The Supreme Court of NSW picked Maurice Blackburn to represent shareholders in a class action arising from disclosures at the Banking Royal Commission in 2018.
Five separate law firms filed proceedings and it was impractical to allow all of them to continue separately. It wasn’t the quickest to file that won the contest. In fact, Maurice Blackburn was the last to file. Slater & Gordon was the second-last and will combine its proceeding with that of Maurice Blackburn.
The big winner was Maurice Blackburn. The court picked the firm because it believed that the plaintiffs will have the best chance of retaining the largest proportion of the compensation. This is because Maurice Blackburn will not use a litigation funder and furthermore, if the firm loses, it will not require costs to be paid by Plaintiffs. This is a type of ‘no win no fee’ scenario.
This is a setback for smaller firms that cannot fund such cases and a setback for litigation funders. In particular it is a setback for Burford Capital which was expected to fund Quinn Emanuel. The other firms missing out to Maurice Blackburn were Shine Lawyers and Phi McFinney McDonald.
The court’s summary of its 47,000 word judgment noted:
The Court held that, absent any factor making it appropriate to allow for the continuance of duplicative proceedings and the fact that there was clearly a substantial overlap in the factual allegations and group membership in each of the proceedings, it was appropriate that only one of the representative proceedings should be permitted to proceed and that the others should be stayed. The Court was not persuaded that group members would be deprived in any real sense of access to a particular remedy or case theory if only one proceeding was permitted to proceed. Moreover, it was held that it would be inimical to the facilitation of the just, quick and cheap resolution of the real issues in dispute if more than one proceeding were to be allowed to continue. The maintenance of multiple proceedings would, among other matters, be likely to impede any attempt to mediate and to the incurring of unnecessary or duplicated costs.
Having concluded that only one of the proceedings should be allowed to continue, the Court held that the consolidated Komlotex/Fernbrook proceeding should continue as the most suitable vehicle to prosecute the group members’ claims. The factors relied upon in reaching that conclusion were: that the “no win, no fee” model proposed by Komlotex/Fernbrook involved no funding commission; that the modelling undertaken as to costs and returns indicated that on most scenarios the net return for group members on this funding model was likely to be the highest or around the highest; and, that Maurice Blackburn Lawyers were prepared to proffer security for costs in the sum of $5 million.
In reaching that conclusion, the Court noted that, amongst other things, there was no sensible basis to differentiate between the respective legal teams, since each appeared to have the skill and capacity to conduct proceedings of this kind in the interests of class members, and there were arguable incentives and corresponding disincentives in all of the funding models proffered.