Stuart Price is the Chief Executive Officer, Managing Director and co-founder of CASL. Mr Price worked in the United Kingdom, the Middle East and Australia during his 30+ year career in banking and investment banking, legal and litigation finance. Mr Price has held senior positions in litigation finance for over a decade with a career highlight being the resolution of a class action against the Queensland State Government for ‘Stolen Wages’ for $190m, on behalf of over 12,000 First Nations peoples.   Mr Price was instrumental in the establishment of The Association of Litigation Funders of Australia (ALFA), where he was the inaugural CEO and Managing Director from 2018. Mr Price continues as a Director of ALFA. Mr Price has a 1^st Class Honours Degree in Applied Mathematics from the University of St. Andrews, is a Fellow of the Institute of Chartered Accountants in England & Wales, a member of the Institute of Chartered Accountants in Australia & New Zealand, a Fellow of the Governance Institute of Australia and a Fellow of FINSIA. At CASL, we actively pursue opportunities to apply our financial and intellectual resources in situations where they can serve as a means of accountability for claimants against those who hold wealth and power. Below is our LFJ Conversation with Stuart Price. What makes Australia an attractive jurisdiction for litigation funders? What are the advantages of funding in Australia vs. other notable jurisdictions? 

Australia has an adversarial legal system in which the Courts apply active case management discipline throughout the life cycle of each proceeding. This generally provides that civil and commercial cases have a timely and predictable trajectory to mediation and hearing. In addition, most jurisdictions operate in accordance with the ‘loser pays’ principle, meaning that the litigant who loses the case must pay the opponent’s legal costs; this provides a strong incentive for both sides to settle prior to hearing. Finally, the legality of third-party funding is well-established in Australia, and we have a mature class action jurisdiction with a strong thread of precedent legitimating funders’ entitlement to directly share in claim proceeds, subject to the Court’s satisfaction with the fairness of such arrangements on a case-by-case basis.

Some of the major trends in the industry involve an increased regulatory push, the inclusion of insurance products, funders getting more involved in arbitration and mass torts, etc. Which major global trends would you say are most salient in the Australian market, and which are less applicable? 

Regulation of litigation funding in Australia peaked in 2020-21, under the previous federal parliament. Reforms included extending the consumer protections available to investors in managed investment schemes (MIS) to participants in class actions, and a proposed minimum return to class members. Both reforms were in search of an actual systemic problem and proved redundant in practice, and were ultimately revoked by the successive parliament upon taking office in early 2022.

You have a background in finance, having been the CEO and founder of an investment bank. From an underwriting perspective, what are the most challenging aspects of funding a claim?  What are the red flags that you watch out for, which might indicate that a meritorious claim isn’t worth financing? 

CASL’s due diligence process for potential investments doesn’t focus solely on the legal arguments of a claim, it also involves an assessment of whether the litigant and their legal team will be sufficiently aligned with CASL’s commercial objective to achieve a feasible resolution as quickly and as cheaply as possible.

With that in mind, claims that have sound legal merits may still represent an uncommercial proposition to CASL for three main reasons. Firstly, the amount of funding required for the legal costs estimated to run the matter may be disproportionate to the likely size of the claim; often this will be a factor in cases that involve many defendants. Secondly, there may be particular characteristics of a case that entail a substantial potential for delay in achieving resolution; this could include novel legal issues which increase appeal risk, or litigants prone to intractable rather than commercial conduct. Finally, we may be unable to reach an acceptable level of confidence in the defendant’s capacity to meet a settlement or judgment sum.

Your website indicates that you finance class actions, arbitration, insolvency and commercial claims. How do you think about these varying legal sectors in terms of capital allocation? Are some riskier than others (broadly speaking), and therefore you won’t commit more than a certain percentage of your portfolio to that legal sector? Or do you rate each claim on its own merits, regardless of legal sector? 

Generally speaking, CASL’s approach is to assess each claim on its own merits, as we don’t perceive certain types of claims as inherently riskier than others, and don’t target a particular composition of the portfolio by claim type.

Whilst class actions typically have a longer life cycle than other types of case, that of itself does not increase their relative risk profile; in any class action, as indeed any type of case, the level of risk will primarily arise from the underlying legal and factual questions the Court is being asked to determine. For that reason, we gauge concentration risk in the portfolio by reference to the existence of any overlap in the legal questions being litigated across existing investments, rather than by type of case.

What do you view as the key drivers of industry growth over the coming years? 

The litigation finance industry is a reflection of the evolution of the civil justice system rather than a driver itself. The civil justice system is adapting and responding to a growth in disputes arising in areas such as privacy and data breaches, consumer claims including product liability, and climate including greenwashing. These types of claims are prominent or growing in other jurisdictions throughout the world, and Australia will benefit from these experiences or will lead the development of such claims given the strength of the legal system and its capacity to adapt.

As a result of the global relevance of certain claims, the law firms and funders are forging closer relationships across borders to ensure the efficient prosecution of claims.

Inevitably the law plays ‘catch-up’, but it is vitally important that law firms and funders continue to push legislators to design effective laws to require accountability, responsibility and high levels of governance within the social fabric to benefit society as a whole.