Fund executive and lawyer David Galloway proposes a method for how funds should manage lawyers who launch insurance litigation before there’s anything to argue about.

Lawyers who get involved in death and disablement claims tend to fall into two categories. The largest is where the lawyer advises their client well, ensures a rapid flow of documentation and only litigates from a position of knowledge after engaging with the underwriting process.

Then there are the aggressive litigators who initiate legal proceedings early, sometimes when a claim is lodged, and with little or no knowledge of the issues. While only a handful of lawyers do this, they inflict considerable cost on the industry and tend to serve their clients poorly by slowing the claims process.

While the law referred to is Victorian, and some of that will change soon, similar principles apply in each Australian state and territory.

Proper Basis

Part 4.1 of the Civil Procedure Act 2010 (Vic) requires two certificates to be completed on commencing civil proceedings, the overarching obligations certificate and the proper basis certificate.

The overarching certificate confirms that the party has read and understood the overarching obligations, including only taking steps to:

  • resolve or determine the dispute;
  • use reasonable endeavours to resolve the dispute by agreement; and
  • use reasonable endeavours to ensure costs are reasonable and proportionate to the complexity or importance of the issues in dispute

The proper basis certificate attests (amongst other things) that any factual statements or claims are made on a proper basis. By s42(3), a factual statement or claim cannot be made on a proper basis unless there is a reasonable belief it is true.

These obligations, together with common sense, explain why most lawyers who become involved in death and disability claims contact the fund or insurer early to make the inquiries needed to advise their client and (if necessary) confirm the existence of a proper basis.

Since insurance claimants rarely (if ever) have possession of the relevant facts until underwriting is completed, a competent lawyer would know that issuing proceedings without attempting to gather information from the insurer or fund is likely to create or escalate a dispute in contravention of the overarching obligations.

A competent lawyer would also know that statements made by a client who is unlikely to have possession of the relevant information cannot constitute a reasonable basis for believing the truth of facts alleged or claims made. Even if the lawyer suspected their client might have sufficient information, it seems absurd to issue proceedings without trying to obtain further information from the fund or insurer when that information is normally available.

It follows that, in most circumstances, we can be fairly certain a lawyer who issues proceedings in insurance matters before underwriting is advanced and without attempting to contract the insurer or fund may have approached the certification obligations a little too casually.

So what?

Courts rarely delay civil proceedings because certification requirements haven’t been met, though they may take this into account when determining costs and making orders. That’s small consolation when the objective is to prevent aggressive litigation, but there is another option.

Aggressive litigators use the tactics they do because there are few personal consequences attached. But funds and insurers can attach consequences to aggressive litigation by lodging a conduct complaint against the lawyer with their state regulator.

In Victoria, the Legal Profession Act 2004 (soon to change) permits the Legal Services Commissioner to receive and handle complaints about the conduct of lawyers. Two levels misconduct are recognised:

  • unsatisfactory professional conduct, including conduct in connection with legal practice that falls short of the standard of competence and diligence a member of the public is entitled to expect; and
  • professional misconduct, including a substantial or consistent failure to reach or maintain a reasonable standard of competence and diligence.

Whether aggressive litigation constitutes either type of misconduct will depend on the circumstances. But it is open to funds and insurers to use the complaints process to attach consequences to aggressive litigation where the facts suggest a clear disregard for proper process.

Circumstances in which this might be appropriate include receiving a Statement of Claim when the insurance claim is lodged (or soon after) without prior contact from the lawyer.


Lodging a complaint won’t stop the proceeding, but should encourage the lawyer to adopt a more considered approach in future.

Once alerted, the Legal Services Commissioner will investigate and may issue a cautioning, mandate training or order payment of compensation up to $25,000. Even if no penalty is issued, the inconvenience of dealing with an inquiry from the Commissioner should cause a practitioner to review their threshold for issuing proceedings.

While it’s suggested complaints should be lodged in hope of modifying the behaviour of a few overly aggressive practitioners, there seems no reason not to also seek compensation where proceedings were issued very early and either the claim was admitted through normal underwriting or had no prospect of succeeding.

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