And certainly, over the last few years, there has been “significant diversification” in the class actions space, moving beyond traditional shareholder claims and into claims against government, as well as employee and consumer claims.

“At a high level, consumer claims have grown over the past several years and have now overtaken securities claims in the class action space,” said Shine Lawyers joint head of class actions Craig Allsopp.

“Some notable areas are financial services claims arising from the findings of the financial services royal commission, which are now on a sharp decline, possibly as a result of reform following the royal commission, product liability claims, particularly with motor vehicles around emissions and defects; and data breach claims following several high-profile data breaches.”

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This shift towards more varied class action claims, according to Allsopp, can be boiled down to a few different factors.

“Some of the diversification has been driven by an increase in certain types of alleged misconduct, for example the motor vehicle emissions claims and data breach claims. Conversely, as securities class actions, at least until a recent string of losses at trial, were relatively well understood and could be developed and identified easily, which led to increased competition and carriage fights. This in turn has led to law firms and funders looking to alternative areas where carriage fights may be less likely,” he said.

“The development of alternative funding options over the last several years has also likely contributed to the diversification into non-traditional class action areas where quantum may not be as well understood as more traditional areas such as shareholder class actions. The availability of CFOs, GCOs, and soon potentially ‘solicitor’s CFOs’, has enabled a wider range of funding models and funding participants (e.g. law firms self-funding), which brings with it different risk appetites compared to the third-party litigation funder who traditionally funded shareholder class actions.”

Additionally, the increased competition between shareholder class actions and the overall reduced profitability of those class actions could also be to blame for an increase in other types of class actions, as firms and funders look to diversify.

“Class actions are the search for entrepreneurial real estate to promote aggregate claims, so it was expected that the subject matter of class actions would gradually become more diverse. One reason for that is the rise in competing class actions in the shareholder space, which creates risk for class action promoters – both because their class action vehicle may not be chosen to proceed over a competitor, but also because competition drives down rates of return for lawyers and funders, such that the profitability of shareholder class actions has probably modestly reduced in recent years,” Herbert Smith Freehills partner and global co-head of class actions Jason Betts said.

“To be clear, we still have roughly the same number of shareholder class actions each year, but promoters are now exploring other more profitable subject matter where the competition is perhaps less. There is more diversity, but not a contraction in shareholder claims. That means we see more large-scale consumer claims, focusing on perceived unfair contract terms or pricing, or attacks on financial or insurance products added to other goods and services. Many such class actions will advance the proposition that representations, in respect of those financial and other products, were misleading.

“Consumer claims are having a renaissance in this regard, because they generally apply to a large national consumer base (so a potentially big class), sometime raise relatively discrete issues of law and fact, and now plaintiff law firms have the benefit of contingency fees to perhaps make these claims more profitable. Contingency fees are a potentially major factor here – with more law firms incentivised to run claims with, say, a 23 per cent or more contingency fee, there will be a push for additional areas of class action ‘opportunities’ around the legal market, including in the environment and corporate governance spaces,” Betts added.

Looking towards FY25, Allsopp said that this diversification is likely to continue as things like data and social media continue to be under increased scrutiny.

“I think the trend towards consumer claims such as product liability and data breach claims will continue. There will likely be increasing scrutiny of big data and social media, and in part depending on reform to privacy laws in Australia, this is likely to be a focus for class actions towards the end of this decade,” he added.

“If solicitor’s CFOs are allowed by the Federal Court, we may see new sources of funding and a further diversification of class actions. For example, judicial comment has been made to the effect that there may be no barrier to a union funding an employment class action itself and seeking a CFO.”

Cyber crimes and climate litigation will also be a key area of focus for class actions, as laws continually develop in line with new risks, added Betts.

“A primary area of focus will include class actions in relation to the impact of cyber security incidents, which in part will depend upon whether a private cause of action in respect of data breaches is given legislative force. But even if it isn’t, companies who make disclosures in relation to their systems for managing risk in relation to cyber crime will be the focus of class action promoters, who will look for shareholder class actions around those representations, should a negative price reaction follow a cyber incident.

“A similar observation might be made of ‘climate risk’. While the law is likely still some way off from developing what might be called a cause of action in respect of alleged climate change ‘damage’, companies who make disclosures in respect of their preparedness for the costs and business changes associated moving in to a lower carbon economic will again be an area of focus for shareholder class action promoters,” he said.

“Separately, when our regulatory structures catch up to, and define, the normative rules for crypto currency assets, expect a fresh look from class action promoters as to what class actions might be viable in that space. If crypto assets are treated like financial products, then investor class action risk arises; if they are treated more like a traditional asset, the sorts of normative standards that regulate product liability issues may arise.”

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