Class action customers won't foot bill - lawyers
Lawyers leading a massive class action against the major banks have rubbished suggestions that disgruntled customers who sign up could end up footing even part of the multi-million dollar legal bill.
Last week Auckland lawyer Andrew Hooker and Australian heavyweights Slater & Gordon launched the Fair Play on Fees campaign to try and claw back six years' worth of allegedly excessive bank fees.
The action will be bankrolled by the local arm of Australian funder Litigation Lending Services (LLS).
More than 20,000 people have already signed up by clicking on an emailed link, which binds them to the densely-worded legal documents attached to the message.
When Auckland businessman Alan Charman considered registering his recruitment business he became concerned about the agreement's wording .
It says the lawyers will receive their fees no matter what, and have the right to abandon the fight if a win looks unlikely.
"The problem is if LLS folds, there's no plan in place," said Charman.
"There's nothing saying that's the end of it, the lawyer wears the loss."
LLS was funding the action on a "no win, no fee" basis.
Banks are expected to defend the potential action, which could blow out the legal costs beyond the estimated $3.5 million price tag.
But Slater & Gordon class action lawyer Ben Hardwick rubbished Charman's concerns.
"Our costs clearly have to be paid by the litigation funder, and our recourse is against the litigation funder if they don't pay their costs."
He said there was "absolutely no risk" to group members in the class action, with a range of mechanisms in place to protect them.
The litigation funder was well-resourced to support the action, would give each participant an indemnity, and take out insurance against any adverse costs that might rack up.
LLS managing director Michelle Silvers refused to give details on the insurance it holds but said the courts required hard proof that the litigation funder could cover the costs.
"The mechanism that the court imposes means that ... we have to put cash up to cover the downside as well," she said.
Charman argued that if LLS went into receivership or liquidation, the courts might decide that any unpaid legal bills could be extracted from the claimants.
"The Titanic was unsinkable as well," he said.
"Sometimes the unlikely does happen."
Silvers and Hardwick said the courts had never ruled in such a way before.
The Fair Play on Fees agreement contains a 14 day "cooling off" period for any customers who change their minds after signing up.
Papers are expected to be filed with the High Court in the next few weeks.