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Victorian Court Sets Legal Cost Boundaries in IAG Class Action Suit

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A crucial court ruling in the Victorian Supreme Court has provided a significant directive regarding legal expenses in a class action facing Insurance Australia Group (IAG).

Justice Lisa Nichols has endorsed a 30 percent limit on the fees lawyers can charge as part of the payout, ensuring a bigger portion of settlements or awards is kept with the affected shareholders.

Such a cost structure offers a more predictable financial outcome for plaintiffs in class actions, particularly with the uncertainties surrounding the case outcomes.

Justice Nichols highlighted that the approved group costs order, which encapsulates GST, presents a safeguard for plaintiffs by securing a definitive portion of the settlements. This structure notably lessens the financial risks plaintiffs undertake, as their compensation remains insulated from disproportionate legal fees. This fixed fee measure is especially appealing given the unpredictable and often extensive legal costs that come with protracted class action battles.

Representing the group members, Damian Norris filed the application for the group costs order, a modality that spells out the legal reimbursement to the attorneys that is bound to a fixed percentage of the settlement figure. Particularly for this case, the issue at hand was IAG's alleged misuse of outdated Quarantine Act wordings in its business interruption policies, which did not account for COVID-19 related claims - a significant oversight leading to investor loss.

The order has resonated within legal confines of the financial industry, indicating IAG's peripheral involvement with the matter. While IAG showed a neutral stance towards the costs order application, their primary focus remains on confronting the accusations of misleading conduct and inadequate informative disclosure, as claimed by the litigants.

In the intricate dance of legal actions, Quinn Emanuel Urquhart & Sullivan orchestrates the motion against IAG, lodged back in 2022, with the insurer resolute in contesting the allegations. Drawn under the scrutiny are claims that IAG misrepresented its financial position and failed to uphold continuous disclosure guidelines, potentially inflating its share value and leading stakeholders to err in their investment decisions between March 11 and November 20, 2020.

This legal development signals a shift towards increased equity and fairness for the claimants embroiled in class actions. Moreover, it promotes the efficient deployment of legal resources and stands as a deterrent to unnecessary escalation in legal fees. The class action encompasses those investors who engaged with the market within the specified period, and as the proceedings unravel, the ruling sets a precedent on managing costs in collective legal pursuits.

Published:Friday, 1st Mar 2024
Source: Paige Estritori

Please Note: If this information affects you, seek advice from a licensed professional.

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Knowledgebase

Incontestability Clause:
A provision in a life insurance policy that prevents the insurer from voiding coverage due to a misstatement by the insured after a certain period.

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