New laws changing litigation

CLASS action rules will be changed to stop greedy litigation funders taking the lion’s share of compensation wins.

Courts will have greater oversight of how class action wins are split between financiers and class action members, under draft legislation released on Thursday.

Under the changes, courts will be empowered to approve or change the share members of class action schemes are entitled to, to make sure the split is fair and reasonable.

Members will be entitled to receive at least 70 per cent of gross proceeds.

Attorney-General Michaelia Cash said the draft legislation would deal with the “feeding frenzy” taking place in class actions.

Independent experts, funded by financiers, will support the courts to make their decision.

The move aims to ensure that actions involving litigation funders are started with the genuine support of plaintiffs.

Treasurer Josh Frydenberg said litigation funders and lawyers were “too often” getting the lion’s share of money awarded to compensate class members for their loss.