Submission on class actions and litigation funding

The Law Commission published an Issues Paper on Class Actions and Litigation Funding in New Zealand (December 2020). This is a first principles review and the Law Commission seeks feedback on whether the potential benefits of class actions and litigation funding can be realised in a way that outweighs any risks and concerns.

The IoD welcomes the review of class actions and litigation funding in New Zealand. This is a key opportunity to put in place a regime that is fit for purpose and for the long-term. There are benefits of class actions and litigation funding including providing access to justice and accountability.

In principle, the IoD supports a new statutory class actions regime and the regulation of litigation funding. However, there are significant risks and concerns that will need to be addressed and managed (eg dealing with unmeritorious proceedings). We are particularly concerned about the future of shareholder class actions. There are lessons that can be learnt from Australia’s experience and its review of class actions and litigation funding. We urge the Law Commission to also consider the recommendations of the Capital Markets Steering Committee from 2019 including the need to review the continuous disclosure liability settings in New Zealand. It is essential that New Zealand gets the settings right.

We also highlight other significant concerns such as the deteriorating D&O insurance market and the importance of attracting and retaining skilled, experienced and responsible directors for New Zealand’s prosperity and wellbeing.