29/07/2020
Janet Albrechtsen
(The Australian)
Slater & Gordon, and its comrade in arms, Maurice (“we fight for fair”) Blackburn, are good at emotive slogans like “access to justice”. They are even more skilled at pretending to be Mother Teresa in wigs. Slater & Gordon has spearheaded the deceptive Keep Corporations Honest campaign. The slick website and soppy advertisements claim that litigation funding and contingency fees, from which the law firm benefits hugely, are simply altruistic, and not merely devices to keep them in Bentleys and Portsea real estate.
Curiously, the campaign’s website was altered on Monday to include details of who’s behind it – only after questions were raised during the latest round of hearings by the Senate Parliamentary Joint Committee on Corporations and Financial Services into litigation funding and the regulation of class actions.
So what else are they hiding? Plenty. There is a reason the Keep Corporations Honest campaign highlights the class action against Johnson & Johnson, the American medical device manufacturer of a faulty pelvic mesh implant. It is a powerful example of why no one in their right mind opposes class actions. They should be an efficient and fair way for individual plaintiffs to join together to seek compensation from big companies who have wronged them.
Alas, this sneaky campaign is focusing on one very powerful, and clear, case as a devious and emotive cloak for law firms and litigation funders to launch all kinds of class actions that are routinely settled by companies as a commercial imperative, not an admission of wrongdoing.
This campaign, led by class action lawyers, is aimed at stopping reforms to protect consumers whose compensation claims are being gouged by an industry so lucrative that overseas pension funds are trying to get some of the action for their investors.
As predictable as the law of gravity, lawyers gravitate to ways to grow their bank balances, not limit them.
The parliamentary committee continuing its hearings this week is a good start to exposing the emotion and deception of the Keep Corporations Honest campaign. On Wednesday, the committee will hear from regulators, including the Australian Securities & Investment Commission. Not before time. To date, the regulator has been missing in action, with reports of commissioners squabbling behind the scenes over ASIC’s role in this area.
In the interests of keeping class action law firms and litigation funders honest, here are nine questions the sluggish regulator should ask of Slater & Gordon, the media booster of this campaign. Until the law firm provides answers, it should be seen as a wolf in sheep’s clothing by politicians, regulators, plaintiffs and the public.
1. If Slater & Gordon wants to see unfortunate plaintiffs compensated fairly for corporate wrongdoing, why won’t it guarantee that a minimum share, say two-thirds, of any verdict or settlement (after all legal fees, litigation funders’ fees and disbursements have been paid) goes to the plaintiffs?
2. In the interests of full disclosure, will Slater & Gordon agree that the returns to litigation funders and contingency fee lawyers must be disclosed to potential plaintiffs in advance of them signing up, as an internal rate of return on the funds invested by the funders and contingency fee lawyers?
Just as consumer credit lenders must give annual percentage rates to enable comparisons, to avoid rip-offs, and ensure returns are correlated to the amounts invested and the risks assumed, contingency fee lawyers and litigation funders, who also provide a financial product, should surely also disclose their fees to potential plaintiffs expressed as an internal rate return.
This, after all, is how they disclose returns to their investors. They could then compete with other providers on the basis of the internal rate of return they demand (subject to the agreed cap).
3. To ensure potential members of plaintiff classes give fully informed consent to being represented by litigation funders or contingency fee lawyers, will Slater & Gordon agree that litigation funders and contingency fee lawyers must set out all terms and relevant information about the litigation funding or contingency fees in a document that meets the same prospectus standards other providers of managed investment schemes must meet? If Slater & Gordon wants to give honest, unbiased advice to the downtrodden, why not insist on giving such a document, including a full analysis of risk factors, to a potential plaintiff and insist on their fully informed consent to it, before the plaintiff signs up?
4. Will Slater & Gordon insist that contingency fee lawyers and funders set out in this prospectus the full and transparent details of the way they will manage inevitable conflicts of interest between funders and contingency fee lawyers, on the one hand, and class members on the other? Surely a champion of the underdog such as Slater & Gordon will want to give full details of what it will do if its interests as a law firm, in staffing, running and settling a case, diverged from the class members?
5. Looking out for plaintiffs, will Slater & Gordon defer to an independent umpire to settle these inevitable conflicts?
6. Again, because it is a plaintiff’s best friend, why shouldn’t Slater & Gordon, and other contingency fee lawyers, be held to a duty to act “efficiently, honestly and fairly” – or are they going to squeal about even these basic protections for plaintiffs, as litigation funders are doing right now?
7. If Slater & Gordon is genuine about wanting to ensure “access to justice”, will it insist that funders and contingency fee lawyers take measures, possibly assessed by an independent arbiter such as ASIC, to ensure it isn’t just taking the easy and remunerative cases that could have been funded by conventional “no win, no fee” arrangements?
8. To that end, will Slater & Gordon insist funders and contingency fee lawyers publicise the number of cases they are offered but turn down, and the number of cases they lose, so plaintiffs know they are not just picking the eyes out of the guaranteed winners of the litigation world?
9. To prove its virtue, will Slater & Gordon, and its funding or contingency fee brethren, promise to stop making political donations so we can be sure decisions on litigation funding or contingency fees are made on the grounds of good public policy, not because lawyers have made big donations to political parties?
Courts are not consumer protection regulators. For years now, court oversight has failed to deliver two critical outcomes for plaintiffs: providing plaintiffs with proper disclosure about a class action, and giving plaintiffs a bigger part of the settlement pie when they are wronged.
That makes ASIC’s supine attitude towards rapacious lawyers and dodgy litigation funding arrangements all the more unfortunate. Now that ASIC has successfully road-tested its new product intervention powers on payday and consumer lenders, it needs to exercise these same powers, and other general powers over managed investment schemes, against litigation funders and contingency fee lawyers.
Whether or not ASIC asks these questions of Slater & Gordon, the law firm should answer them.
Its answers will be valuable contributions to an area in need of sensible reforms so that plaintiffs’ interests trump those of lawyers and litigation funders.
Slater Gordon, and its comrade in arms, Maurice we fight for fair Blackburn, are good at emotive slogans like access to justice. They are even more skilled at pretending to be Mother Teresa in wigs. Slater Gordon has spearheaded the deceptive Keep Corporations Honest campaign. The slick website and....
