- Commonwealth Model Litigant Rules, Appendix A, Legal Services Directions, issued by the Commonwealth Attorney General under s. 55ZF of the Judiciary Act 1903 (Cth), with effect from 1 September 1999, amended 1 March 2006. See also Guidelines on the State of Victoria's Obligations to Act as a Model Litigant, Department of Justice, 2004, available at http://www.justice.vic.gov.au/wps/wcm/connect/DOJ+Internet/Home/About+Us/Our+Organisation/JUSTICE+-+Model+Litigant+Guidelines+(PDF) (last accessed 12 September 2007). For the purposes of this paper we will refer only to the Commonwealth Model Litigant Rules.
- See Camille Cameron and Michelle Taylor-Sands, “‘Playing Fair’: Governments as Litigants” (2007) 26 Civil Justice Quarterly 497, 498–9; Deare v Attorney General (1835) 160 ER 80, especially p. 85; and Eastern Trust Co v McKenzie, Mann & Co Ltd [1915] AC 750.
- See Cameron and Taylor-Sands, ibid, for a detailed consideration of the origins, content and operation of the Commonwealth Model Litigant Rules.
- Hughes Aircraft Systems International [1997] FCR 151, per Finn J at 196–7.
- Cameron and Taylor-Sands, supra n. 2, 502.
- Ibid, 503.
- Ibid.
- Ibid. See also Kenny v State of SA (1987) 46 SASR 268, per King CJ at 273.
- See eg John Basten, “Disputes Involving the Commonwealth: Observations from the Outside” (1999) 92 Canberra Bulletin of Judicial Administration 38.
- This is discussed in detail below in Part II, 1. See also Cameron and Taylor-Sands, supra n. 2, 504–6 for a discussion of governments as repeat players.
- Marc Galanter described “repeat player” and “one-shotter” litigants in “Why the Haves Come Out Ahead: Speculations on the Limits of Legal Change” (1974) 9 Law and Society Review 95. While Galanter was not dealing exclusively with corporate litigants, many of the features he identified as giving advantages to a litigant are features exhibited by modern corporations. For a critique of Galanter's work see Richard Lempert, “A Classic at 25: Reflections on Galanter's ‘Haves' Article and the Work it has Inspired” (1999) 33 Law and Society Review 1099. Lempert argues that Galanter and others who have attempted to prove his thesis have failed to make an empirical connection between repeat player status and litigant success, and that Galanter's work fails to distinguish between the repeat aspect of a party's litigation activity and “advantages of wealth and power and, in the case of governments, moral status and control over judicial appointments”. Other writers have made some empirical connection between repeat player status and success in litigation: see, for example, Donald Songer, Reginald Sheehan and Susan Brodie Haire, “Do the Haves Come Out Ahead Over Time? Applying Galanter's Framework to the Decisions of the US Courts of Appeals, 1925–1988” (1999) 33 Law and Society Review 811–32.
- Galanter, ibid, 98.
- There is some American research to support the proposition that litigants with experienced advocates have a greater chance of success than litigants with less experienced advocates. In a study of various types of litigants appearing before US Courts of Appeal from 1925 to 1988, researchers reported that repeat player litigants, especially the US government, were much more likely to win than one-shot litigants with fewer resources. They also found that the advantage in appellate litigation enjoyed by the “haves” was consistent over time. See Songer, Sheehan and Brodie Haire, supra n. 11. See also Susan Brodie, Stefanie Lindquist and Roger Harley, “Attorney Expertise, Litigant Success, and Judicial Decision-making in the US Courts of Appeal” ‘ (1999) 33 Law and Society Review 667.
- Galanter, supra n. 11, 99–100.
- There will be cases, however, in which the expertise of a one-shotter's legal advisers or the manner in which the litigation is structured (for example, as a class action) will narrow the gap between the one-shotter and a repeat player opponent. See Cameron and Taylor-Sands, supra n. 2, 506 for a consideration of this issue in the context of governments as repeat players.
- Galanter, supra n. 11, 100. See also Basten, supra n. 9, making similar comments about governments as repeat players.
- Plaintiff class actions also have the capacity to adjust the power balance between one-shotters and corporate repeat players. One of the advantages of class actions is that one-shotters can pool their resources. Whereas pursuing one claim against a corporation may be uneconomical, pursuing dozens or hundreds of claims in one proceeding may be much more feasible. This gives to the plaintiff class many of the advantages enjoyed by repeat players, including the capacity to hire lawyers who themselves are repeat players. It also gives the class access to funding options not available to single plaintiffs. Consider, for example, the rise of the institutional litigation funder in Australia and the growing extent to which they are funding shareholder class actions: see Marcus Priest, “Court Empowers Funders of Class Actions”, Australian Financial Review 15 April 2005, and “Class Action Illegal, Aristocrat Argues“, Australian Financial Review 24 June 2005. Galanter says of class actions: “The class action is a device to raise the stakes for a [repeat player], reducing his strategic position to that of [a one-shotter] by making the stakes more than he can afford to play the odds on, while moving the claimants into a position in which they enjoy [repeat player] advantages without having to undergo the outlay for organizing” (p. 143). The capacity of the class action to overcome the advantages of the repeat player should not, however, be overstated. See the comments of Finkelstein J in Bright v Femcare (2002) 195 ALR 574, [160], to the effect that defendants in class actions in the Federal Court of Australia occasionally take an unacceptably aggressive and adversarial approach in the conduct of class actions, “to do whatever is necessary to avoid a trial, usually by causing the applicants to incur prohibitive costs“.
- See, for example, the comments of Lord Woolf in Access to Justice: Interim Report to the Lord Chancellor on the Civil Justice System in England and Wales (1995), [5.5], Department of Constitutional Affairs, available at http://www.dca.gov.uk/civil/interim/woolf.htm (last accessed 12 September 2007).
- ALRC Report No 89, Managing Justice, [3.140]. The ACCC is an independent Commonwealth statutory authority set up to ensure that individuals and businesses comply with the Commonwealth competition, fair trading and consumer protection laws.
- Ibid. In the authors' view the suggestion that model litigant rules ought to apply to all litigants is problematic. The reasons for requiring governments to behave as model litigants are not readily applicable to all litigants. Furthermore, there are some litigants, such as those who are self-represented, for whom the obligation to comply with model litigant rules would be unduly onerous.
- Ibid.
- Ibid.
- Committee Hansard, Senate Community Affairs Legislation Committee, Reference: Tobacco Advertising Prohibition, 12 August 2004.
- Tom Noble, “Low-tar Smokes No Help, Study Finds“, The Melbourne Age 10 January 2004, found at: http://www.theage.com.au/articles/2004/01/09/1073437471897.html (last accessed 12 September 2007).
- Cameron and Taylor-Sands, supra n. 2, 506.
- Galanter, supra n. 11, 98.
- One of the aims of class action legislation is to give individual claimants strength in numbers that they would not have as individual plaintiffs. If class actions work as intended, this can be the result. For an argument that they do not always achieve their intended aims, however, see B. Murphy and C. Cameron, Access to Justice and the Evolution of Class Actions in Australia (2006) 30 Melbourne University Law Review 399.
- It is also possible for a corporation to move between the repeat player and the one-shotter categories at various stages of one dispute.
- Galanter, supra n. 11, 98.
- See infra Part V, 2.
- The literature on the public/private dichotomy is vast. See in particular Margaret Thornton, “The Cartography of Public and Private” in Margaret Thornton (ed), Public and Private: Feminist Legal Debates (Melbourne, Oxford University Press, 1995); and Karl Klare, “The Public/Private Distinction in Labour Law” (1982) 130 University of Pennsylvania Law Review 1358. Klare states at 1361 that there is no distinction between the two. “What does exist is a series of ways of thinking about public and private that are constantly undergoing revision, reformulation and refinement.”
- Thornton, ibid, 5.
- Thornton gives as examples “the sale of public assets, the corporate sponsorship of state schools, and the contracting out of legal services by government departments to private law firms”. Vogel states: “As the line between ‘public’ and ‘private’ blurs, business corporations have greatly expanded the scope of their impact on the life-chances of individuals in the polity: profit-making firms are now engaged in commercial ventures in areas ranging from slum clearance to health care.” David Vogel, “The Corporation as Government; Challenges and Dilemmas” (1975) 8(1) Polity 5, 31. See also Catherine M. Donnelly, Delegation of Governmental Power to Private Parties (New York, Oxford University Press, 2007).
- Thornton, supra n. 32, 11. In 1970, Robert Dahl expressed a similar view in the specific context of corporations: “Whatever may be the optimal way of governing the great corporation, surely it is a delusion to consider it a private enterprise.” See Robert Dahl, After the Revolution (New Haven, Yale University Press, 1970), quoted in Vogel, ibid, 15.
- John Kenneth Galbraith, “On the Economic Image of Corporate Enterprise” in Ralph Nader and Mark Green, Corporate Power in America (New York, Grossman, 1973) quoted in Vogel, supra n. 33, 16. See also Donnelly, supra n. 34, 6–10.
- See Christine Parker, “Public Rights in Private Government: Corporate Compliance with Sexual Harassment Legislation” (1999) 5(1) Australian Journal of Human Rights 159, and the sources referred to there, especially at n. 4. See also Dan Danielson, “How Corporations Govern: Taking Corporate Power Seriously in Transnational Regulation and Governance” (2005) 46 Harvard International Law Journal 411, especially pp. 423–4. Danielson states: “If corporations are significant institutions in the transnational governance regime [and he argues that they are] then policymakers and activists will need to find ways to affect the decision-making of these corporate institutions to shape their incentives, bargaining power, and business strategies, and to make their internal decision-making processes more visible and open to political contestation.” See also Gavin Anderson, “Corporations, Democracy and the Implied Freedom of Political Communication: Towards a Pluralistic Analysis of Constitutional Law” (1998) 22 Melbourne University Law Review 1. Anderson states, at p. 5, that “... the effective exercise of economic and social (and political) authority is no longer (if it ever was) the exclusive preserve of the state”.
- Or as Vogel asks: “[I]f the corporation is a government, should it not be subject to republican and democratic norms?” See Vogel, supra n. 34, 15.
- Steven Gerencser, “The Corporate Person and Democratic Politics” (2005) 58(4) Political Research Quarterly 625.
- Ibid, 626. Vogel commented, in 1975, that the nature of corporations as governments had attracted the attention of political scientists, but he described that tradition as “distinguished, if not particularly influential...”: supra n. 34, 7.
- Joseph L. Staats, “Habermas and Democratic Theory: The Threat to Democracy of Unchecked Corporate Power” (2004) 57 Political Research Quarterly 4, 585. Staats suggests that Habermas's theory of democracy offered in Beyond Facts and Norms fails to address the capacity of corporate power to corrupt “discourse among autonomous discussants in an atmosphere of relative symmetry...” (p. 589). He focuses, in particular, on “how corporate power allied with the mass media is able to use powers of agenda control and role definition to colonize lifeworld, thereby corrupting the democratic process” (p. 590). Staats offers the grim analysis that the power of corporations, in concert with the mass media, to control the issues that find their way to the public agenda may result in “a permanent absence of democratic legitimacy” (p. 593). Similarly, Vogel comments that “the real problem of corporate legitimacy is not the conflict between owners and managers, but the divergence of the decision of the corporation as a whole from the needs of society” (Vogel, supra n. 34, 12).
- Staats, ibid, 592.
- Gary Coglianese, Legitimacy and Corporate Governance, available at http://ssrn.com/abstract=975410 (last accessed 12 September 2007).
- Ibid, 161.
- Ibid, 166.
- Ibid, 167.
- A dominant theme in the ACCC's concerns about the impact that litigation against the tobacco industry would have on the ACCC's litigation budget was the cost of discovery and gathering evidence. See the discussion supra in Part II, 1.
- An example of such an attempt can be seen in the tobacco industry's use of law firms and “research institutes” to extend the protection of privilege to research documents. See the description of this strategy in the judgment of Eames J in McCabe v British American Tobacco Australia Services Ltd [2002] VSC 73, [323–37]. The recent request from the Commonwealth of Australia to the Australian Law Reform Commission to consider and report on aspects of corporate legal professional privilege as they operate in Australia is due in part to concerns about misuse of corporate legal professional privilege: see Australia Law Reform Commission, “Legal Privilege Controversies Prompt ALRC Review” (Press Release, 23 April 2007), available at http://www.alrc.gov/media/2007/mr2304.htm (last accessed 19 May 2007).
- Civil Procedure Rules 1998.
- For a general discussion of the effect that these reforms ought to have on disputing parties, see Home Office v Lownds [2002] EWCA Civ 365, per Lord Woolf CJ, paras 1 and 23. In the context of an assessment of costs, his Lordship held that “litigation should be conducted in a proportionate manner and, where possible, at a proportionate cost”. In Solutia UK Limited v Griffith [2001] 1 Costs LR 99 lawyers acting for 165 claimants spent £210,000 to recover about £90,000. The Court of Appeal judges criticised this situation and called on judges to exercise greater case management control of proportionality as cases unfold.
- This is discussed below in Part V.
- This and similar phrases—see, for example the reference in Access to Justice, Interim Report, The Right Honourable Lord Woolf, Chapter 5, para 1, to “equality of arms”—remind us that there is still much about adversarial common law litigation that is in the nature of a contest. Conducting litigation as if it is a contest is one type of Commonwealth conduct that has attracted judicial criticism in cases in which the Commonwealth Model Litigant Rules have been commented on. The fact that it does have elements of contest is one of the reasons why parties with superior resources are able to exploit that superiority—for example, by taking technical points—to the detriment of a model litigant.
- The Civil Procedure Act 2005 came into effect on 15 August 2005.
- Ibid, s. 56(1). This overriding purpose closely resembles the overriding objective in the Civil Procedure Rules of England and Wales. The New South Wales provisions also include the concept of proportionality, which is a central concept in the English Civil Procedure Rules. See ss. 57–60 of the New South Wales Civil Procedure Act 2005.
- Ibid, s. 56(4).
- We rely here on the comprehensive examination of the duty to the court in Ipp, “Lawyers' Duties to the Court” (1998) 114 Law Quarterly Review 63. Ipp has identified four duties within the duty to the court: the duty of disclosure owed to the court, the general duty not to abuse the court process, the general duty not to corrupt the administration of justice, and the general duty to conduct cases efficiently and expeditiously. The last of these has assumed more prominence as concerns grow about the expense of litigation and the impact of this expense on access to justice. Civil justice reforms in England have arguably extended this duty by increasing the onus on lawyers to co-operate. The overriding objective is an example of this expansion, as are such measures as pre-action protocols and the capacity of the court to consider pre-action conduct when making costs orders.
- Richard Painter, “The Moral Interdependence of Corporate Lawyers and Their Clients” (1994) 67 Southern California Law Review 507; Christine Parker, Just Lawyers (New York, Oxford University Press, 1999) (see especially Ch. 2).
- See for example Ethics for In-house Counsel, prepared by the Australian Corporate Lawyers Association (ACLA) in conjunction with the Corporate Lawyers Association of New Zealand (CLANZ) and the St James Ethics Centre, June 2005 (reprinted), copy on file with authors.
- We are aware of the danger that such orders might have the opposite effect to the one we are considering here. Where, for example, such an order is used or threatened against a party or that party's solicitors because they have pursued an unpopular case, power asymmetries between litigants may be exacerbated rather than mitigated.
- See above, Part III, 1 and 2. See also Painter, supra n. 57. In a submission to the US Senate Committee on Banking, Housing and Urban Affairs (Oversight Hearing on Accounting and Investor Protection Issues Raised by Enron and Other Public Companies), 27 February 2002, lawyer Ira M. Millstein stated: “I would be remiss if I did not discuss lawyers and their self-interests. Lawyers play a critical role in both supporting the governance efforts of boards and assisting managers to structure transactions while abiding by legal requirements. A classic dilemma is posed, however. Lawyers often identify with the management team and view themselves as strategic partners in achieving the client's business goals. And they may well perceive that the more effective they are in helping to achieve management's goals, the more likely it is that they will receive additional business. Yet lawyers are also expected to provide professional judgment and counsel management about legal boundaries...” In its 2002 report on corporate responsibility, the American Bar Association stated that one development in the 1990s that helped to create “a potent recipe for failures of corporate responsibility” was the increasing pressure of consolidation and global competition faced by accountants and lawyers, which made it necessary for them “to compete more keenly to identify ways to enhance their relationships with their corporate clients”. The ABA concluded that this imperative resulted in a failure of these outside professionals to provide the independent review and advice necessary to temper corporate executives' self-interest: see Preliminary Report of the American Bar Association Task Force on Corporate Responsibility, 16 July 2002, 7–9. The ABA reiterated this concern in its final report: see Report of the American Bar Association Task Force on Corporate Responsibility, 31 March 2003. These reports are available at http://www.abanet.org/buslaw/corporateresponsibility/ (last accessed 12 September 2007).
- Ethics for In-house Counsel, supra n. 58.
- At p. 3.
- See below, Part V.
- Australian Standards 8000–2003 (‘AS 8000–2003’), 23 June 2003.
- Ibid.
- Ibid, [1.5.6].
- S. Wheeler, “An Alternative Voice In and Around Corporate Governance” (2002) 25(2) University of New South Wales Law Journal 556.
- Ibid. Notorious international examples are the Enron and WorldCom collapses. Australian examples include the James Hardie and Australian Wheat Board cases.
- S. Wheeler, “An Alternative Voice In and Around Corporate Governance” (2002) 25(2) University of New South Wales Law Journal 556, 557.
- Phillip Selznick, The Moral Commonwealth (Berkeley, University of California Press, 1992), 343.
- AS 8003–2003, supra n. 64, s. 3.9.
- Ibid, s. 5.2(g). Examples of this “impact” theme are evident in comments made on behalf of Standards Australia regarding the International Organisation for Standardisation's plans to develop new international corporate social responsibility guidelines. In a Standards Australia press release regarding the proposed international standards, references were made to “the rising tide of social dissatisfaction around organisations' perceived failure to account for their impacts on the community“, “the perceived social impact of multinational corporations...” and “the impact of business activity and the results of those impacts on society”: see “Organisations to Become Socially Responsible’ (Press Release, 3 August 2004), available at http://www.standards.org.au/cat.asp?catid=41 (last accessed 12 September 2007). The International Organisation for Standardisation released its Working Report on Social Responsibility in April 2004.
- See, for example, AS 8000–2003, supra n. 64, Appendix B.
- Examples of such schemes in Australia can be found in the banking, insurance and electrical utilities sectors. Any attempt to assess the fairness and effectiveness of such schemes is beyond the scope of this paper.
- AS 8000–2003, supra n. 64, s. 1.3(b).
- Ibid, Appendix B, (iii).
- Ibid, Appendix B, (iv).
- AS 8000–2003, supra n. 64, Appendix B.
- The James Hardie controversy in Australia arose when it was discovered that the company had failed adequately to fund a compensation fund for present and future victims of the company's asbestos-related activities prior to moving its operations to the Netherlands. One result was the Jackson Inquiry. See David Jackson QC, Report of the Special Commission of Inquiry into the Medical Research and Compensation Foundation, 21 September 2004.
- Ibid.
- See for example Stephen Bartholomeusz, “Morality Tale as Hardie has to Pay“, The Melbourne Age, 22 September 2004; Marcus Priest, “Hardie Down but Not Out“, The Weekend Australian Financial Review 25–26 September 2004, 21.
- Wheeler, supra n. 67, 567.
- Ibid, 561.
- Vogel, supra n. 34, 34.
- Ibid.
- Selznick suggests that the modern notion of the socially responsible corporation “has not come easily, and is still precarious and highly controversial”. See Selznick, supra n. 70, 345. A more recent criticism is that corporations may try to exploit the self-regulatory nature of corporate social responsibility principles and codes to avoid external scrutiny and regulation. See Ronen Shamir, “Between Self-Regulation and the Alien Tort Claims Act: On the Contested Concept of Corporate Social Responsibility” (2004) 38 Law and Society Review 635.
- Another disadvantage of exclusive reliance on corporate social responsibility standards is the extent to which corporations might use corporate social responsibility codes and language to avoid or pre-empt external scrutiny and controls. Shamir has considered this issue in the context of claims against multinational enterprises under the Alien Tort Claims Act in the United States. In his view, corporations are struggling to structure corporate social responsibility discourse around voluntary self-regulation and to position themselves as authoritative players within the field: see Shamir, ibid. In the context of an aspirational code of the kind we are considering, one that is intended to complement but not to replace other types of regulation of litigants and their lawyers, cynical use of such a code, while always a risk, is unlikely to succeed in the manner contemplated by Shamir as long as other effective complementary regulatory mechanisms exist.
- Ethics for In-house Counsel, supra n. 58, 3.
- For a different approach, see the recent recommendations of the Victorian Law Reform Commission Civil Justice Enquiry, Chapter 3, “Improving the Standards of Conduct of Participants in Litigation” (copy of draft chapter on file with authors). The VLRC proposes that overriding obligations ought to apply to key participants in the civil justice system, including parties and their lawyers, with a view to creating “a uniform ‘model standard’ of conduct”. The new provisions would create statutory obligations, with sanctions for non-compliance.
- For a discussion of the types of conduct for which the Commonwealth of Australia has been commonly criticised by courts and tribunals, see Cameron and Taylor-Sands, supra n. 2, 513–19.
- Cameron and Taylor-Sands, ibid.
- See ibid for a discussion of these cases.
- See Parker, supra n. 37, 182.
- These rules are discussed supra in Part III.
- In The Open Corporation, Parker describes a system of meta-regulation and meta-evaluation. She states, at 277: “Effective corporate self-regulation depends on the company obtaining adequate information about its responsibilities in the context of its social and legal environment, relating that s of the comprehensive and effective self-regulatory scheme that Parker is proposing. See Christine Parker, The Open Corporation (Cambridge University Press, 2002).
Legal Ethics
Volume 10, 2007 - Issue 2