In Australia, “litigation funders” have been riding high for several years now. As previously discussed here, publicly-traded companies such as IMF (Australia) Ltd., the dominant class action litigation funder in Australia, have reported surging earnings even in the worst of economic times due to the rise of class actions in Australia and the absence of any contingent fee model there to fund such cases.
A recent decision by Australia’s Federal Court in the Brookfield Multiplex Limited case, however, has reportedly stopped the entire litigation funding industry in its tracks. In the Brookfield case, the court found that litigation funding arrangements and solicitors’ retainer for representative proceedings constitute an unregistered Managed Investment Scheme in breach of the Corporations Act 2001 (Cth). Attorneys from the Middletons law firm in Australia write that while no final orders have been made in the case, Brookfield has now sought an order that would restrain the litigation funders from taking any steps in the case pursuant to the unlawful arrangement.
