1 00:00:05,790 --> 00:00:08,039 Sean Aylmer: Welcome to the Fear and Greed Business Interview. I'm Sean 2 00:00:08,039 --> 00:00:11,310 Sean Aylmer: Aylmer. We often talk about class actions on this podcast, 3 00:00:11,520 --> 00:00:14,219 Sean Aylmer: a claim made by a group of people against a 4 00:00:14,219 --> 00:00:17,699 Sean Aylmer: company or an organization for some kind of wrongdoing, but 5 00:00:17,699 --> 00:00:20,430 Sean Aylmer: we haven't talked about the way this kind of litigation 6 00:00:20,430 --> 00:00:24,419 Sean Aylmer: is often paid for. Litigation funding is an asset class 7 00:00:24,450 --> 00:00:28,530 Sean Aylmer: for investors, one uniquely tied to the legal system. Remember, 8 00:00:28,530 --> 00:00:31,049 Sean Aylmer: this is general information only and you should always seek 9 00:00:31,049 --> 00:00:34,680 Sean Aylmer: professional advice before making investment decisions. Stuart Price is the 10 00:00:34,680 --> 00:00:39,330 Sean Aylmer: Chief Executive Officer of CASL, one of Australia's leading litigation 11 00:00:39,330 --> 00:00:41,100 Sean Aylmer: funders. Stuart, welcome to Fear and Greed. 12 00:00:41,340 --> 00:00:42,120 Stuart Price: Thank you for having me. 13 00:00:42,810 --> 00:00:45,719 Sean Aylmer: Let's start with the very basics. What is litigation funding 14 00:00:45,719 --> 00:00:46,800 Sean Aylmer: and how does it work? 15 00:00:47,309 --> 00:00:51,449 Stuart Price: Litigation funding, we have one of the most advanced legal 16 00:00:51,450 --> 00:00:54,270 Stuart Price: systems and some of the best laws in the world, 17 00:00:54,750 --> 00:00:58,770 Stuart Price: but unfortunately it costs a significant amount of money and 18 00:00:58,770 --> 00:01:03,120 Stuart Price: has a significant amount of risk attached to it. That 19 00:01:03,120 --> 00:01:09,090 Stuart Price: means that it is often reserved for some of the most financially 20 00:01:09,209 --> 00:01:14,069 Stuart Price: resourced, best resourced companies in the world. What we provide 21 00:01:14,069 --> 00:01:18,720 Stuart Price: litigation funding is the capacity and ability for other people 22 00:01:18,720 --> 00:01:22,800 Stuart Price: to bring cases against these types of companies and enterprises 23 00:01:23,130 --> 00:01:27,809 Stuart Price: that have large financial resources and to level the playing 24 00:01:27,809 --> 00:01:32,310 Stuart Price: field. Really it allows people to access the legal system 25 00:01:32,520 --> 00:01:36,300 Stuart Price: without taking on the financial burden or the financial risk. 26 00:01:36,959 --> 00:01:39,719 Sean Aylmer: Okay. So what types of claims and actions are you 27 00:01:39,719 --> 00:01:40,830 Sean Aylmer: talking about here? 28 00:01:41,670 --> 00:01:45,719 Stuart Price: The types of actions and claims that we generally fund 29 00:01:45,990 --> 00:01:50,940 Stuart Price: are class actions. Now this might be against shareholder securities 30 00:01:50,940 --> 00:01:55,980 Stuart Price: class actions, which are misleading, deceptive conduct on the ESX, 31 00:01:55,980 --> 00:01:59,670 Stuart Price: the stock exchange, or it could be consumer class actions 32 00:01:59,790 --> 00:02:03,750 Stuart Price: or indigenous class actions, non- securities class actions, which is 33 00:02:03,750 --> 00:02:07,860 Stuart Price: very much a growing area. We also have commercial claims, 34 00:02:07,860 --> 00:02:12,269 Stuart Price: breach of contracts. We could have insolvency claims for breaches 35 00:02:12,270 --> 00:02:17,220 Stuart Price: of directors' duties. Really anything which is likely to go 36 00:02:17,250 --> 00:02:23,038 Stuart Price: through the legal system and it has good prospects of being 37 00:02:23,038 --> 00:02:26,160 Stuart Price: successful, we're willing and able to look at it. 38 00:02:26,520 --> 00:02:29,669 Sean Aylmer: Okay. So are there any that we might know of, even 39 00:02:29,669 --> 00:02:32,639 Sean Aylmer: if they're not settled and they're allegations until they're proven 40 00:02:32,639 --> 00:02:35,220 Sean Aylmer: one way or another, but are there some out there, 41 00:02:36,000 --> 00:02:37,170 Sean Aylmer: a couple of examples? 42 00:02:37,710 --> 00:02:42,329 Stuart Price: The career highlight that I had, and I think this is really one 43 00:02:42,329 --> 00:02:46,290 Stuart Price: of the best examples of litigation funding, was the Queensland 44 00:02:46,290 --> 00:02:50,608 Stuart Price: stolen wages. So this was a claim by around 14, 45 00:02:50,610 --> 00:02:56,310 Stuart Price: 000 indigenous individuals and their families for wages that they 46 00:02:56,700 --> 00:03:02,160 Stuart Price: earned but did not receive between 1939 and 1972. That was the 47 00:03:02,160 --> 00:03:05,430 Stuart Price: period where they were under the Protections Act. We funded 48 00:03:05,430 --> 00:03:10,349 Stuart Price: that class action in my previous organization and that resulted 49 00:03:10,349 --> 00:03:14,429 Stuart Price: in a settlement of $ 190 million. That was the fifth- 50 00:03:14,429 --> 00:03:19,889 Stuart Price: largest class action in Australia's history and the largest human 51 00:03:19,889 --> 00:03:24,419 Stuart Price: rights class action of its time. So that really in 52 00:03:24,540 --> 00:03:28,410 Stuart Price: a nutshell is one of the most historically important class 53 00:03:28,410 --> 00:03:32,009 Stuart Price: actions, but also demonstrates the power of being able to 54 00:03:32,040 --> 00:03:37,049 Stuart Price: bring the funding and also the capability to prosecute these 55 00:03:37,380 --> 00:03:41,250 Stuart Price: claims on behalf of a group of people that individually 56 00:03:41,280 --> 00:03:46,110 Stuart Price: or collectively weren't able to provide the financial resource to 57 00:03:46,110 --> 00:03:46,500 Stuart Price: do so. 58 00:03:47,190 --> 00:03:49,079 Sean Aylmer: Stay with me, Stuart. We'll be back in a minute. 59 00:03:56,310 --> 00:04:01,350 Sean Aylmer: My guest today is CASL Chief Executive, Stuart Price. So 60 00:04:01,650 --> 00:04:04,110 Sean Aylmer: I want to get to litigation funding as an asset 61 00:04:04,110 --> 00:04:06,330 Sean Aylmer: class in a moment, but before we do that, how 62 00:04:06,330 --> 00:04:11,040 Sean Aylmer: do you judge, how does CASL judge whether or not 63 00:04:11,129 --> 00:04:14,490 Sean Aylmer: to take on a client/ class action? 64 00:04:15,210 --> 00:04:19,650 Stuart Price: Absolutely. Well, we've had in excess of 25 years of 65 00:04:19,800 --> 00:04:25,320 Stuart Price: doing that exact step. The 25 years has really refined 66 00:04:25,320 --> 00:04:28,859 Stuart Price: our selection process, and I like to refer to it 67 00:04:28,889 --> 00:04:33,779 Stuart Price: almost as the John West approach, which is we do 68 00:04:33,930 --> 00:04:37,950 Stuart Price: decline a lot more cases than we select. So it's 69 00:04:37,950 --> 00:04:42,810 Stuart Price: a very high bar to be funded. That's an important 70 00:04:43,200 --> 00:04:47,219 Stuart Price: consequence for the other side, the defendant to realize that 71 00:04:47,219 --> 00:04:50,580 Stuart Price: it has reached that bar. But we look at factors 72 00:04:50,580 --> 00:04:54,330 Stuart Price: such as the area of law, the types of claims 73 00:04:54,330 --> 00:04:57,359 Stuart Price: that are being prosecuted, the evidence. We look at the 74 00:04:57,360 --> 00:05:01,769 Stuart Price: financial metrics of the cost of prosecuting it versus the 75 00:05:02,070 --> 00:05:05,729 Stuart Price: likely claim size. We look at the parties to make 76 00:05:05,730 --> 00:05:09,210 Stuart Price: sure that the parties on the defendant's side are able 77 00:05:09,210 --> 00:05:12,870 Stuart Price: and capable of paying a resolution, and we look at 78 00:05:12,870 --> 00:05:18,508 Stuart Price: qualitative factors like are they likely to, for instance, continuously 79 00:05:18,599 --> 00:05:22,019 Stuart Price: appeal and take matters as they're allowed to do all 80 00:05:22,020 --> 00:05:24,390 Stuart Price: the way through to the high court. So we look 81 00:05:24,420 --> 00:05:28,350 Stuart Price: at a number of factors, bill over 25 plus years 82 00:05:28,470 --> 00:05:33,240 Stuart Price: of case selection. That case selection, we've achieved a 92% 83 00:05:33,360 --> 00:05:38,129 Stuart Price: success rate in our selection. So from my perspective, what 84 00:05:38,130 --> 00:05:41,130 Stuart Price: we're doing in selecting cases, we're doing really well. 85 00:05:41,699 --> 00:05:44,969 Sean Aylmer: Okay. And you get paid if you win, presumably. So 86 00:05:44,970 --> 00:05:48,720 Sean Aylmer: 92% of the time you're getting paid. Is that how that works? 87 00:05:49,170 --> 00:05:53,460 Stuart Price: Absolutely. We only get paid when the case is successful. 88 00:05:53,880 --> 00:05:59,430 Stuart Price: That's important because we're absolutely aligned with the claimant, the 89 00:05:59,430 --> 00:06:04,470 Stuart Price: group members. We put our financial resources behind the case 90 00:06:04,589 --> 00:06:09,839 Stuart Price: and we bring also a lot of experience and skill 91 00:06:10,110 --> 00:06:14,460 Stuart Price: to the broader legal team on developing the strategies to 92 00:06:14,460 --> 00:06:18,119 Stuart Price: prosecute the case most efficiently. But the important part you 93 00:06:18,389 --> 00:06:21,479 Stuart Price: touched on there, we only get paid at the end 94 00:06:21,779 --> 00:06:26,010 Stuart Price: and generally in class actions, we only get paid to 95 00:06:26,010 --> 00:06:29,969 Stuart Price: the level that the court determines is fair and reasonable. So 96 00:06:31,080 --> 00:06:35,850 Stuart Price: there is reporting governance, checks and balances imposed by the court. 97 00:06:36,539 --> 00:06:39,210 Sean Aylmer: Okay. What about on the investor side? And I know 98 00:06:39,210 --> 00:06:42,479 Sean Aylmer: that in recent days you've launched a fund that will 99 00:06:42,480 --> 00:06:48,089 Sean Aylmer: be used for new actions. As an asset class, how 100 00:06:48,089 --> 00:06:51,150 Sean Aylmer: do I think about it? Is it a defensive asset 101 00:06:51,150 --> 00:06:54,120 Sean Aylmer: class? Is it something that, I mean, it's long term 102 00:06:54,210 --> 00:06:56,880 Sean Aylmer: presumably. As an investor, how should I think about this? 103 00:06:57,540 --> 00:07:02,878 Stuart Price: It's definitely an asset class, which I find is really 104 00:07:02,880 --> 00:07:07,320 Stuart Price: interesting when people dive into it. It's an alternative asset class and 105 00:07:07,920 --> 00:07:11,909 Stuart Price: is probably one of the most vanilla alternative asset classes 106 00:07:11,910 --> 00:07:16,260 Stuart Price: that exist. It is uncorrelated to the stock exchange or 107 00:07:16,260 --> 00:07:20,460 Stuart Price: bonds or property. There will be litigation that arises at 108 00:07:20,460 --> 00:07:24,660 Stuart Price: all points in time, and there are, like I described 109 00:07:24,660 --> 00:07:30,990 Stuart Price: earlier, cases that arose from actions back in 1939 to 1972 being 110 00:07:30,990 --> 00:07:34,650 Stuart Price: brought in the modern time. So as an asset class, 111 00:07:34,710 --> 00:07:38,849 Stuart Price: there is a great deal of breadth and variety to 112 00:07:39,270 --> 00:07:44,549 Stuart Price: what is provided. There is some degree of predictability and 113 00:07:44,549 --> 00:07:50,130 Stuart Price: certainty. The predictability is the laws are very well- developed. 114 00:07:50,490 --> 00:07:55,950 Stuart Price: There certainly is no guarantee about the outcome. But in 115 00:07:56,190 --> 00:07:59,909 Stuart Price: that John West approach, one of the factors that we 116 00:07:59,910 --> 00:08:03,989 Stuart Price: do adopt is making sure that there's a greater probability 117 00:08:04,080 --> 00:08:07,920 Stuart Price: of success than otherwise. But as an asset class, the 118 00:08:07,920 --> 00:08:14,880 Stuart Price: predictability almost guaranteed that the court will manage the case 119 00:08:14,910 --> 00:08:18,179 Stuart Price: all the way through to the end as efficiently as 120 00:08:18,179 --> 00:08:22,949 Stuart Price: possible. So you don't have the court taking its time 121 00:08:22,949 --> 00:08:28,380 Stuart Price: and allowing defendants or plaintiffs to waste time. They want 122 00:08:28,380 --> 00:08:31,200 Stuart Price: to move things as efficiently through the court system as 123 00:08:31,200 --> 00:08:36,420 Stuart Price: possible. So as an investment class, an asset, it is 124 00:08:36,420 --> 00:08:42,780 Stuart Price: very attractive for sophisticated investors. I think when you identify 125 00:08:42,900 --> 00:08:46,320 Stuart Price: that we select on average about 5% of the cases 126 00:08:46,320 --> 00:08:50,160 Stuart Price: that come to us for funding, that from an investor's 127 00:08:50,160 --> 00:08:55,410 Stuart Price: perspective, they have a basket of cases that we invest 128 00:08:55,410 --> 00:08:59,130 Stuart Price: in. There's not a guarantee that every single one will 129 00:08:59,490 --> 00:09:04,620 Stuart Price: win, but on the balance of probabilities, we expect to 130 00:09:04,620 --> 00:09:09,059 Stuart Price: win much more than we lose. And historically that's produced 131 00:09:09,360 --> 00:09:13,049 Stuart Price: a very attractive return profile for investors. 132 00:09:14,250 --> 00:09:19,380 Sean Aylmer: So in terms of Australia as a country vis-a- vis the US 133 00:09:19,380 --> 00:09:21,870 Sean Aylmer: and some of these other developed nations, is this something 134 00:09:21,929 --> 00:09:25,708 Sean Aylmer: that we further developed than those nations? I'd imagine that 135 00:09:25,710 --> 00:09:27,929 Sean Aylmer: the US would be more developed and that gives us 136 00:09:27,929 --> 00:09:31,559 Sean Aylmer: some sort of insight into how Australia will perform as 137 00:09:31,559 --> 00:09:32,339 Sean Aylmer: an asset class? 138 00:09:33,000 --> 00:09:36,238 Stuart Price: There's two answers to that. Australia was the first to 139 00:09:36,929 --> 00:09:41,400 Stuart Price: introduce litigation funding and my business partner, John Walker, was 140 00:09:41,400 --> 00:09:46,499 Stuart Price: really the initial pioneer back in 1996. So globally litigation 141 00:09:46,500 --> 00:09:51,179 Stuart Price: finance arose from Australia. The size and scale of the 142 00:09:51,179 --> 00:09:56,970 Stuart Price: US and its reputation for litigation is partially a reflection 143 00:09:57,000 --> 00:10:01,200 Stuart Price: on the nature of the jurisdiction. There is no adverse 144 00:10:01,200 --> 00:10:05,939 Stuart Price: costs in the US whereas there is adverse costs in 145 00:10:06,000 --> 00:10:08,400 Stuart Price: Australia. And what that means is you can bring an 146 00:10:08,400 --> 00:10:13,078 Stuart Price: action in the US, lose and have no downside, whereas 147 00:10:13,080 --> 00:10:17,340 Stuart Price: here in Australia, you bring an action, lose, you wear 148 00:10:17,340 --> 00:10:20,220 Stuart Price: all of the costs that you've invested as well as 149 00:10:20,490 --> 00:10:24,149 Stuart Price: the cost of the other side. So fundamentally, we've got 150 00:10:24,150 --> 00:10:28,860 Stuart Price: different jurisdictions. Australia led the way in the world and 151 00:10:29,160 --> 00:10:33,480 Stuart Price: from my perspective, has the most developed legal system and 152 00:10:33,480 --> 00:10:37,890 Stuart Price: also some of the most sophisticated litigation funders in the world. 153 00:10:39,450 --> 00:10:42,719 Sean Aylmer: What I think I've learned today, chatting to you, Stuart, 154 00:10:42,719 --> 00:10:46,619 Sean Aylmer: is the governance around litigation funding here is a lot 155 00:10:46,619 --> 00:10:49,620 Sean Aylmer: more rigorous than I actually expected. The other thing we 156 00:10:49,620 --> 00:10:53,400 Sean Aylmer: haven't spoken about is the good that this asset class 157 00:10:53,400 --> 00:10:56,280 Sean Aylmer: can do for individuals. Obviously the indigenous Australians that you're 158 00:10:56,280 --> 00:11:01,289 Sean Aylmer: talking about between 1939 and 1973 or four whom weren't paid the 159 00:11:01,290 --> 00:11:03,870 Sean Aylmer: right wages, they got money from that. But I mean 160 00:11:04,020 --> 00:11:05,730 Sean Aylmer: there is a public good in what you're doing. 161 00:11:06,330 --> 00:11:12,360 Stuart Price: Absolutely. I mean, the governance improvements are very notable from 162 00:11:12,360 --> 00:11:18,299 Stuart Price: the way that companies, governments, insurers, how they treat other 163 00:11:18,360 --> 00:11:23,819 Stuart Price: parties. So you really have that rebalancing of the power 164 00:11:24,000 --> 00:11:28,170 Stuart Price: within the legal system. So from my perspective, it's a 165 00:11:28,170 --> 00:11:33,570 Stuart Price: necessary part of the social fabric of Australia to have 166 00:11:33,840 --> 00:11:38,790 Stuart Price: litigation funders and the abilities to hold these large enterprises 167 00:11:38,790 --> 00:11:42,929 Stuart Price: to account. Some of the examples that I've mentioned and 168 00:11:42,929 --> 00:11:47,100 Stuart Price: some in the future will only arise because of the 169 00:11:47,100 --> 00:11:50,700 Stuart Price: presence of litigation funding. And I think that's a really 170 00:11:50,700 --> 00:11:54,119 Stuart Price: good thing that people know and should know that if 171 00:11:54,120 --> 00:11:56,999 Stuart Price: they do bad things or a wrong thing, they will 172 00:11:57,000 --> 00:11:59,759 Stuart Price: be held to account and there's a means and mechanism 173 00:11:59,760 --> 00:12:00,059 Stuart Price: to do so. 174 00:12:00,750 --> 00:12:02,640 Sean Aylmer: Stuart, thank you for talking to Fear and Greed. 175 00:12:03,030 --> 00:12:03,720 Stuart Price: Thank you very much. 176 00:12:04,080 --> 00:12:06,720 Sean Aylmer: That was Stuart Price, co- founder and CEO of litigation 177 00:12:06,720 --> 00:12:10,439 Sean Aylmer: funder, CASL. This is the Fear and Greed Business Interview. 178 00:12:10,440 --> 00:12:12,990 Sean Aylmer: Remember, this is general information only and you should seek 179 00:12:12,990 --> 00:12:16,590 Sean Aylmer: professional advice before making investment decisions. Join us every morning 180 00:12:16,590 --> 00:12:18,719 Sean Aylmer: for the full episode of Fear and Greed, daily business 181 00:12:18,719 --> 00:12:21,270 Sean Aylmer: news for people who make their own decisions. I'm Sean 182 00:12:21,270 --> 00:12:22,710 Sean Aylmer: Aylmer. Enjoy your day.