also this opinion piece on class actions at the following link. The Victorian contingency fee Bill is known formally as the Justice Legislation Miscellaneous Amendments Bill 2019 (VIC)