Contingency Fee Agreements with Represented Persons in Class Actions—An Undesirable Australian Phenomenon

Abstract

Part IVA of the Federal Court of Australia Act 1976 (Cth), which has been regulating class actions in the Federal Court of Australia since 1992, is silent with respect to the crucial issue of whether the lawyers hired by the class representatives may enter into contingency fee agreements with such representatives and/or the persons on whose behalf the class proceedings are instituted, the class members. This silence was attributable to the Australian Government's rejection of the Australian Law Reform Commission's recommendation that the legislative regime governing class actions should expressly authorise and regulate the execution of contingency fee agreements by the class lawyers with the class representatives. As a result of several post–1992 statutes enacted by State Parliaments, lawyers hired by Part IVA plaintiffs have been able to follow the practice of executing contingency fee agreements with, not only the representative plaintiffs, but also the class members. The aim of this paper is to provide a critical analysis of this practice. It undertakes a review of the American and Canadian regimes governing the employment of contingency fee agreements in class proceedings as a part of this analysis.