Snapshot of Success
It is one thing to stand on a soapbox and verbally champion the positive attributes of the alternative litigation finance industry, but another to support these statements with quantifiable results. In the past couple months, our Australian parent put its money where its mouth is and has helped claimants achieve great success in their legal battles with the use of litigation funding.
Air Cargo Class Action
Early June 2014 marked the end of a seven year air-cargo class action suit led by Maurice Blackburn Lawyers. The class action was brought by various importers and exporters against a number of airlines, including Qantas Airways Ltd, Lufthansa Cargo, Singapore Airlines Ltd , Cathay Pacific Airways Ltd and British Airways, on allegations that these companies colluded to price-fix fuel and security surcharges on international air-freight services. Without admitting liability, the airline companies entered into a $38 million settlement.
Brooke Dellavedova, Class Actions Principal at Maurice Blackburn Lawyers noted that “[t]his case was hard fought and resource intensive. Without the class actions mechanism, there’s no way the smaller businesses we acted for could have pursued these claims…. The case was funded by Bentham IMF Limited. Without litigation funding, it is doubtful whether this case could have proceeded.”
Standard & Poor’s Appeal
Standard and Poor’s (“S&P”) appeal stemmed from a 2012 decision finding 13 New South Wales councils were deceived when S&P gave a particular product, the Constant Proportion Dept Obligation (“CPDO”), a AAA credit rating, which is the highest investment ranking available. In 2006, CPDOs were created by ABN AMRO (a European bank) and heralded as the "poster child for the excesses of financial engineering" by researchers from the United States Federal Reserve. An ABN AMRO banker likened CPDOs to that of a casino, stating "[i]f you win you start again. If you lose, double your bet. Repeat. You have a great chance of winning (99.9 per cent) 1 pound, but a chance of losing the lot (0.10 per cent) if you lose 11 times in a row." The value of the CPDOs tanked during the global financial crisis and the underlying court found the S&P liable to the tune of $30 million.
S&P appealed and stood firm in their belief that investors must do their due diligence as S&P maintains no relationship with investors that use their ratings. The Federal Court of Australia was not persuaded by S&P’s position and dismissed S&P’s appeal, thereby affirming the underlying court’s decision.
On behalf of local councils, Bentham IMF Limited financed the case against S&P and ABN Amro. This decision is the first of its kind against a credit rating agency and helped to lay the groundwork for a similar case also receiving litigation funding in the Netherlands.
These recent success stories exemplify how litigation funding has helped provide access to justice and hold large corporations accountable for their actions. As the alternative litigation finance industry grows, there is no doubt we will see more “David vs. Goliath” type cases to completion.