Crowd funding via the pooling of funds to initiate and maintain class actions has never been easier.

Growth in technological advancement, beginning around the early 2000s, has provided the capability for online platforms to be used to finance projects. Relevantly, these technological advancements have led to efficiencies in processes (business or otherwise) like never before.

The ease with which information can be delivered to numerous people instantly has also provided improved access (via online platforms) to potential Group Members of class action litigation, as well as potential alternative litigation funders. Improved information flow also provides power to numerous people who may otherwise perceive themselves as a minority.

The economic climate has also undoubtedly had an influence on the increasing number of class actions in Australia. The rise in Corporate Insolvency throughout the 2008-2009 period saw claims activity rise overall in the Directors & Officers space. This was as a result of an increase in class action lawsuits filed against public companies, due to market losses and related stock price depreciation associated with the sub-prime mortgage and credit crisis in the USA.

Historically low interest rates have encouraged the rise in litigation funders willing to back claims as an alternative investment option.

These developments, in conjunction with the ever increasing use of technology (which provides the capability to instantaneously link relevant potential stakeholders), have supported growth in the number and size of class action law suits. This is particularly true in the professional lines area in Australia over the past decade.

The use of technology throughout the litigation process has also allowed for large amounts of data and information to be analysed more quickly. This appears to have influenced the expanding scope of claims. In turn, this has led to an increase in complex multi-party and multi-action litigation, including:

  • simultaneous investigatory actions;
  • shareholder and/or debenture class actions; and
  • claims against independent third parties who may have provided services to a company throughout its business life.

Ultimately, the increasing number and scope of class actions in Australia will lead to higher litigation costs for business. Businesses should regularly review their insurance policies and consider the scope of cover and existing policy limits to ensure they remain suitable to meet their needs in this technologically advanced litigation environment.