Importance of class actions, claim farming and contingency fees for lawyers

These are some of the questions to be pondered by the expert panel on day one of the upcoming Specialist Accreditation Conference. The panel, ‘Costs: Class actions, indemnity, claim farming and contingency fees’, will be moderated by Linden Barnes, senior ethics solicitor at the Law Society of New South Wales. The panel will feature three experienced legal practitioners with grounds in class actions and costs.

One of the panellists, Christine Tran, Partner at Herbert Smith Freehills Kramer, has almost two decades of experience in defending class actions. She explains that she joined the class actions team at Freehills (as it was then known) as soon as she was placed as a graduate. “[I]t was quite unusual back then to specialise so early. But one of the things that drew me to this practice area was the fact that it was developing.

“There’s this opportunity to participate and influence the development of law that I found highly unusual and [it was] also really interesting and exciting to be solving problems with the entire legal community…,” she says.

Tran points out that legal practitioners practising in this space often face intricate and critical procedural questions in relation to class actions. Aside from being a diverse area of law, Tran says there is a “procedural overlay, but at its very heart, it’s civil litigation. And … you can be doing all types of law because it’s an aggregation mechanism, so I found that aspect really interesting … despite the label that’s given to it, there is this diversity of interesting matters.”

Number of claims on the rise

With a career spanning almost two decades in defending class actions, in particular complex securities claims, Tran has witnessed ebbs and flows in the number of class action claims being bought. “I’ve definitely seen an increase. [T]hat’s a short answer, but with it [which is] inherent in litigation, there’s peaks and troughs.

“[S]o I’m also wary about reading too much into trends…,” she says.

As Tran elaborates, when you examine the number of class actions over a 10 to 15 year period, the numbers have increased. “[O]ne of the goals is to be at the start of that sort of exponential growth and really develop my career alongside the class action industry as well,” she says.

When it comes to contingency fees, Tran acknowledges it is at an “interesting development point. There’s a real policy question about whether or not it ought to be permitted,” she says.

Tran points to the United States of America as an example and says there are various considerations as to whether Australia should follow its example. “[W]e have, on the one hand, the example of America where contingency fees are allowed … it can be seen as one of the reasons why America is [a] very litigious society.

“[D]o we want to have that in … Australia? And contingency fees (are) permitted for class actions that are brought in the Victorian Supreme Court. So you have this one jurisdiction that allows contingency fees and we have seen the impact of that …,” she says. Tran explains that although the number of filings in the Victorian Supreme Court dropped following the introduction of a ‘group costs orders’ regime, the numbers have increased.

“We’re still seeing how that’s going to develop and whether it’s going to be …, from the law firm’s perspective, … [a] profitable way of earning fees and supporting this kind of litigation,” she says.

For legal practitioners, there are various practical and policy questions. “Should we be allowing one jurisdiction to be attracting all this class action litigation? Does it create an over burden for that particular system? What does it mean for the development of jurisprudence? …

“[H]ow’s that going to impact the system if we do introduce it in other jurisdictions? So I think it’s a really interesting question,” she says.

Tran says Australia is perceived as the “birthplace of third-party litigation funding.” However that raises ethical questions over whether there is a conflict of interest between the lawyer and their client. “[A]s lawyers, we have to take into account our client’s interest, we have to act in our client’s interest, but we’re also very mindful of our duties to the court. And now that you have this sort of money aspect … how does that impact those considerations?” she asks.

Tran hopes that attendees at the session will receive “a more nuanced view of all these issues, because the panel is made up of people who are looking at it from different perspectives,” she says.

The Specialist Accreditation Conference 2025 will be held in person on 28 August and online on 29 August. For program details and to register, please visit the website.