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Snapshot

  • The Federal Court has power to make a common fund order in class actions on settlement or judgment.
  • However, in NSW, a common fund order cannot be made in favour of a solicitor.
  • Victoria is the only jurisdiction which permits a solicitor to receive a percentage of a settlement or judgment in a class action.

Almost 20 years ago, the High Court held in Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd [2006] HCA 41 that litigation funding was permissible. Since then, class actions financed by third-party litigation funders have become routine. It has also become routine for the court to make what has become known as a ‘common fund order’ (‘CFO’) on the settlement of class actions.

A CFO is an order which requires all group members—including those who have not entered into a funding agreement—to contribute equally to a payment to a litigation funder in respect of the funder’s commission. It involves group members who have not signed a funding agreement being required to pay a percentage commission to the litigation funder.

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