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Commercial Regulatory Issues

Looks Dubious – The Third Ground to Restrain a Lawyer from Acting

April 5, 2023

Looks Dubious – The Third Ground to Restrain a Lawyer from Acting

The following piece was contributed by Valerie Blacker, commercial litigator focusing on funded litigation, and Amelia Atkinson, litigation and dispute resolution lawyer at Piper Alderman. Strata Voting Pty Ltd (In Liq) v Axios IT Pty Ltd and Anor[1] is a funded single plaintiff action. It involved a recent examination of the Court’s power to prevent a lawyer from acting in proceedings for a conflict of interest. The authors represented Strata Voting in its successful defense of the restraint application. The Third Ground Less frequently invoked than the first and second grounds (misuse of confidential information and breach of fiduciary duty), the third category upon which to restrain a lawyer in a position of conflict from acting in a matter is known as the “inherent jurisdiction” ground. The Court can restrain lawyers from acting in a particular case as an incident of its inherent jurisdiction over its officers and control of its processes.[2] The jurisdiction is enlivened where there is an objective perception that a lawyer lacks independence such that the Court is compelled to interfere and remove the lawyer from acting in the matter. In other words, the position of the lawyer makes the Court uneasy. The test for intervention is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice, including the appearance of justice, requires that a legal practitioner should be prevented from acting.[3] Axios’ failed application The jurisdiction to enjoin a solicitor from acting is to be regarded as exceptional, and to be exercised by the court with caution. That was the basis on which his Honour Judge Dart of the South Australian Supreme Court dismissed the application brought to restrain Piper Alderman from acting for the liquidators. Here, Piper Alderman is acting for the company in relation to a dispute which was in existence before the winding up commenced.  The liquidator retained Piper Alderman to continue acting for the company for the purpose of the litigation, the subject of the existing dispute. The supposed conflict was said to have arisen from a proof of debt which Piper Alderman lodged for about $47,000 in fees incurred prior to the administration. The argument was that Piper Alderman’s impartiality was impaired by the fact that unless the litigation is successful, Piper Alderman will not be paid its outstanding fees because there will be no funds in the winding up to do so. Axios contended that “the conduct of the solicitor was so offensive to common notions of fairness and justice that they should, as officers of the Court, be restrained from acting”. However, his Honour considered the firm’s status as creditor to be unremarkable. Even in a case where a substantial sum (over $830,000) was owed to lawyers by their insolvent client,[4] there was no risk to the proper administration of justice. As everyone knows, solicitors routinely act in matters where they are owed money including conditional costs agreements, risk share arrangements, contingency fee arrangements and agreements that include uplift fees, to name a few. The restraint application in Strata Voting was unsurprisingly and swiftly[5] dismissed with costs. Conclusion If an opposing party asserts that a lawyer should be restrained from acting for the opponent, it is necessary for a clear case to be made that the lawyer is in a position where he is fixed with an interest of such a nature that he may fail in his overriding duty to the court. It requires proof of facts, and not mere speculation as to motive. The risk to the due administration of justice has to be a real one. Otherwise, a litigant ought not to be deprived of the lawyer of his choice. — About the Authors: Valerie Blacker is a commercial litigator focusing on funded litigation. Valerie has been with Piper Alderman for over 12 years. With a background in class actions, Valerie also prosecutes funded commercial litigation claims. Amelia Atkinson is a litigation and dispute resolution lawyer at Piper Alderman with a primary focus on corporate and commercial disputes. Amelia is involved in a number of large, complex matters in jurisdictions across Australia. For queries or comments in relation to this article please contact Amelia Atkinson | T: +61 7 3220 7767 | E:  aatkinson@piperalderman.com.au [1] Unreported, Supreme Court of South Australia, Dart J, 23 January 2023 (Strata Voting). [2] Kallinicos & Anor v Hunt [2005] NSWSC 118 at [76] (Kallinicos). [3] Ibid. [4] Naczek & Dowler [2011] FamCAFC 179, [84]. [5] In a 5-page judgment.

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Commercial Regulatory Issues

Government to End PACCAR Limbo for Litigation Funding Agreements

By John Freund |

The UK government has pledged to introduce legislation to resolve the uncertainty created by the Supreme Court’s PACCAR ruling, which has left many litigation funding agreements in legal limbo. The Ministry of Justice confirmed its intention to bring forward a bill that will clarify that third party litigation funding agreements (LFAs) are not damages based agreements (DBAs) under existing law, a classification that, since PACCAR, has rendered many LFAs unenforceable and raised deep concerns across the funding market.

An article in The Law Gazette reports that the forthcoming legislation will specifically address the fallout from the 2023 PACCAR decision, which had classed typical litigation funding arrangements where a funder receives a share of damages as DBAs, bringing them within regulatory restrictions and making them invalid unless they met DBA regulatory requirements. This has undermined the clarity and enforceability of funding agreements for collective actions and other high value cases.

Industry sources and legal commentators have long advocated for a statutory fix. Over recent months, funders and claimant groups have pointed to the erosion of access to justice while PACCAR uncertainty persists, given that many have been hesitant to underwrite new claims under a model the courts deemed unenforceable. The government’s proposed change to statute rather than judge made law aims to restore the pre PACCAR position and reaffirm that LFAs do not fall within the DBA regime.

If enacted, the bill is expected to provide greater certainty for both existing and future litigation funding arrangements, reinforce the UK’s position as a leading venue for funded litigation, and encourage finance for complex group and commercial claims. Observers note that while the legislative promise is welcome, its timing and detailed provisions will be closely watched by funders, claimants and legal practitioners alike.

Commercial People Moves

Omni Bridgeway Bolsters U.S. Team with Claire-Naïla Damamme & William Vigen

By John Freund |

Omni Bridgeway has further strengthened its U.S. litigation finance platform with two senior strategic hires in its Washington, D.C. office. In a move signaling expanded capabilities in both international arbitration and antitrust litigation funding, the global legal finance leader appointed Claire-Naïla Damamme and William Vigen as Investment Managers and Legal Counsel. These additions reflect Omni Bridgeway’s continued commitment to deepening in-house legal and investment expertise amid growing demand for sophisticated funding solutions.

Omni's press release states that Claire-Naïla Damamme brings nearly a decade of distinguished international legal experience to Omni Bridgeway, where she will lead the firm’s U.S. International Arbitration initiative. Damamme’s background includes representing sovereign states and multinational corporations across energy, telecommunications, infrastructure, and technology disputes. Her expertise covers the full lifecycle of investor-state and commercial arbitrations, including enforcement before U.S. courts, honed through roles at top global law firms and institutions like White & Case LLP, WilmerHale, and the International Court of Justice.

William Vigen complements this expansion with more than 15 years of trial and litigation experience, particularly in antitrust enforcement and government investigations. Before joining Omni Bridgeway, Vigen worked at the U.S. Department of Justice’s Antitrust Division and later as a partner in private practice, where he led complex criminal prosecutions and major civil antitrust matters. At Omni Bridgeway, he will spearhead investment sourcing and evaluation in antitrust and related litigation.

According to Matt Harrison, Omni Bridgeway’s U.S. Managing Director and Chief Investment Officer, these appointments underscore the firm’s focus on delivering world-class legal finance expertise both domestically and internationally.

Case Developments Commercial

Archetype Capital Partners Secures Injunction in Trade Secret Battle with Co‑Founder

By John Freund |

A significant legal win for litigation funder Archetype Capital Partners emerged this month in the firm’s ongoing dispute with one of its co‑founders. A Nevada federal judge granted Archetype a preliminary injunction that prevents the ex‑partner from using the company’s proprietary systems for underwriting and managing mass tort litigation while the underlying trade secret lawsuit continues.

According to an article in Bloomberg, Archetype filed suit in September against its former co‑founder, Andrew Schneider, and Bullock Legal Group LLC, alleging misappropriation of confidential methodologies and business systems developed to assess and fund mass tort claims. The complaint asserted that Schneider supplied Bullock Legal with sensitive documents and leveraged Archetype’s systems to rapidly grow the firm’s case inventory from a few thousand matters to well over 148,000, a jump that Archetype says directly undercut its competitive position.

In issuing the injunction, Judge Gloria M. Navarro of the U.S. District Court for the District of Nevada found that Archetype was likely to succeed on its trade secret and breach of contract claims. While the court determined it lacked personal jurisdiction over Bullock Legal and dismissed the company from the suit, it nonetheless barred both Schneider and Bullock from distributing proceeds from a $5.6 billion mass tort settlement tied to video game addiction litigation that had been structured using Archetype’s proprietary systems.

The order further requires the return of all materials containing confidential data and prohibits Schneider from soliciting or interfering with Archetype’s clients.