Litigation Assistance Fund (LAF)

The Litigation Assistance Fund (LAF) is a non-profit charitable trust for which the Law Society acts as trustee. It began operations in 1992. Since then it has provided funding assistance to approximately 1,500 civil claimants in South Australia. The damages ultimately received by those claimants totals in excess of $195 million.

Rule 16A of the Australian Solicitors’ Conduct Rules actually requires South Australian solicitors to inform their clients about LAF in certain circumstances.

Who can apply for LAF funding and how is this done?

LAF receives applications for funding assistance from solicitors on behalf of civil claimants seeking compensation/damages who are unable to meet the fees and/or disbursements of prosecuting their claim. The applications are subjected to a means test and a merits test, and the final decisions on the applications are made by Assessment Panels and/or the Advisory Board of LAF, which are constituted of senior practitioners.

An application form (see below) must be completed by both the applicant and the applicant's solicitor. There is no application fee for Pension Card or Automatic Issue Health Care Card holders, but otherwise the application fee is $100, or $250 for an urgent application.

LAF cannot assist in family law or defacto relationship law matters including those involving property issues.


The two different types of possible funding

LAF provides two different forms of funding – Disbursements Only Funding (DOF) and Full Funding. The distinction is important.

In summary, in DOF matters, claimants receive funding only to meet disbursements, and this does not include counsel fees. In DOF matters, it is a condition of the grant of assistance that the solicitor (and any counsel) enter into a contingency fee agreement with the claimant which establishes that in the event of the action being unsuccessful the solicitor and counsel will not charge the claimant.

In Full Funding matters, claimants receive funding to meet solicitor/counsel fees as well as any disbursements. The Fund pays "solicitor/client costs" (not "solicitor/own client" costs) on the scale appropriate to the jurisdiction.

Most of the matters currently funded by LAF are DOF matters.


How is LAF itself funded and how does this affect the claimants?

LAF received an initial grant of funding upon its inception in 1992, but does not receive any ongoing government funding or any donations or grants. Instead, it funds itself by receiving a relatively small portion of the monetary proceeds (usually damages) achieved by the claimants whom it assists. Claimants who received DOF funding repay the amount received, plus an uplift of 100% on that amount. Claimants who received Full Funding repay the amount received, plus 15% of their damages. This ensures LAF’s ability to continue to provide assistance. Claimants whose claims are ultimately unsuccessful are not required to make any repayment to LAF (and nor are their solicitors). However, the Fund does not pay costs awarded in favour of another party against the claimant.


How are applications to LAF assessed and why is this the case?

The self-funding model is one of the reasons applications to LAF are subjected not only to a means test but also to a merits test. In essence, a decision is made as to the likelihood of the claim succeeding (as well as its likely quantum and the recovery prospects) because LAF can only continue to assist claimants if it regularly receives the repayment and uplift amounts which flow from successful cases. The repayment and uplift amounts received are used entirely for the continued operation of LAF. This, of course, is the crucial difference between LAF, which is a non-profit charitable trust, and commercial/private litigation funders, which can receive vastly higher portions of claimants’ damages for commercial profit purposes.

To satisfy the means test, the applicant can have a family income of up to $150,000, and assets of “reasonable” value including a house and car.

What is a real-life example of a LAF-funded claim?

Claimant A suffered a serious infection during surgery which was not diagnosed expeditiously. He was subsequently assessed as having substantial damage to his shoulder as a result of the infection. LAF provided Disbursement Only Funding (DOF) to enable:
  • a report to be obtained as to the standard of the medical care provided;
  • reports in respect of quantum to be obtained from an occupational physician, a psychologist and an occupational therapist; and
  • payment of a District Court filing fee given an impending limitation date.

The claim settled in the sum of approximately $150,000 all-inclusive. The DOF funding provided by LAF totalled $5,535. The claimant repaid to LAF from the settlement funds that amount of $5,535, together with the 100% uplift; ie the total payment by the claimant to LAF was $11,071.


Where does LAF fit in?

As practitioners know, government-funded representation is often available to under-resourced litigants in criminal matters and family matters. When it comes to civil matters, this is not usually the case. Civil litigants can access a variety of free or low-cost services offering one-off general advice but often not ongoing representation. In many instances, this gap is filled by civil litigation practitioners prepared to act on a contingency or even pro bono basis. The profession is well aware of the valuable role played by JusticeNet in the pro bono context. However, this is not a complete answer. In some cases, firms are able to act on a contingency basis, but not able to incur disbursements on behalf of their clients. Sometimes the scale of a matter, or its longevity, will make it impossible for a firm to act on a contingency basis. The list of potential hurdles is a long one. In many such cases, LAF is able to assist.

Some final important considerations

LAF recommends that claimants who are considering applying to LAF ask/remind their solicitor to consider carefully whether an application to LAF is the most appropriate course in the circumstances of the claim.  In particular, claimants/solicitors should investigate whether there may be other and better potential methods of obtaining funding/representation in relation to the claim.

It should be noted that, if an application to LAF is approved, claimants and their solicitors are asked to enter into a Funding Agreement with LAF.  This gives LAF certain rights and powers, including that funding can be withdrawn and/or varied.

Further, it should be noted that, in relation to DOF funding, if during the life of the claim the claimant can afford to fund some of the disbursements themselves, it may be in their interest to do so, due to the 100% uplift. 


The Forms and the Rules

For DOF applications:
Application form
Rules

For Full Funding applications:
Application form
Rules


Further information

For further information about the Fund, please contact the Manager of the Fund, Annie MacRae, using the contact details below.

Annie.MacRae@lawsocietysa.asn.au
Telephone: (08) 8229 0263
Level 10, 178 North Terrace ADELAIDE SA 5000
GPO Box 2066 ADELAIDE SA 5001