Changes to collective actions regime raise concerns over access to justice

Jeremy Marshall, CIO of Winward Litigation Finance, expressed cautious optimism about the changes, stating “On the surface the proposals are a few positive steps forward for the regime but unfortunately they may take funding and access to justice a couple of steps back.” He noted that while the intention behind the proposals is to reduce uncertainty for funders and make funding collective actions claims more appealing, some adjustments, such as increasing certification hurdles, could inadvertently lead to higher costs and limit funding opportunities for legitimate claims.

Marshall identified the importance of Damages-Based Agreements (DBAs) in aligning interests within the funding structure, remarking that “DBAs help to ensure alignment so that has to be cheered.” However, he cautioned that the proposed changes might escalate upfront costs, making it less viable for some meritorious cases to attract funding. He strongly believes that “Judicial discretion should not extend to delaying the payments to funders until distribution is done” as this could unfairly impact funders whose returns should be safeguarded upon the award of damages.

In contrast, David Greene, Co-President of the Collective Redress Lawyers Association, conveyed a more positive assessment of the DBT's proposals, welcoming them as “measured and sensible” due to the emerging nature of the opt-out regime. He highlighted that prioritising consumer interests over lobbying influences, such as those from the US Chamber of Commerce, was a significant step forward. Greene stated, “Reversing PACCAR, introducing DBAs in opt out cases will increase the availability of funding for these cases, which is positive for consumers to gain access to the justice process.”

Despite these optimistic elements, Greene also raised concerns about potential drawbacks, explaining that “there are some elements that may restrict consumer rights.” He underlined the risk that higher hurdles at the certification stage could disproportionately affect class representatives and ultimately the consumer groups they represent. As this discussion unfolds, the balance between protecting consumer rights and ensuring sufficient funding for collective actions remains a pivotal focus for stakeholders in the legal field.