Gallavin on Litigation: Crowdfunding and public interest litigation

By Chris Gallavin

Provocative title, yes I know, but with public interest issues dominating the legal horizon and increasing problems over access to justice I thought it an opportune moment to raise an issue that everyone else seems to have decided is a great idea; crowdfunding.

I know little to nothing about crowdfunding although before you all accuse me of being a luddite I do have an iface account and I regularly hear that someone somewhere has said something silly on a thing called twigger (yes, i am joking).

With the thought of crowdfunding firmly in my mind, I undertook a small amount of research.

What it is

Referring to Wikipedia (don’t tell my students) and ignoring the small sign at the top of the page that read “this article has multiple issues”, I discovered that crowdfunding (evidently one word) is the practice of raising funds for a project or venture via contributions from a large number of people, “typically via the internet”.

I was surprised by the claimed figure of $5.1 billion as representing the worth of the industry in 2013.

Evidently the most successful campaign concerned an online space trading and combat video game called Star Citizen. That campaign raised US$70,000,000. That’s a lot of money by any calculation.

There are more than 450 crowdfunding platforms globally with some operating out of New Zealand, and I cannot help but wonder whether there is a trick or a donation that litigators are missing out on.

Place in litigation

Typically, crowdfunding is the reserve of start-ups or inventors or even artists such as bands or film makers. There are undoubtedly many other applications for this fairly simple idea of asking for a donation of $20, $50, $100 or $1,000 from thousands if not hundreds of thousands of people, but my question is whether there is a place for such funding within litigation.

The title of this piece pairs crowdfunding with public interest litigation. I have done this on the presumption that it is within this area of law that crowdfunding would likely be successful.

I suspect that seeking funding for private litigation would, in all likelihood, fail to attract significant buy-in from random members of the public. Public interest issues, on the other hand, may very well attract philanthropic support and, in fact, this has already been the case in New Zealand in differing contexts.

The recent Teina Pora appeal to the Privy Council, for example, was supported by the University of Canterbury via the for-academic-credit work of our two top final year students and a substantial philanthropic donation from an anonymous UC Law alumni.

But notwithstanding an ad hoc tradition of philanthropic support for some actions, the notion of crowdfunding seems to introduce a quite different, more formalised opportunity to fund litigation.

Alternative funding

With the enactment of the Lawyers and Conveyancers Act 2006, the opportunity for alternative forms of litigation funding arrangements opened up.

Litigation funders are now a very real consideration for litigation teams, with such businesses having been well established in Australia and the United Kingdom. I am unaware of whether similar formal businesses have been established in New Zealand but if they have not, I suspect it will only be a matter of time before they are.

Problems

Crowdfunding may pose particular problems for the profession. I do not here propose that my floating of the idea be taken as endorsement, let alone a legal opinion on the legality or otherwise of such an opportunity.

However, the actions of a practitioner setting up a crowdfund appeal may be regarded as unseemly, if not an activity that is unbecoming the profession.

Time and perhaps a complaint or two to the New Zealand Law Society would, I suspect, determine that issue but the fact remains that significant support could be gathered for a suitable action from members of the wider community.

Further difficulties arise in relation to what, if anything, is given in return for one’s “investment”. A share of the proceedings, if successful, would likely be problematic, a key chain or an “I support ‘x’ cause” bumper sticker perhaps not.

Not insurmountable?

Fees in advance, accounting for fees, the charging of a defendable rate and the use of any excess (say in the case of an action settling early) are all issues that would need careful consideration.

But at first blush such problems do not appear insurmountable if it is the client arranging the crowdfunding, rather than the lawyer.

Additional issues such as client confidentiality, accusations of prejudice, inhibiting a fair trial and even defamation may also be problematic, given the necessity to replicate significant aspects of a dispute in a public forum in order to attract support.

Again, these issues are likely not insurmountable.

Large issues such as earthquake insurance, actions involving judicial review of decisions effecting broad sectors of the community, defending the closing of schools, widespread historical sexual, mental or physical abuse cases (eg, abuse while under the care and protection of state agencies), and even commission type enquiries (eg, Pike River, or Waitangi Tribunal investigations) are just a few of the issues that might attract significant public support.

Undoubtedly forms of crowdfunding of litigation already occur. There may already have been direct examples of litigation crowdfunding in action in New Zealand. This notwithstanding, I do wonder whether there is an opportunity for public participation in the progression of important public interest litigation.

I know of many practitioners who have cases and issues simmering in the background who dedicate significant pro bono time and resources to advancing such issues. Crowdfunding might very well provide a new basis of support separate to the stress-inducing process of legal aid.

Dr Chris Gallavin is an Associate Professor and Dean of Law at Canterbury University. He has published extensively on criminal justice and on evidence and procedure in particular. He is the author of the appellant handbook, Evidence (LexisNexis, Wellington, 2008), and regularly undertakes consultant work in the area of the law of evidence. 

This was first published in LawTalk 858, 13 February 2015.