News

02/06/17

Australia’s shareholder class actions market: what does the data tell us, and the future hold?

Shareholder class actions, and the litigation funding of them, is on the rise. Corporate defendants facing a claim who are able to settle early and cheaply, come second only to those who know prevention is better than cure.

Gilbert + Tobin today launched a Class Actions website for Australian companies concerned by their growing exposure to shareholder class actions. 

Litigation partner Crispian Lynch explains: 

“This site gives companies a snapshot of the key facts and figures needed to understand the growing threat of shareholder class actions, the drivers behind it and how to mitigate and manage exposure to the risks. We provide data analytics to back up the anecdotes.”

“For example, by graphing median settlement amounts against the time between filing and settlement, we show that typically, companies which take longer to settle a shareholder class action pay more. By analysing historical class action settlements, we have calculated what percentage of total amounts claimed are on average paid to settle class actions.”

The influence of commercial litigation funding on the growth, type and conduct of class actions commenced in Australia is another factor highlighted by the site.

 

Gilbert + Tobin expects the intertwined growth in funding and shareholder claims to continue in the near term.

Litigation funders surveyed by Gilbert + Tobin unanimously identified Australia as an attractive jurisdiction in which to fund litigation.  Factors such as the availability of increasingly sophisticated data analytics enabling funders, plaintiff law firms and institutional investors to automatically identify shareholder claims will also help fuel this growth. 

However, Gilbert + Tobin predicts litigation funders becoming increasingly challenged by market constraints and increased competition and regulation over the medium to longer term.

Gilbert + Tobin also predicts that the overwhelming preference for pre-trial settlement – currently no shareholder class action commenced in Australia has proceeded to judgment – will continue.

For those looking for guidance on how to avoid shareholder class actions altogether, the site gives detailed guidance on how to mitigate the risks.

The site may be accessed at: www.gtlaw.com.au/classactions

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