Tides shift in Australia's class action landscape as Federal Court green lights solicitors' common fund orders

The Full Court of the Federal Court of Australia determined  in a recent decision that the Federal Court has the power to make a Solicitors’ Common Fund Order (“SCFO”) in class action proceedings which open the door for class actions plaintiff lawyers to receive a contingency fee – i.e., a percentage from a class actions settlement or judgment. 

Prior to this decision, class action plaintiff law firms were only able to obtain contingency fees in the Supreme Court of Victoria, following the enactment of legislation in 2020 permitting group costs orders, which entitled lawyers to a percentage of any recovery. Historically, for this reason, the Supreme Court of Victoria has been the preferred jurisdiction for class actions lawyers who did not wish to engage with a third party funder to bring an action. 

This article discusses the Full Court’s decision and what this means for Australia’s class action landscape going forward. 

The decision 

The Full Federal Court found in R&B Investments Pty Ltd (Trustee) v Blue Sky (Reserved Question) [2024] FCAFC 89 that SCFO’s may be made under ss 33V or 33Z of the Federal Court of Australia Act 1976 (Cth) (Act).

The Full Court rejected the respondent’s contentions that SFCO’s would: