The High Court of Australia has unanimously held that the Federal Court of Australia does not have the power to order a Solicitors’ Common Fund Order (CFO) in NSW as such orders are inconsistent with the Legal Profession Uniform Laws (NSW) prohibition on contingency fees.
The decision means that solicitors are unable take a percentage of a settlement amount or award of damages in lieu of charging costs in the usual way.
The question arose in Kain v R&B Investments Pty Ltd [2025] HCA 28, a class action in the Federal Court of Australia. The Applicants’ solicitor sought a CFO in its favour. The Full Federal Court held that it was “licit exercise of power” to order a Solicitor’s CFO under the Federal Court Act, and ordered the CFO.
Gageler CJ observed that although the relevant provisions of the Federal Court Act confer power on the Federal Court to order settlement CFOs, it does not confer power to order a solicitors’ CFO.
The decision does not impact the Court’s power to order settlement CFOs in favour of third party litigation funders, nor did the resolution of this question involve reopening the Court’s earlier decision in Brewster.
Justin Gleeson SC, Sebastian Hartford Davis and Damian Morris of Banco Chambers, with Olivia Ronan, appeared for the Second Respondent. They were instructed by Banton Group and Shine Lawyers.
Ryan Jameson of Banco Chambers, led by Ross Foreman SC appeared for John Kain, instructed by Arnold Bloch Leibler.