A Full Federal Court decision last week has put a spanner in the works for many ongoing high-profile class actions.

The decision says litigation funding and lawyer retainer arrangements made by group members of a class action against Brookfield Multiplex amount to a managed investment scheme that must be registered under the Corporations Act.

Class action groups often use commercial litigation funding to cover the legal costs in exchange for a portion of a settlement.

Andrew Watson, a principal at Maurice Blackburn, the law firm representing the group members suing Brookfield Multiplex, says the decision is disappointing. He says the court has not made its orders yet and a “variety of submissions” will be made in the meantime.

He says the firm is representing groups in a number of funded class actions including those mounted by shareholders of the Australian Wheat Board and failed property group Centro.

“Funding arrangements differ from action to action, but it’s fair to say that the nature of the full court’s decision probably affects most of those arrangements,” Mr Watson told insuranceNEWS.com.au

He says the firm has a range of options to ensure the class action against Multiplex will proceed, with a special leave application for a High Court appeal “under active consideration”.

Options include seeking an exemption from the Australian Securities and Investments Commission (ASIC), reconfiguring existing funding arrangements and complying with managed investment scheme legislation – the least attractive option because of associated delays and its cumbersome application to class actions.

Wen-Ts’ai Lim, a partner at law firm Blake Dawson, says an application for special leave to appeal to the High Court will probably be mounted very soon, and the decision may serve to reinvigorate government scrutiny on the litigation funding industry.

“Up until this point there has been some talk about whether or not the whole litigation funding industry needs to be regulated,” he told insuranceNEWS.com.au.

An ASIC spokesman declined to comment on the issue.