Five years of group costs orders: Trends and implications for future Australian class action litigation

What you need to know

• Victoria remains the only Australian jurisdiction permitting percentage-based plaintiff solicitors' fees in class actions, known as a group costs order or GCO.
• The regime has been in force for five years and some clear trends and patterns are emerging.
• The Supreme Court of Victoria has adopted an active supervisory role to ensure GCOs strike a balance between appropriate remuneration for plaintiff solicitors and the protection of group member returns. This includes varying GCOs at a later stage of the proceeding.
• Recently, a novel application was brought in Byrnes v Origin Energy to vary an existing GCO percentage in the course of the proceeding. This is the first application of its kind to be determined since the GCO regime was introduced in 2020.¹
• The decision highlights potential challenges in setting GCO rates – parties to class action proceedings should not assume that GCOs, once made, are set in stone.

Introduction

Victoria’s group costs order (GCO) regime, introduced under Part 4A of the Supreme Court Act 1986 (Vic), marked a significant departure from traditional approaches to funding class action litigation in Australia. It has now been in force for five years, with approximately 30 GCOs granted between February 2022 and March 2026, and data is emerging to permit some meaningful analysis as to how the regime is operating in practice.

This article looks at some of these trends and patterns, with particular focus on claim types, the presence of competing class actions, the involvement of litigation funders and the commencement and settlement percentage rates approved by the Court.

The Victorian GCO framework

Section 33ZDA of the Supreme Court Act empowers the Court, on application by a plaintiff in a group proceeding, to order that the plaintiff solicitors’ fees be calculated as a percentage of any award or settlement. Where such an order is granted, the plaintiff solicitors must indemnify the plaintiff and group members for any adverse costs orders and provide security for the defendant’s costs.

Overview of GCO activity

Since the first GCO was made in Allen in November 2021, the Supreme Court of Victoria has granted approximately 30 GCOs across a range of substantive claims.² The total number of GCO applications has increased steadily, with the regime establishing itself as a viable – and increasingly preferred – mechanism for funding class action litigation.

GCOs have been most frequently ordered in shareholder claims, representing over half of the GCOs to date. Litigation funding has remained prominent, with ~40% of GCOs involving litigation funding in some capacity. Approximately one fifth of GCOs have been granted in the context of carriage disputes. We discuss additional insights into Australian class action trends more generally in our recent publication, 'Current Trends in Australian Disputes 2025-2026'.³

Collectively, these trends reflect plaintiff law firms' proactive and continuing reliance on the GCO regime. This is consistent with its underlying policy aim to broaden access to justice by enabling plaintiff law firms to run class action proceedings on a contingency basis under the Court’s supervision, as an alternative to third‑party funding and common fund orders (CFOs). With the High Court’s confirmation in Kain that solicitors’ CFOs are not available, the GCO regime has become the only clear mechanism for solicitors' contingency fees, cementing Victoria’s distinctive role in Australia's class action landscape, which otherwise prohibits such arrangements under professional conduct rules.⁴

Early case trends suggest that the GCO regime will continue to influence the approach to funding of class actions nationally. Clearly, the Supreme Court of Victoria will remain an important jurisdiction for solicitors commencing class actions (including, potentially, for matters with a modest connection to the forum), given the early certainty of costs recovery that GCOs provide. This dynamic is likely to heighten competitive pressure on funding models and pricing in other jurisdictions, raising a question about whether other States and Territories will introduce their own GCO regimes.

The Court’s approach

The Court adopts an active role in administering GCOs, with particular regard to the fairness of the order to members and its proportionality in relation to the outcome. This supervisory power also extends to varying a GCO during a proceeding, including the percentage rate.

General principles can be gleaned from the Court's approach to administering GCOs generally and variation of rates at settlement.⁵

• Detailed evidence: Applicants must substantiate proposed GCO percentages with detailed and robust analyses The types of evidence relied on in past cases include financial modelling of expected returns, and confidential risk and prospects assessments.
• Reasonable fee percentages: The Court has generally fixed GCOs of 20% to 25%, towards the lower end of that range for more straightforward cases with larger recoveries, and towards the upper end for those with higher risk or complexity. In McCoy, the Court resolved to reduce the GCO from 24.66% to 17.392% as a result of the proceeding settling at a relatively early stage, which led to an unusually high rate of return for the plaintiff firm.⁶
• Fairness, not commercial rates: GCOs are not blunt instruments – they aim to uphold outcomes that are fair and reasonable for group members, not simply reflect market rates for third party funding.

GCO rates

Professor Vince Morabito's report Group Costs Orders, Funding Commissions, Volume of Class Action Litigation, Reimbursement Payments and Biggest Settlements analysed GCO data (set out in part in the column 'As at February 2025').⁷

Across the entire period of the GCO regime's operation, we observe the following broad trends.

• Types of claims: As referred to above, over half (~60%) of GCOs have been granted in shareholder class actions. In light of recent cases where outcomes for shareholders have been unfavourable, including recent jurisprudence about the difficulties in proving loss in shareholder claims, we observe that ~60% may represent a high watermark and expect that we will see increased diversification of the types of class actions brought. To date, we have seen GCOs ordered in a range of other claim types including consumer protection and product liability. We provide some insights into the particular types of issues surrounding loss in shareholder claims in our publication, 'Putting the brakes on shareholder class action claims'.⁸
• Litigation funder involvement: The role of litigation funders remains strong, despite the scope for plaintiff firms to take the whole GCO. Of the approximately 30 GCOs granted, under half (~40%) involved third-party litigation funding. It is interesting to observe that a number of funded matters have been competing class actions, where competitive pressure has driven down rates. Funders may be prepared to accept lower percentage returns under a GCO arrangement compared to traditional funding arrangements, given the reduced risk afforded by the Court's early approval of the rate (cf. alternative funding arrangements such as CFOs: Clarke v JB Hi-Fi Group Pty Ltd .⁹ The future role of funders will be interesting to watch, given the downward pressure on traditional rates of funding and the potential for competitive tensions between funders and law firms, particularly some of the larger plaintiff firms who – to date – have dominated GCO applications.¹⁰
• Impact of competing class actions: Approximately one fifth (~20%) of GCOs have been ordered in the context of carriage motions. One of the most significant insights from the data is the correlation between competing class actions and lower GCO rates. There have been six GCOs awarded in carriage contests, with the average GCO rate of ~23%. In contrast, approximately 20 GCOs have been awarded where there has not been a competing class action, with an average rate of ~30%. This difference reflects, among other factors, the competitive tension inherent in multiplicity scenarios. When multiple plaintiff law firms bring competing class actions, the GCO rate becomes a key factor in determining which proceeding should be permitted to continue. Firms are incentivised to propose lower rates to secure carriage, ultimately benefiting group members.
• Rate trends: The lowest GCO rate approved has been 14% in a shareholder class action that proceeded in the context of four competing class actions and a carriage motion. At the other end of the spectrum, the highest rate approved was 40%.
• Tiered GCOs: Tiered GCO rate structures, where the percentage rate decreases as the quantum of recovery increases, is a notable trend emerging from the data. To date, five matters have adopted tiered structures. Tiered structures recognise that the marginal cost of prosecuting litigation does not increase proportionally with the quantum of recovery. This approach also ensures that group members receive a greater share of any "windfall" recovery while still providing adequate incentive for plaintiff lawyers to pursue the best possible outcome.
• Settlement outcomes: Of the ~30 GCOs granted, approximately ten matters have reached settlement with approval hearings conducted in 2024 and 2025. In the majority of cases, the settlement GCO rate approved matched the commencement rate, suggesting that the initial rate-setting is generally appropriate. However, as noted above, in McCoy, the Court reduced the effective rate for the relevant tier from 24.66% to 17.392%, a significant reduction beneficial to group members given the early stage at which the matter settled.

Variation – a key case: Byrnes v Origin Energy Pty Ltd

Consistent with its supervisory role, the Court can revise a GCO to ensure that it remains appropriate in light of changing circumstances.

This power has recently been invoked in the application in Byrnes v Origin Energy. In that matter, Justice Waller had approved a GCO incorporating a 30% plaintiff solicitors' fee. However, in October 2025, the plaintiff communicated its intention to seek a variation of the GCO, pointing to the improbability of the proceeding continuing if the initial 30% rate was not varied. This type of variation application has only been made once before, in the matter of EML Payments, where it was withdrawn before the application was heard.¹¹ Accordingly, the Byrnes application is the first of its kind to be dealt with under the GCO regime.

At the hearing, the plaintiff's lawyers argued the current rate of 30% would frustrate the proceeding and should be varied to a ratchet rate (35% if the case resolved for $42.5 million or less, and 25% if it resolved for more), reflecting what was stated to be the minimum commercially viable rate for the plaintiff's lawyers to continue self-funding.

With an eye to broader policy implications, the Court questioned whether allowing the application could encourage more such applications by plaintiffs seeking to improve their position on recovery with more certainty. Relevantly, while the contradictor emphasised the need for exceptional or materially changed circumstances to justify the variation, the plaintiff's lawyers pointed to what the interests of justice require as the relevant statutory test.

Ultimately, the Court granted the plaintiff's application for the specified ratchet rate to replace the 30% flat rate. The reasons relied upon to make this decision are detailed below.

How did the Court resolve this question?

In considering what is "appropriate or necessary to ensure that justice is done in the proceeding",¹² the Court turned its mind to various factors, including the following.

1. The specific circumstances of the case, including the quantum of return: Justice Waller said that the circumstances specific to the case warranted his granting of the plaintiff's application. The Court took into account "material considerations bearing on the viability of proceedings and the interests of group members." While a material change of circumstances is often relevant, it is not a rigid requirement for a variation to be granted.¹³
2. Prejudice in retaining the initial GCO rate and third-party litigation funding: Justice Waller said that if the variation was refused, the only option for the plaintiff would be to seek third-party funding or retain a new law firm. This would involve uncertainty, delay and additional costs for group members.
3. Whether the contradictor opposes the application: the Court gave substantial weight to the fact that the court-appointed contradictor did not oppose the variation and had acknowledged that there were more factors that weighed in favour of granting the application than against.
4. Sensitivity to variable quantum: GCO rates tend to have a correlation to the quantum of potential recovery and risk. For larger claims, particularly in cases where tiered GCOs have been ordered (or could be proposed as a variation), rates compress to reflect economies of scale. Smaller claims generally attract higher percentages to compensate for greater risk and lower absolute returns. In this case, the Court found that the adopted ratchet structure was appropriate and designed to "ensure proportionality as the quantum of recovery increases." ¹⁴
5. Timing of variation: The Byrnes application is novel for the short passage of time (only a few months) between the Court setting the original 30% GCO and the plaintiff flagging its intention to seek a revision. The Court held that, although the statute is primarily intended to operate at the point of settlement or judgment, the power is broad enough to also be exercised at other stages of the proceeding. This demonstrates that, in the right circumstances, the Court is willing to grant applications for GCO variation at early stages of proceedings.

Impact of the decision

The decision in Byrnes has brought clarity to the scope of power the Court has to approve GCO variations. Some key takeaways include:

• The main purpose of the power to vary GCOs: Justice Waller said the main purpose of the power is to shield group members from a windfall for plaintiff solicitors.¹⁵
• Increasing GCO rates prior to settlement should be exceptional: Justice Waller made it clear that awarding an increase in GCO rates prior to settlement should only occur in exceptional circumstances and should be dealt with by the Court with "considerable caution".¹⁶
• Standing for applications is not limited to plaintiffs: applications can also be brought by group members who believe the GCO rate is excessive. This could include, for example, a substituted law practice or a plaintiff concerned that the rate could lead to a dismantling of the case.¹⁷

Outlook

Based on the patterns identified in the first five years of the GCO regime, the following trends appear likely to continue or accelerate:

• Continued growth in GCO applications: The steady increase in GCO activity suggests the regime has been embraced. As more settlements are approved, and with new guardrails in place following Byrnes, practitioner confidence in the GCO framework will further increase.
• Diversification of claim types: We expect the dominance of shareholder class actions to decrease, with the new frontiers for class actions to include consumer protection, product liability, privacy and data breach and environmental and climate-related class actions. Novel claim types may justify higher rates, given the increased risk and precedent-setting nature of such litigation.
• Increased use of tiered structures: The recognition that marginal legal costs do not scale linearly with recovery quantum suggests that tiered structures will become more common, particularly in matters with potentially large recoveries.
• Competitive pressure maintaining rate discipline: Where multiple class actions are commenced, competitive tension will continue to exert downward pressure on GCO rates. Tiered rate structures may be desirable in matters with significant recovery potential. For defendants, the GCO rate approved may provide insight into the plaintiff's assessment of case strength and likely settlement range.
• Funding arrangements: The GCO regime presents both opportunities, as well as challenges to traditional approaches to litigation funding. Funders may develop more complex and sophisticated approaches to funding, including hybrid, risk-sharing arrangements, so as to leverage optimal returns.

Conclusion

Practitioners engaging with the GCO regime – whether as plaintiffs, defendants or funders – will benefit from closely monitoring emerging trends. As the dataset continues to grow and more cases reach settlement or judgment, further trends will undoubtedly emerge, warranting ongoing analysis and adaptation of litigation strategy. Approaches to GCO rate setting, approval and variation will be at the heart of this analysis.

Ultimately, the Byrnes decision underscores that, while the Court is attentive to the fairness implications of GCOs, variation will likely remain a matter for application (rather than the Court initiating rate variation by its own motion). Ongoing vigilance and strategic engagement with the statutory regime will be paramount for parties seeking to manage class action risk effectively with the evolving profile of GCOs.

Other authors: Patrick Stratmann, Lawyer and Evie Mithen, Graduate.