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Media Release

August 7 2008

New book challenges legal claims system

New law book to challenge claims systemAccessing the justice system could be easier and more affordable if it operated more like the insurance system, according to UniSA Professor of Law, Vicki Waye.

In her new book, Trading in Legal Claims: Law, Policy and Future Direction in Australia, UK and US, Waye argues that allowing personal injury claims to be traded and sold would ease the burden for individuals dealing with an expensive and difficult to access legal system.

“Many people are in a position to claim for personal injury but due to difficulties accessing the system, they don’t have the capacity to recover their losses,” Prof Waye says.

“Excluding claims for physical and mental injury, personal injury claims are mainly about financial injury, ranging from bad financial advice and finance broking problems to credit contracts.

“Examples can include a big corporate collapse in which thousands of shareholders may have acted on the basis of a misrepresentation about the financial prosperity of the company, invested in the company and lost a lot of money.

“What can these shareholders do? Currently, access to the legal system is limited to the very rich, the most persistent, or those who have a large stake in the outcome, so for the everyday person it’s just too expensive and time consuming to pursue these types of claims. It’s just not an easy system.”

Prof Waye proposes that instead of individuals going to court to have their claims redressed, it would be far easier and more cost effective to sell the claim to a centralised litigation broker who would operate on their behalf, in the same way insurers do.

“The idea of selling claims is about providing a service to individuals, so they don’t need to pursue the claim through the courts themselves, with all the cost and effort associated with that,” Prof Waye says.

“A litigation broker or entrepreneur would pay the individual for the claim and then assume all the responsibility and risk for its success.

“Like insurers, such entrepreneurs would be better in a much better position to deal more effectively, efficiently and cheaply with the claim, and bear the litigation risk, because they can evaluate the associated risk and spread it across a wider pool of clients.”

Prof Waye concedes that the while the concept does have its opposition and is certainly controversial among the legal community, to some extent it is already happening.

“Courts and lawyers don’t like it because it means the claim is redressed outside their forum and the idea of ‘commodifying’ justice is also contentious,” says Prof Waye.

“That you can put a price on suffering for a third party to make money is offensive to some.

“However, we’ve already allowed large litigation funders to loan large amounts of money to underwrite claims in exchange for a proportion of the proceeds or settlement.

“You can also already sell certain claims, and we’ve even come far enough to sell portions of personal injury claims. If you’re prepared to go that far, why not sell the whole claim?

“The road has already been travelled a certain way, we’re just not quite there yet,” Prof Waye says.

Prof Waye’s book also provides comparisons between Australia, the UK and the US systems, reviews regulation, costs, and abuse of process issues that might arise and examines conflicts of interest that may exist between claimholders, lawyers and entrepreneurs.

Prof Waye is an expert in comparative legal process and arbitration and is a foundation staff member of UniSA’s new School of Law.

Trading in Legal Claims is available from $90 through Presidian Legal Publications at www.presidian.com.au.

…remarkable…formidable scholarship...analys[ing] legal texts and case law…in Australia, the UK and US…the [text] will be of considerable interest to policy makers, particularly in the UK where alternative sources for funding litigation…are now under consideration.
- Emeritus Prof of Law Martin Partington, English Law Commission

…original insights with respect to a vitally important area that has received very little attention….. The author conveys her knowledge, ideas and proposals in a clear, intelligent and balanced manner….. based on an extensive and thoughtful analysis of the jurisprudence in this area both locally and overseas.
- Assoc Prof of Law Vince Morabito, Monash University (Australia)

…a very thorough analysis…..a substantial original contribution to knowledge in this area...contain[ing] originality by the discovery of new facts about this particular new kind of industry…
- Prof of Law John Farrar, University of Waikato (NZ)

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