Implications from today’s ALRC Report: Contingency fees need to be supported by appropriate safeguards says Honan

Commenting on the Australian Law Reform Commission’s (ALRC) Final Report to the Federal Attorney-General on the “Inquiry into Class Action Proceedings and Third-Party Litigation Funders’, Head of Legal at Honan Insurance Group, Blair McNamara said that change will still be some way off.

Commenting further, Blair McNamara said the report makes various recommendations including regulation of third party litigation funding in Australia and proposing the prohibition on lawyers charging contingency fees to be lifted.

He added, this will impact current conditions.  At present, legislation which regulates the legal profession in Australia prohibits lawyers charging legal fees being a percentage of a recovery.

“I do not see contingency fees being for lawyers as a drastic or alarming development so long as the change is supported by appropriate safeguards”, said Blair McNamara. 

“Whilst, corporate Australia may not universally see such a change as positive, it is important to note that;

- the ALRC recommendation is limited to class action litigation only that are filed in Australian courts.

- a lawyer’s percentage-based fee should absorb all legal costs and disbursements (including an after the event insurance premium and security for costs). 

- percentage-based fee agreements be permitted only with leave of the Court, which provides a further safeguard. 

“Further, third-party litigation funders are not bound by the same legal duties as lawyers to charge contingency fees could be less costly overall and in the interests of class members.” 

It’s important to appreciate that this is a Law Reform proposal at Federal level and any change to removing prohibitions on contingency fees will need to transpire at state and territory level where lawyers are regulated. 

Hence Blair McNamara’s belief that even with broad support such a change will be some way off.

“I think the more interesting question will be, if allowed, what impact will contingency fees have on the third-party litigation funding business model”, concluded Blair McNamara?

ENDS

Issued by Honan Insurance Group    www.honan.com.au

Media Enquiries:                   Mr. Joe Perri, Joe Perri & Associates Pty Ltd

Tel:  +61 3 9324 0362  Mob:  +61 412 112 545  Email:  jperri@joeperri.com.au  

About Blair McNamara

Blair McNamara was appointed Honan Insurance Group’s Head of Legal in October 2018.

As Head of Legal, Blair is often called upon to provide keynote presentations at industry seminars and media commentary on matters relating to claims, reinsurance, insurance law.  

Blair has an extensive legal and commercial background gained in Australia, New Zealand the UK with experience on both the insurance defendant side and with plaintiffs as a lawyer. 

Prior to joining Honan, he was an Associate with Govett Quilliam and BJT Legal; Managing Principal – Professional Risk at IFS solutions.