A comparative analysis of litigation funding in insolvency claims and in class actions: one coin, two sides?

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2024

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Duffy, M.
Lombard, S.

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Journal article

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The University of New South Wales law journal, 2024; 47(3):941-974

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There is an extensive literature on third party litigation funding (‘TPLF’) of class actions and a separate literature on the longer- standing use of TPLF in claims by insolvency administrators such as liquidators and bankruptcy trustees. Despite this, there has been little comparative study of TPLF in the two species of litigation. This article seeks to fill that gap and, in so doing, draw some distinctions impacting the issue of appropriate regulation in the two contexts. These include salient differences between repeat playing Australian Securities and Investments Commission-regulated professional insolvency practitioners governed under corporate and personal insolvency regulatory architecture and less experienced, less regulated representative plaintiffs in class actions. Further, the existence of vulnerable class members as silent ‘parties’ to class action litigation and funding arrangements and the effect of settlement processes affecting non-responsive class members is noted. These are found to raise differences, despite both types of litigation benefitting from substantial court supervision.

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Copyright 2024 University of New South Wales

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