9.1 The aim of this consultation paper is to encourage discussion about the need for reform to address issues arising from the terms of reference, and generate ideas about the form any such reform should take. Some reform options have been put forward and more are welcome. The Commission will carefully consider submissions made to it on this important matter and will then formulate its recommendations to government.
9.2 The recommendations that can be made must be confined to the powers of the State of Victoria, yet perhaps the most far-reaching reform needed falls within the jurisdiction of the Commonwealth. Following an extensive review of access to justice arrangements, the Productivity Commission has recommended that litigation funders be licensed under a Commonwealth scheme. It has proposed that direct regulation would reduce the risks that: a funding agreement is unfair; the litigation funder exercises too much control over proceedings; potential conflicts of interest are not managed; and that the funder does not hold adequate capital relative to its financial obligations. Its recommendation proposes a systemic response to many of the issues being considered in this review.
9.3 The terms of reference of this review are necessarily directed to the court’s supervision and management of proceedings that are financed by litigation funders, and class actions. By imposing procedural and evidentiary requirements on the parties, the court can improve transparency and certainty about the role of litigation funders and their arrangements with plaintiff lawyers as well as with the plaintiff. Other methods of supervision may also be appropriate.
9.4 In class actions, the Supreme Court has gained extensive experience and knowledge since the regime was established in Victoria in 2000. The law firms and litigation funders that have been involved in class actions have also developed expertise in selecting and conducting proceedings of this type. This review provides an opportunity to reflect on how past problems in individual cases can be avoided in future through procedural or other reform.
9.5 This review is also timely. The number of law firms that are filing class actions is growing, as is the number of litigation funders that are offering a variety of services under different terms and conditions. In addition, the relationships between litigation funders and law firms are becoming more complex.
9.6 The reform ideas in this paper would increase transparency about the litigation funder’s role and its implications for the court and the parties to the litigation. With transparency, accountability should be strengthened as well, to seek to ensure that the interests of the litigation funder and lawyer are not eclipsing those of their clients or undermining the objective of improving access to justice.