Rethinking risk: new report sheds light on Australia's class action landscape

The report details shifting risks impacting businesses, with survey respondents naming their legal and commercial concerns relating to cyber security and data integrity, financial loss including credit and liquidity, and the broad spectrum of social and governance considerations. 

To access the report: Rethinking Risk: Inside Class Actions in Australia

Jason Betts, partner and Global Co-Head of Class Actions at Herbert Smith Freehills, commented, "Corporate Australia is operating in a complex class action landscape that is in a state of constant evolution, driven by legislative reforms, case developments, and the increasing accessibility of litigation funding models.

“Governance issues relate to everything we do as corporate litigators, so there is an explicit correlation between increased regulation and the risk profile of the proceedings we are planning for, and responding to.

“Regulatory compliance and governance are areas of risk for Australian corporates, as we see litigants who are seeking to hold businesses to account in an era of heightened scrutiny. With strong links to an increasing focus on environmental, social, and governance (ESG) concerns we are seeing the landscape shift. Class action risks sit across the ESG spectrum, but we have recently observed movement towards S & G as points of direct concern.”

Changing perceptions of class action risk

The report is based on a survey conducted among Australia's leading organisations with a key survey finding showing that 68% of respondents have seen their level of concern about the need to defend a class action had increased over the past five years.

Melissa Gladstone, class actions partner at Herbert Smith Freehills noted, "The heightened level of concern is a clear indication that businesses are cognisant of class action risk, which is expanding into areas such as privacy, consumer, employment and environmental issues.

“We see a matrix of risks in our clients' businesses – class actions are just one they are managing day to day. The report and our experience show that organisations are re-focussing effort and resources to respond to these emergent areas.  

Cyber class actions loom large

Herbert Smith Freehills’ survey respondents placed cyber risk as their top concern identifying it as part of the emerging front line in the dynamic class actions landscape.

“Corporate Australia has valid concerns relating to class action exposure that can arise from cyber incidents. With issues of investigation privilege and overlap of regulator responses, in the heat of a response to a cyber breach there is a cascade of decisions that can either open or minimise litigation risk.

“Global trends in cyber-security litigation are increasingly impacting Australia. We are closely observing international developments and their implications within the Australian legal framework”, concluded Gladstone.