The Funders

Understand the commercial litigation funders financing 76% of shareholder and investor class actions

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The emergence and continued profitability of commercial litigation funders has been a driving force in the growth, type and conduct of class actions commenced in Australia.

  • The proportion of class actions which are funded has increased from 0% in 1992 to approximately 50% in 2016.
  • 76% of investor and shareholder class actions are now funded.

These funders are sophisticated investors managing significant funds (both in Australia and overseas) and employing experienced legal practitioners and sophisticated technology to proactively identify claims to fund in Australia.


 

Who are the funders?

 
FunderCapital/Value% of funds invested in AustraliaMaximum contributionTop 3 types of claims funded
Balance Legal CapitalUndisclosedUndisclosedUp to $8mPlaintiff Class Action
Commercial Litigation
Other
Burford Capital$2.6 billion (committed to investments)UndisclosedFacilities up to $160mPortfolio Finance
Commercial Litigation
International Arbitration
Harbour Litigation Funding$670 million (committed capital)10%Up to $40mCommercial Litigation
Plaintiff Class Action
Other
IMF BenthamUndisclosed – listed on ASX100%No maximum – case by case basisCommercial Litigation
Plaintiff Class Action
International Arbitration
LCM FinanceUndisclosed – listed on ASX100%No maximum – case by case basisCommercial Litigation
Plaintiff Class Action
International Arbitration
Litigation LendingUndisclosed80%No maximum, case by caseInsolvency
Plaintiff Class Action
Commercial Litigation
Vannin Capital+$500 million (investable capital)15%No maximum – previously up to $20mCommercial Litigation
Plaintiff Class Action
International Arbitration

 

Funder's perspective

 

In response to G+T’s survey of prominent litigation funders operating in Australia, funders have indicated that Australia is an attractive jurisdiction in which to fund.

The key funding criteria typically considered by funders are:

  • The provable (as opposed to claimed) damages (most funds have pre-determined thresholds)
  • The strength of the claim (typically requiring independent prospects advice and approval by the fund’s investment committee)
  • The ability of the defendant(s) to meet a judgment
  • The funder’s existing portfolio (diversification of risk)
  • The lawyers running the case
  • The projected legal costs (including the defendant’s)

Funders offered their own variations on these criteria:  IMF | Burford | Harbour | Vannin Capital | Balance | Litigation Lending.


 

Influence of funders on settlement

 

Increased claim funding is contributing to increases in both the proportion of Australian class actions which settle and the quantum of those settlements.

Typical Distribution of Settlement Funds_Infographic.png

 
 

Continued growth in funding predicted

Gilbert + Tobin predicts the growth in litigation funding in Australia will continue for the foreseeable future, underscored by:

  • The continued profitability of funders.
  • Australia being, in the words of prominent funders, an attractive jurisdiction in which to fund.

For advice or assistance in relation to your potential class action exposure and/or litigation funding, please don’t hesitate to contact one of our class action experts.


SOURCE: V. Morabito, An Empirical Study of Australia’s Class Action Regimes Fourth Report: Facts and Figures on Twenty-Four Years of Class Actions in Australia (Monash University, Department of Business Law and Taxation, August 2016).