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ASIC to the rescue on class actions
Class action lawyers will be breathing a sigh of relief, with ASIC announcing on Thursday it would give the go-ahead to litigation funding arrangements, the future of which - following a recent…
Lawyers Weekly
Class action lawyers will be breathing a sigh of relief, with ASIC announcing on Thursday it would give the go-ahead to litigation funding arrangements, the future of which - following a recent Federal Court decision - was looking shaky.
Speaking to Lawyers Weekly at the time, Maurice Blackburn partner Andrew Watson, who was running the class action, said that the decision was likely to have broader implications for other actions (see full story).
However, ASIC has come to the rescue - at least in the short term - announcing its intention to grant transitional relief to lawyers and litigation funders whose litigation funding arrangements would otherwise constitute an unregistered managed investment scheme.
The relief will apply until 30 June 2010, but beyond there, the situation is still hazy. "ASIC will grant transitional relief to avoid any disruption that could adversely impact plaintiffs in those actions, or interfere with the timely and efficient conduct of the subject litigation," the statement from ASIC read. "The relief will allow time for Government and ASIC to consider and consult on how funded class actions should be regulated under the [Corporations Act] in future. Depending on the outcome of that process, existing class actions may need to be restructured to meet the requirements of the Act by the end of the relief period."
The announcement was welcomed by the managing director of litigation funder Litigation Lending Services, Michelle Silvers, who said that the transitional relief allieviates potential disruption to some 20 existing class actions. "The Full Federal Court's decision ... had the potential to disrupt many class actions currently underway and would be of major concern to the thousands of small investors and others relying on these class actions to achieve justice," Ms Silvers said.
She added, however that it is only a temporary solution and that consultation should occur to determine how class actions should be managed in the future.
ASIC's transitional relief will apply to class actions commenced before 4 November, however, applications can also be made for actions commenced after this date which will be considered separately.
- Zoe Lyon
