Class Actions

Responding to class action risk

The trends to note as you assess your class action risk are:

2019 landscape

  • The most noteworthy change in the class actions landscape in 2019 is the rise of consumer class actions as the most common form of new filing.
  • 2019 class action filings are the third highest on record, having fallen slightly from the historic highs of 2017 and 2018. 
  • New filings aside, class action activity is at an all time high as the cases filed in prior years move through the courts. 
  • There have been fewer shareholder class action filings in 2019 than in previous years - partly due to the uncertainty and competitive pressures created by the variable way courts are dealing with competing class actions.

2020 and beyond

  • funded-class-actions-by-period.pngAustralia's first ever decision in a shareholder class action provides important guidance that will affect the way shareholder class actions are run in the future.
  • More class actions are being funded by third party litigation funders, but a new trend is developing amid common fund uncertainty. 
  • We expect to see an increase in consumer class actions, employment claims, data breach claims and also shareholder claims for alleged non-disclosure of major business risks, such as climate change, among other things.
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A framework for considering and assessing your class action risk

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Properly assessing class action risk means looking behind the headlines and raw data. We are becoming increasingly concerned about the entrepreneurialism in class actions. Many class actions, even those pursued primarily for the benefit of the promoters, leave organisations significantly exposed. 

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If a class action is commenced against your organisation, you are likely to face a period of difficult and sustained litigation, irrespective of your assessment of the merits. The class action may raise complex legal and strategic issues, be a significant drain on financial and management resources, and potentially damaging from a reputational perspective. The mere threat or launch of a class action can also have similar consequences.

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It is important to resist knee jerk or otherwise dismissive reactions to the threat of a class action. Instead, engage in an objective assessment of the risks from day one.

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As a preventative measure, understand the conduct that may increase your class action risk and, consistent with good risk management practice, ensure appropriate systems are in place to minimise the prospects of that conduct occurring.

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Put plans in place to ensure in the event that something goes awry, the response can be swift, measured, based on an objective assessment of the situation and not inflame the associated class action risk.

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Class actions are a specialised form of litigation. Entrusting your organisation's response, including the associated crisis management, to lawyers who are class action experts puts you at a significant strategic advantage.