Lawyers Taking a 40 Percent Cut of Compensation Claims: Report

A new report by the Menzies Research Centre has found that the rise in class actions taken on “no win, no fee” bases and underwritten by litigation funders has deprived plaintiffs of a significant share of the damages they’re awarded. Between 2009 and 2020, 41 class actions backed by litigation funders were settled in Australia for a total of $2.389 billion. From this, lawyers took $341.84 million in fees and charges. Litigation funders, who effectively gamble on a successful outcome and profit from the money awarded to the plaintiffs, received $642.63 million. That left plaintiffs almost a billion dollars out of pocket. At present, litigation funders can quickly launch a class action once they identify a person to be a representative plaintiff, on the understanding that they will likely be able to secure a contingency fee when the case is settled....