Class Actions

• Criteria for Class Actions:

  1. 7 or more people who have claims against the same person/organisation
  2. Claims relate to same, similar, or related circumstances
  3. The same issues need to be decided on
• Three options for funding class actions

  1. No win, no fee arrangements
  2. Litigation funders
  3. Group costs orders
• No Win, No Fee: A legal agreement whereby a client pays no legal fees unless they win their case.
• Litigation funders: Large claim (generally), third party (not law firm), pays for some or all of the costs, usually take between 20-40% of the damages (varies), they are receiving compensation for the 'risk' they took in backing the class action, usually agree to pay if it fails (hence the risk)
• Group cost orders: Small claim (generally), need an order from the court, more transparent and simple, charge a fee calculated as a % of the damages
• Appropriateness of class actions:

  • Whether there are 7 or more people who have a claim against the same defendant from similar circumstances
  • Whether a law firm or litigation funder is willing to fund the claim. The bigger the claim, the more to receive funding assistance.
  • Whether there is someone willing and able to be the lead plaintiff.
  • Very small claimsmay not be economical
  • Whether one group member has suffered significantly more than the other group members - go their own way
  • If a person is part of a class action, they give up their right to sue individually. You cannot do both.
• Strength of class actions:

  Group members are not responsible for the payment of any costs (though they will share the costs if the claim is successful). This can help to increase access to justice for group members who may not be able to initiate a claim individually.
• Strength of class actions:

  Far more efficient to deal with a number of claims simultaneously - courts are not backlogged with claims about the same issue, helping to save their time and resources.
• Strength of class actions:

  People can pursue a smaller claim they may not have considered worthwhile individually once they consider the cost of pursuing a claim vs what they are claiming.
• Strength of class action:

  Litigation funders and plaintiff law firms acting on a “no win no fee” agreement can enhance access by taking on the risk of bearing costs if the action is unsuccessful.
• Strength of class action:

  Class actions reduce the costs for the defendant/s too. They can respond to similar claims in one go, rather than defending against multiple separate claims.
• Strength of class actions:

  It is much more convenient for group members who want to pursue a claim but don’t want to be actively involved in participating in proceedings (reduces stress, time, etc).
• Weakness of class actions:

  Class actions impose a large cost burden on the lead plaintiff if the class action fails and there is no litigation funder or no “no win no fee” agreement with a law firm backing the action
• Weakness of class actions:

  Class actions by nature are complex and lengthy and so do inevitably use lots of court time and resources. Even if there is a settlement, the approval time for this can also be significant.
• Weakness of class actions:

  Litigation funders and plaintiff law firms often stand to gain a huge amount of the damages if the action is successful. They have been criticised for taking too much and this can reduce the overall damages that are shared between the plaintiffs.
• Weakness of class actions:

  Sometimes multiple class actions are launched by different law firms in relation to the same issue which can be confusing for those opting in/out and can increase the costs to the defendant and caseload of the courts.
• Weakness of class actions:

  Group members may feel left out of the loop without up-to-date information about the proceeding. This is particularly so for those class actions that involve thousands of group members where one-on-one communication for updates is difficult.