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Where there are many people affected by similar types of circumstances a class action can be a cost-effective way to fight a complex legal battle.

What is a class action?

A class action is the name given to legal a proceeding in which one or several plaintiffs have a claim against the same entity or person. To put it simply, a class action is a way of grouping many people affected in similar circumstances together in a “class” to recover compensation.

The “class” of plaintiffs being represented mostly consist of:

  • Employees
  • consumers
  • investors
  • or patients

Benefits of a class action

Class actions have a number of benefits for claimants. These include allowing access to justice for those whose claims are too small to pursue on an individual basis, up against large corporate institutions, or individuals with high-value claims but insufficient financial resources to pursue.

Another benefit of a class action lawsuit would be is that they can be run on a no win no fee basis. This means that win or lose, the class won’t be left out of pocket.

Types of class actions

  • Actions under the Migration Act
  • Shareholder class actions
  • Investor class actions
  • Anti-cartel class actions
  • Disaster class actions
  • medical class actions
  • financial product class actions

Who can start a class action

Anyone with a valid claim may commence a class action, so long as the following legislative requirements are met. 

  • seven or more people have claims against the same person(s);
  • the group’s claims are in respect of, or arise out of, the same, similar or related circumstances; and
  • the claims give rise to at least one substantial common issue of law or fact

The person who initially brings a claim to light becomes what’s called “the class representative“. This person brings the initial proceedings on behalf of a larger group that has been affected in similar circumstances.

Who pays for a class action?

Determining who pays for the cost’s associated with legal proceedings depends on several factors. In Australia, there are 2 types of class actions.

  1. Funded
  2. and Unfunded

A ‘funded‘ class action is where one or more persons agree to pay the associated legal fees and other costs in part or in full. 

An ‘unfunded‘ class action is where the plaintiffs agree with lawyers to meet the costs of the legal action themselves or via a no win no fee agreement.

What’s the difference between opt-in and opt-out class actions

In Australia, the class action regime employs an “opt-out” model. This means that claims are initially brought on behalf of all potential plaintiffs who fall in line with the nature of the claim. Plaintiffs who do not wish to be a “party” in the claim or wish to pursue their own, need to actively “opt-out” or they become “bound” by the outcome in the class action.

Another type of class action is an “opt-in” class action whereby any potential plaintiffs need to actively “opt-in” to become a party to the claim.