Lawyers take a lot of heat in the U.S. for sometimes taking as much as a third of class action settlements as fees, but take a look at how fees work in Australia.
In Australia, class action litigation is usually funded not by the law firms, but by litigation funding companies that front money to law firms in exchange for huge payouts if the case is successful. Consider the recent record settlement in the Centro case in Australia, where a court recently approved a $200 million settlement in the shareholder action against the company and its former auditor, PricewaterhouseCoopers. According to The Australian, almost half of the $200 million will go to the lawyers and litigation funders who worked on the case. This week, the court approved $99 million in such payouts as follows:
- Law firm Maurice Blackburn: $20 million
- Law firm Slater & Gordon: $10 million
- Litigation funder IMF (Australia): $60 million
- Litigation funder Comprehensive Litigation Funding: $9 million
With $99 million in fees and costs going to the firms above, that leaves just $101 million of the $200 million settlement for shareholders. Nonetheless, Judge John Middleton found that the fees and costs were fair and reasonable. "I accept that the proposals adopt the fairest and most reasonable approach to group members, taking into account the prospects of recovery and risks of continuing to litigate these proceedings," the judge said.