Damian Scattini, a partner recruited in 2015 by Quinn Emanuel Urquhart & Sullivan for its Sydney office, has joined a scramble among Australian plaintiffs lawyers seeking to secure financing and clients to pursue shareholder claims against AMP Ltd.
The 169-year-old Sydney-based wealth management company, which late last month fired its longtime general counsel, has been embroiled in a scandal related to fees charged to clients for nonexistent services. Those misconduct allegations have caused AMP’s share price to tumble, spurring at least five firms to file suits against the company.
But in Australia, a pivotal question has emerged. Who will fund the pursuit of such claims?
Scattini, who last year filed a class action against publicly listed Australian law firm Shine Corporate Ltd., accusing it of misleading investors, has won financing for his AMP actions from Burford Capital Ltd., the world’s largest provider of litigation finance.
The role of litigation funding is key in Australian shareholder class action litigation “because Australian lawyers are prohibited from charging a contingency fee and we have a ‘loser pays’ system, which necessitates the involvement of someone who is prepared and able to meet the defendant’s costs if the claim is dismissed with prejudice,” Scattini wrote in an email.
The Quinn Emanuel partner, who previously worked at Australian plaintiffs firm Maurice Blackburn, won Burford’s backing by noticing a steep drop in AMP’s share price beginning on March 9.
On March 14, an AMP executive testified before Australia’s Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. In that testimony, the executive acknowledged that “AMP had, over years knowingly charged customers for services that it never provided and misled the Australian regulator, ASIC, about its conduct,” Scattini wrote.
Scattini added that “this triggered further falls in the share price.” According to media reports, the executive explicitly said he had “lost count” how many times the company had fooled Australian regulators.
It was then that Scattini “spoke with Burford about events as they were unfolding,” said the Quinn Emanuel litigator. “We both recognized that shareholders would be likely to be entitled to recover losses brought about by AMP’s misleading conduct and its failure to meet its continuous disclosure obligations.”
With his allegations against AMP, Scattini will have plenty of company. So far, four other leading Australian plaintiffs firms—Maurice Blackburn; Slater & Gordon; Shine Lawyers (which trades as Shine Corp.); and Phi Finney McDonald (backed by Australian-based litigation funding firm IMF Bentham Ltd.)—have reportedly either filed suits against AMP or announced plans to do so.
AMP ranks as a household name in Australia and New Zealand with about 740,000 shareholders. The company itself is being represented by Herbert Smith Freehills.
A lengthy certification fight won’t be likely in Australia. Although plaintiffs lawyers in the country cannot negotiate contingency fee arrangements, they do get to avoid lengthy class certification battles since no “formal certification process” exists in Australia’s courts, wrote Scattini, explaining the situation facing his AMP shareholder clients.
“The class action seeks to recover the losses sustained by shareholders who acquired shares at an inflated value and have lost, in aggregate billions of dollars since the market became aware of the true situation,” Scattini said.
Scattini, who in Australia has previously taken on other large defendants such as Toyota Motor Corp., hopes that his cases against AMP will change some of the Australian government’s policies toward the financial services industry.
“Personally, I would like to see the Australian Securities and Investments Commission (ASIC) given greater resources and enforcement powers,” he wrote.