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Compliance and Precedents Guide

Crowdfunding Public Interest Law, Led By Lawyers

We crowdfund public interest law in compliance with lawyers’ statutory obligations, ethics rules, and common law. We are named after Article 2 of the International Covenant on Civil and Political Rights, which guarantees non-discrimination, enactment of legislation and policy to protect rights, and a right to remedy from a competent court for breaches of rights.

The Article Two model is unique in safeguarding lawyers’ obligations and client relationships during the crowdfunding process. Every lawyer has their individual obligation to comply with applicable rules and legislation, but Article Two is designed to help lawyers to comply.

This Guide is not legal advice, but is guidance based on what we currently know about how crowdfunding is treated in the law. Each client’s situation will require tailored legal advice from their lawyer.

“The law now looks favourably on funding arrangements that offer access to justice so long as any tendency to abuse of process is controlled… the present litigation attracts the principle that ‘Public policy now recognises that it is desirable, in order to facilitate access to justice, that third parties should provide assistance designed to ensure that those who are involved in litigation have the benefit of legal representation”: Fostif Pty Ltd v Campbells Cash & Carry Pty Ltd [2005] NSWCA 83, per Mason P (as his Honour then was), at [105], cited on appeal in the High Court at Campbells Cash and Carry Pty Ltd v Fostif Pty Ltd (2006) 229 CLR 386 at [65], per Gummow, Hayne, and Crennan JJ.

The main guidance for crowdfunding in Australia is “Crowdfunding: Guidance for Australian legal practitioners” issued by the Law Council of Australia in 2019. For charities, the Australian Charities and Not-for-profits Commission issued guidance in July 2017: “Crowdfunding and charities: Information for charities, donors and fundraisers about the use of crowdfunding”. Also relevant is the Victorian Legal Services Board + Commissioner’s “Information for people eligible for compensation (redress) / how to avoid claim farming”, to avoid and deter unethical claim farming practices. We also set out relevant case law below.

Article Two helps lawyers and their clients crowdfund  for legal fees and disbursements in public interest causes. Only lawyers can list a campaign, which protects both lawyers and clients against accidental disclosures of confidential information or litigation strategy, unintentional waivers of privilege, or misuse of funds.

  1. Discuss: a client instructs a lawyer about a public interest legal cause, or a law firm identifies a systemic legal issue among their clients. If a client is involved, a costs agreement would be signed in the usual way. Article Two does not get involved in the client-lawyer relationship. Alternatively, lawyers might want to run a law reform campaign, which may not require a client.
    • Lawyers can share the Clients section of our How It Works page to help the client come to a decision.
    • Lawyers can use this Compliance and Precedents Guide to decide how and when forensic decisions will be made about the matter.
  2. Draft: lawyers draft a campaign, with client instructions if necessary. In the usual way, lawyers would obtain written instructions and issue advice in writing.
    • The Listing Form sets out appropriate information to include. Article Two does not accept any information beyond the draft campaign, so we cannot interfere with client confidentiality or client legal privilege. This also reduces the risk of being subpoenaed.
    • This Compliance and Precedents Guide helps lawyers apply their usual ethical obligations to drafting campaigns.
    • The case law below shows that a thoughtfully costed campaign can prevent or minimise later problems. It also promotes accountability and buy-in of donors.
  3. Review: lawyers consider feedback from Article Two, with client instructions if necessary. Article Two only suggests feedback: the final editorial decision is with the lawyer, with consultation from any clients.
    • A practising Australian lawyer with litigation experience makes suggestions to help with compliance.
    • The Listing Checklist helps with one final read-through before the campaign is listed.
  4. Share: lawyers and clients market the campaign. Donors support the campaign with donations. Lawyers can provide updates.
    • Donors can read the How It Works page to understand whether donating to an Article Two campaign is right for them.
    • Donations are protected by Stripe Connect…
    • This Compliance and Precedents Guide helps lawyers think through how they can publicise the campaign and provide updates on it without breaching privilege or confidentiality.
  5. Change: donations are distributed immediately, so lawyers and clients can get to work!
    • Tell us how you went! We love to hear outcomes, receive feedback, and improve the Article Two experience. We can’t build the coalition without you.
    • Check out the other campaigns to see whether there are other lawyers pursuing similar causes. Maybe you can collaborate?

Crowdfunding for litigation is already a common practice. Lawyers regularly apply for grants of legal aid and negotiate third-party litigation funding. We help lawyers and clients with the trust and confidence to crowdfund in compliance with applicable laws.

  1. Lawyer-led Campaigns: only lawyers can list campaigns, meaning that misconduct can be investigated by the regulator, and clients’ best interests can be protected by the lawyer drafting and managing the campaign. Where litigation is involved, proper basis certification discourages abuses of process.
  2. Secure Trust Accounts: crowdfunded money is paid into the lawyer’s trust account or another account controlled by the lawyer, so there is little risk the money will be misused.
  3. Trust: our guide and model help clients and their lawyers identify whether Article Two is right for them.
  4. Self-Regulation: if we become concerned that a breach of laws or regulations may have occurred, we will consider making a report to the local professional regulator ourselves.
  5. Community and Coalition: campaigns are public, so we can build communities of practice beyond informal connections and friendships. Clients and lawyers can build coalitions for overlapping causes. 
  6. Transparency:5% fee and processing fees. No opaque approvals process. No bated breath waiting for an outcome. No interference with the client-lawyer relationship.
  7. Not Just Human Rights: Article Two permits funding for economic justice, regulatory certainty, healthy competition… any use of law can be in the public interest.
  8. Funding Advocacy: crowdfunding public interest law on one platform enables us to advocate for increases to legal aid and community law by showing the amount of lawyers, clients, donors, and dollars that support funding better access to justice.
  9. Access to the Judiciary: crowdfunding can increase access to litigation, so that the judiciary can perform its function of holding the legislature and executive to account.
  10. Prevention: we hope to reduce the need for large, expensive, slow class actions in the future if more systemic issues can be litigated by individuals earlier and more cheaply.
  11. Ecosystem: more Australian lawyers can practise in the public interest. Crowdfunding can remediate some of the pay inequity experienced by juniors and minority barristers who take pro bono briefs and public interest briefs. More law firms will be able to take pro bono matters if they crowdfund only for disbursements, or by accepting limited funds to avoid the opportunity cost of passing up a paid matter. Moreover, community lawyers know how to address systemic issues if only they can get the funding to advocate for them!
  12. Article Two partners with Stripe Connect, which complies with the highest applicable global anti-money laundering and counter-terrorism financing regulations in each jurisdiction it operates in. Stripe stays abreast of changes to applicable laws and regulations, and it may also choose not to provide high-risk services that fall outside of Stripe’s risk appetite.

For our full manifesto, see our Why Article Two page.

The Law Council of Australia’s 2019 publication, “Crowdfunding: Guidance for Australian legal practitioners”, is the major guidance for solicitors and barristers on which laws, especially conduct rules, apply to crowdfunding. The Article Two model is donor-based crowdfunding.

We designed the Article Two model by reference to the Law Council of Australia’s guidance, the case law, and our experience in practice and in litigation.

Here, we set out some, but not all, of the applicable conduct rules by reference to the Australian Solicitors’ Conduct Rules. Lawyers with specific questions should read the Law Council of Australia’s guidance and refresh their memory of their conduct rules.

  • Rule 7.1: clients must receive advice about all relevant legal issues that arise in their legal representation, including how crowdfunding influences the conduct of the matter.
  • Rule 7.2: requires solicitors to advise clients about alternatives to court (fully contested adjudication). Article Two enables crowdfunding for alternatives to litigation, including law reform advocacy, bill drafting, FOI requests, and sending legal letters. Lawyers should not recommend Article Two to their clients if crowdfunding is not in their best interests.
  • Rule 8: our rule that only lawyers can list campaigns builds on lawyers’ existing ethical obligations, so that all campaigns are for legal representation for lawful activities, and so that campaigns comply with applicable laws.
  • Rule 12 on conflicts of interest: in the context of Article Two, clients must grant informed consent for a lawyer to crowdfund. Ordinarily, the lawyer discloses their costs estimates. For a crowdfunded case, the lawyer would also come to an agreement with the client about what would be funded, whether that includes their own fees, and how much. Some campaigns may only seek funding for disbursements, which are not legal fees.

Lawyers have stringent obligations relating to how they deal with Donations:

  • common law obligations to establish with clarity the identify of persons to whom advice is given and understand the purpose behind transactions;
  • obligations when dealing with trust monies, where the use of lawyers’ trust accounts is restricted by statute to matters or transactions in relation to which legal services are provided. This means a lawyer cannot accept money into trust except in the course of or in connection to underlying legal services. There are also rules relating to the reporting of irregularities/record keeping for trust monies; and
  • for certain transactions involving “designated services”, obligations under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and related rules, as to be amended and apply to lawyers from 1 July 2026.

Division 400 of the Criminal Code 1995 (Cth), which deals with the proceeds of crime, applies to everyone, with offences for dealing (including recklessly or negligently) with money or other property that is or is likely to become, proceeds or an instrument of crime.

Crowdfunding in the Case Law

Here we set out case law on how crowdfunding has been treated in the courts. We hope lawyers can use this guide to think through how to approach crowdfunding as part of strategy, submissions, or evidence.

Approximately 110 decisions searchable on Jade mentioned “crowdfund”, “crowd fund”, “crowd fund*”, “crowd-fund*”, “GoFundMe”, “Chuffed”, and “Pozible”. “Fundly” produced too many irrelevant results, but was mentioned in only one decision. We assumed that any mention of Fundly would be accompanied by a mention of the term “crowdfund” or “crowd fund” and did not search further. Decisions were sorted into categories according to the way crowdfunding was treated.

The District Court of New South Wales has recognised that “the cost of defending a defamation action in Australia… is eye-watering, with the result that crowdfunding hundreds of thousands of dollars is necessary, even for the winner” (Maatouk v Katrib [2022] NSWDC 463 at [31]), in setting aside default judgment against a defendant to defamation.

An injunction was denied to restrain speech critical of a plaintiff in defamation to crowdfund the defence on the basis that defamation is expensive; the defendant has not stated she is indigent; the publication is limited; and the defendant should be permitted to raise funds and an injunction would have the practical effect of restraining her from doing so: Goldberg v Voigt [2019] NSWDC 691 at [20], [21], [28]. On the other hand, a respondent’s admission of impecuniosity and evidence of crowdfunding were taken as factors in ordering an injunction against publishing injurious falsehoods: Bruder Expedition Pty Ltd v Leigh [2019] QDC 116.

Stay applications have been granted partly on the basis that the defendant should be permitted to crowdfund a defence to a defamation lawsuit: Rajput v Gill & Anor (Ruling) [2022] VCC 314 at [33], [49]; cf Bruder Expedition Pty Ltd v Leigh [2019] QDC 116. Variations to consent orders restraining the defendant’s speech in a defamation lawsuit have been granted so that crowdfunding can occur: Capilano Honey Ltd v Mulvany (No 2) [2017] NSWSC 1237 at [27].  The defendant had been directed to pro bono representation to receive advice for this purpose: Capilano Honey Ltd v Mulvany [2017] NSWSC 833 at [9]. However, an application to stay lower court criminal proceedings brought late because the plaintiff had to crowdfund was refused on the usual principles governing stay applications, including delay: Tey v State of NSW [2021] NSWSC 1424.

A crowdfunding campaign should not breach privacy legislation or suppression orders. One key example is s 121 of the Family Law Act: Wallis & Neville [2015] FCCA 2954; Faraday & Faraday [2020] FCCA 1895; Markwell & Solberg & Anor [2020] FCCA 1751.

Pseudonym orders over proceedings have been crafted to permit a defendant to a defamation application to crowdfund a defence: EFG (a pseudonym) v Trnka & Anor (Ruling) [2024] VCC 1882.

Any information in a campaign can be used as evidence. Any information shared with Article Two is susceptible to subpoena.

As always, witnesses must be honest where their evidence relates to crowdfunded money. Evidence of crowdfunding can be used in cross-examination for substantive issues such as inability to pay damages: Clinch v Rep (Discrimination) [2020] ACAT 13.

Inferences have been drawn and credit findings made about facts in issue:

  • in family law cases: Wallis & Neville [2015] FCCA 2954; Binetto & Massani [2017] FamCA 106; Welsh & Riggs [2017] FCCA 3315; Faraday & Faraday [2020] FCCA 1895; Mafton & Salmet [2020] FCCA 256; Ogburn & Waymark [2021] FCCA 1686; Kemp & Vinson [2022] FedCFamC2F 963; Collingwood & Collingwood (No 3) [2022] FedCFamC1F 388; Larson & Kidd [2022] FedCFamC2F 55; Calpin & Leigh [2023] FedCFamC1F 767; Chosar & Chosar [2023] FedCFamC2F 735; Rasul & Momin (No 2) [2023] FedCFamC1F 947; Martine & Carmona [2024] FedCFamC2F 800
  • in administrative law cases: Anees and Minister for Immigration and Border Protection (Migration) [2016] AATA 1090 (23 December 2016); Piesse v Medical Board of Australia (Review and Regulation) [2017] VCAT 1615; Bari (Migration) [2020] AATA 928 (10 January 2020); RQRP and Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (Migration) [2020] AATA 437 (10 March 2020); NCHC and Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (Migration) [2021] AATA 1840 (21 June 2021); CVJ & Anor v Department of Children, Youth Justice and Multicultural Affairs [2022] QCAT 280; 1927648 (Refugee) [2023] AATA 3555 (15 August 2023); Livingstone and Minister for Immigration, Citizenship and Multicultural Affairs (Citizenship) [2024] AATA 3282 (13 September 2024); Terrones Tafur (Migration) [2024] AATA 3967 (31 August 2024)
  • in employment cases: Application by Construction, Forestry, Mining and Energy Union-Construction and General Division, Australian Capital Territory Divisional Branch [2020] FWC 5853; Construction, Forestry, Maritime, Mining and Energy Union-Construction and General Division, Australian Capital Territory Divisional Branch [2020] FWC 5855; Ms Jean Madden v Street Swags Ltd [2021] FWC 160; Clark v Victorian WorkCover Authority [2022] VCC 303; SafeWork NSW v Autocare Services Pty Limited (No 2) [2022] NSWDC 64
  • in defamation cases: Naidoo v State of Queensland & Anor [2017] QDC 63; Capilano Honey Ltd v Mulvany (No 3) [2018] NSWSC 767; McIntosh v Peterson [No 2] [2024] WASC 428; Harvey v Henderson [2025] NSWSC 601; Al Muderis v Nine Network Australia Pty Limited (Trial Judgment) [2025] FCA 909
  • in damages cases: Robinson v Lorna Jane Pty Ltd  [2017] QDC 26; Tredders Investments Pty Ltd as trustee for Warren Tredrea Trust v Channel 9 South Australia (No 3) [2024] FCA 233
  • in criminal cases: Davey v Tasmania [2024] TASCCA 11; The State of Western Australia v Damjanovic [2024] WASC 402; DPP v Clifford (Ruling No 1) [2025] VSC 115 in a change of venue application

If a litigant misstates any aspect of the plaintiff’s conduct of this litigation or otherwise makes statements calculated to occasion prejudice to the processes of the court, the sanction lies in contempt: Capilano Honey Ltd v Mulvany (No 2) [2017] NSWSC 1237 at [27]. Breach of law can be held against client or witness in evidence, or there can be a finding of contempt: Fairs & Anor & Pettit & Anor (No. 3) [2018] FCCA 1061.

Merely being funded by crowdfunding over another source is not an abuse of process: Stop The Tip Inc v Environment Protection Authority [2017] VCAT 1453 at [18]. Crowdfunding to defend defamation proceedings not inherently an indication of a lack of bona fides; not aggravating factor for damages: Dutton v Bazzi [2021] FCA 1474 at [208]-[209].

Campaign drafting should not come across as improperly pressuring an opposing party regarding their litigation, by making wilful representations, refusing to address legitimate concerns of opposing litigants, providing legal correspondence to media and prompting harassment: Registered Clubs Association of New South Wales v Stolz (No 2) [2021] FCA 1418. Based on a threatened contempt of court, an injunction was granted based on a finding that the defendant had actively sought to encourage media condemnation of the plaintiff, including by providing correspondence from the plaintiff’s lawyers to the media without giving the lawyers a chance to respond in protest.

Leave has been denied to a self-represented litigant to file a complaint in discrimination because his campaign of harassment, including a crowdfunding campaign, was found to be a collateral purpose: Burns v Folau [2020] NSWCATAD 287.  A crowdfunding campaign should not be used to visit reprisals on a successful party or impair public confidence in a court: Tate v Duncan-Strelec [2019] NSWSC 1383. No single crowdfunding page has been the subject of these decisions; the impugned campaigns included a crowdfunding page but involved other publications and disparagement.

The defendant was found guilty of contempt for publishing information for the purposes of reprisal for losing litigation and of impairing public confidence in a court. The crowdfunding campaign was an integral part of the conduct in seeking reprisal, although it alone would not have been sufficient to prove one of the charges of contempt: Tate v Duncan-Strelec [2019] NSWSC 1383.

Security for costs applications include public interest as a factor. Six factors are set out in McMillan v Coolah Home Base Pty Ltd [2023] NSWCA 172, including considerations about the significant work that would be required of the respondents. Crowdfunding is a relevant consideration for where the respondent to the security for costs application/applicant for leave to appeal can pay costs from, but the more important factor is the prospects of success of appeal: Bruder Expedition Pty Ltd v Leigh [2020] QCA 238.

Evidence was led that one party crowdfunded in other party’s security for costs application: WorkPac Healthcare Pty Ltd v Rovic & Ors (No 3) [2017] QDC 188; Bhatia v Gill [2022] WASC 341. Evidence of crowdfunding was taken as evidence of applicants’ financial circumstances for considering whether application for security for costs should be granted: Rose v Secretary of the Department of Health and Aged Care [2025] FCA 339. Applicant admitted she was impecunious and did not expect much more in crowdfunding; ordered to pay security for costs. The merits of the matter were that the substantive application for leave to appeal concerned matters of practice and procedure rather than public interest issues, although original proceeding did contain public interest issues: Tracey Leigh v Louis Philippe Sanchez [2025] QCA 4.

If there is a risk of defamation, consider drafting to prevent identification of person. Qualified privilege found not to apply at a public meeting to fundraise for another person’s legal defence: Bennette v Cohen [2009] NSWCA 60. Injunctions have been denied to restrain speech critical of a plaintiff in defamation in a Facebook post and associated crowdfunding campaign: Goldberg v Voigt [2019] NSWDC 691).

Defamatory statements are not protected by qualified privilege if they are published indiscriminately “without any concern as to whether the recipients had an actual interest in receiving the information”, including on a crowdfunding page (Hive & Wellness Australia Pty Ltd v Mulvany [2019] VSC 273 at [57]). Defamatory statements can be made about crowdfunding activities: Harvey v Henderson [2025] NSWSC 601.

A crowdfunding platform has once been co-defendant in a defamation lawsuit: Massarani v Kriz [2022] FCA 80. The plaintiff was not identified in the article published on the crowdfunding platform, meaning that the article has to be downloaded and viewed, and then the plaintiff has to be identifiable by those who read the article for defamation to arise. The crowdfunding platform removed the article within a few hours of being served the statement of claim, the first time it became aware of any issue with the article. No concerns notice had been sent. A summary judgment application by the crowdfunding platform was dismissed on the basis that the platform was unlikely to be a subordinate distributor of potentially defamatory material and a defence of innocent dissemination was unlikely to succeed.

Bennette v Cohen [2009] NSWCA 60: The defence of common law qualified privilege to defamation was found not to apply to a public meeting to crowdfund to respond to another person sued for defamation, because the defendant had no interest in describing the plaintiff in defamatory terms and the audience had no interest in receiving those statements. Even if the respondent had an interest in the occasion, the defamatory statements were foreign to that interest and there was no connection between the subject matter of the meeting and the defamatory statements.

“There is nothing special about the application of the usual discretion as to costs where legal fees are raised through crowdfunding. The usual rules of costs may be displaced by a combination of: the public interest, strength of argument, any earlier resolution offers, existence of a protective costs order, and so on”: Larter v Hazzard (No 3) [2021] NSWSC 1595.

The usual rule of costs is not displaced by the existence of public interest in challenging the legality of administrative acts; crowdfunding does not displace risk to applicant of paying costs if respondent is unsuccessful; crowdfunders have had the satisfaction of seeing the legal issues being raised and determined in court; litigation was substantially brought for plaintiff’s benefit and would, if successful, have benefited a limited cohort of health workers in the same position as the plaintiff; argument was weak; resolution offer by defendant was refused; interest from the public is not public interest; no protective costs order, which has particular application in public interest litigation since it affords the plaintiff advance notice of exposure to costs: Larter v Hazzard (No 3) [2021] NSWSC 1595.

Consideration of the public interest is relevant to whether a costs order should be made. In Knowles v Commonwealth of Australia (No 2) [2022] FCA 1003 at [39], Mortimer J (as her Honour then was) wrote:

one rationale for refusing a costs application against unsuccessful litigants is not to inhibit the bringing of proceedings concerning issues affecting the community or a sector of it. However, that rationale has less work to do where the claims are found to have no reasonable prospects of success than when arguable claims go to trial and are not successful. What the rule of law should promote is access to the courts for all members of the community where they have a grievance that the law recognises as arguable. It is in cases of that nature that any chilling effect from prospective costs orders can be antithetic to the rule of law. Nevertheless, there are rare cases, Ruddock v Vadarlis [2001] FCA 1329; 110 FCR 491 being one example, where the merits of the claim may not matter as much as the important principle of preserving ready access to the courts where fundamental human rights are at stake – such as the right to liberty, and to claim asylum, being the rights in issue in Vadarlis. (our emphasis)

At [40] and [41], the costs order was discounted, even though none of the causes of action had any reasonable prospect of success, on the basis that the “factual sub-stratum to the causes of action, and the instruments impugned, were relevant across the Australian community, and their validity was a matter of public interest at a general level”, and that an application for a costs capping order had been made.

See also Kassam v Hazzard; Henry v Hazzard (No 2) [2021] NSWSC 1599. The unsuccessful plaintiffs argued that no adverse costs order should be made because the litigation was brought in the public interest because the impugned orders affected a large section of the community, raised several issues of public importance, and raised novel human rights issues not previously considered by a superior court. Moreover, the plaintiffs had conducted the proceedings with expedition. The defendants submitted that a costs order should be made because the plaintiffs were comprehensively defeated, substantive amounts were crowdfunded, reasonable offers were made to resolve the proceedings, and the litigation was not in the public interest.

The challenge was found to be public interest litigation, at [11]:

there is a strong public interest in affected persons being able to test the legal validity of such a step without facing financial ruin or at least severe hardship if the challenge fails. To so hold serves the rule of law.

However, public interest litigation should have “something more” to displace the usual rule as to costs:

[9] Ms Davidson’s characterisation of the approach to a contention that a costs order should not be made in litigation that can be characterised as being brought in the public interest without “something more” must be accepted. However, it does not mean that the additional circumstance or factor “must be unrelated to the nature, extent or other features of the public interest involved in the litigation” the relevant “circumstance or factor can relate to the public interest in the litigation” (Caroona Coal Action Group Inc v Coal Mines Australia Pty Limited and Minister for Mineral Resources (No 3) [2010] NSWLEC 59 at [56]; “Caroona” cited in Local Democracy Matters at [8]). Hence in Local Democracy Matters at [8], the Court referred to litigation upholding the liberty of the subject in time of war or litigation to stop or limit the development of one of the last habitats of an endangered species as examples of cases that might in themselves warrant the Court ordering that each party pay their own costs (see for example Liversidge v Anderson (1942) AC 206 at 283).

[10] In Caroona at [60], Preston CJ in LEC comprehensively reviewed the authorities and identified five non-exhaustive categories of such litigation that might meet the requirement of raising “something more” namely: litigation that raises one or more novel issues of general importance; litigation that has contributed, in a material way, to the proper understanding, development or administration of the law; litigation brought to protect the environment or some component of significant value; litigation that affects a significant section of the public and where there was no prospect of financial gain for party who brought the proceedings.

Means of unsuccessful parties can be factored in in public interest litigation, but no evidence was filed in Knowles v Commonwealth of Australia (No 2) [2022] FCA 1003. The factors weighed up in that decision were: no reasonable prospects of success, forensic choice to bring a wide proceeding against a number of instruments and multiple defendants, history of similar other proceedings that had been unsuccessful, and early discontinuance offers by the successful defendants. In the circumstances, despite the public interest in the litigation, costs orders were made for the defendants with discounts for the interlocutory decision, consistency between respondents, and to recognise the public interest element of the proceedings.

 If crowdfunded money is available to pay the adverse costs order, the plaintiffs cannot claim that it is “unfair or unjust” for them to personally bear the burden of an adverse costs order unless the unsuccessful litigant does have to personally bear the burden of the order. There is recent guidance on how an adverse costs order might be capped with regard to a crowdfunding appeal: Kassam v Hazzard; Henry v Hazzard (No 2) [2021] NSWSC 1599 at [42], adopted in agreement in Knowles v Commonwealth of Australia (No 2) [2022] FCA 1003 at [42]:

…in similar circumstances it is to be expected that if a submission to the effect that it is “unfair and unjust” for a party to personally bear the burden of a costs order is made to the Court and crowdfunding has been undertaken, then that party will provide evidence to the Court explaining the extent and terms of the fundraising, especially when they are given the express opportunity to do so. Had that been undertaken in this case and had the explanation revealed that, for example, a reasonable portion of the funds set raised was set aside to meet or defray the Henry plaintiffs’ costs exposure then the Court could have considered whether to make an order limiting the costs recoverable from the plaintiffs to that amount or something similar (UCPR, 42.4(1)).

If crowdfunded money was paid to the unsuccessful party’s lawyers first and left the client exposed to a costs order:

[40] “that situation could, or at least should, only have come about after they received proper (and independent) advice about the financial risk of becoming a plaintiff and how their solicitors were preferring their own interests to their clients in apparently applying the funds to meet their own costs and disbursements and leaving them exposed to a costs order… If they did not receive that advice then the plaintiffs’ solicitors (and potentially their insurer) may have to ultimately carry their cost exposure.”

For an “activist” law firm to be exposed to clients’ adverse costs order, some relevant connection to the proceedings is required beyond merely moral support, including financial support including crowdfunding, provision of witnesses, own activist campaign where litigation is part of the strategy: Munkara v Santos NA Barossa Pty Ltd (No 5) [2024] FCA 717. No final decision was made on these factors as EDO Lawyers came to a settlement on costs, and her Honour Charlesworth J also noted that public interest is a consideration in the administration of justice more generally in the making of costs orders.

The unsuccessful defendants to a defamation suit took into account the plaintiffs’ crowdfunding in the formulation of an offer of settlement, although the offer was ultimately not found to be valid: McIntosh v Peterson [No 3] [2024] WASC 446.

Lawyers can and do go after donors to litigation if the donors take an active part in the proceedings, such as in the Munkara litigation and the Deeming v Pesutto litigation. Letting the lawyers conduct the litigation, with instructions from their properly advised client, keeps donors, lawyers, and litigants safe.

For successful parties to litigation, costs recovery is subject to the indemnity principle: costs are only recoverable to the extent that the party has either paid them, or has an enforceable liability to pay them. So where no loss has or will be incurred, a successful party is not to be compensated. It appears to currently be accepted that the indemnity principle is not applicable when crowdfunding is used (E1 v E2; E Pty Limited v E2 [2023] NSWDC 411; Kassam v Hazzard; Henry v Hazzard (No 2) [2021] NSWSC 1599).

A costs agreement could be drafted to impose an enforceable liability to pay or recover crowdfunded legal fees if the client is successful in the proceedings (see in particular E1 v E2; E Pty Limited v E2 [2023] NSWDC 411 at [19]).

A successful defamation applicant who crowdfunded also won a costs order to be paid by respondent, where the respondent’s settlement offer was not validly or reasonably made: Hanson-Young v Leyonhjelm (No 5) [2020] FCA 34.

Denigration of a crowdfunding campaign has been argued to be part of a broader campaign of harassment justifying a grant of aggravating damages: Hanson‑Young v Leyonhjelm (No 4) [2019] FCA 1981. Text of a crowdfunding campaign has not been taken to aggravate defamation allegations: Dutton v Bazzi [2021] FCA 1474 at [208] and [209], and crowdfunding products not overtly offensive were found not to make out aggravated damages in a discrimination claim (Tickle v Giggle for Girls Pty Ltd (No 2) [2024] FCA 960).

Evidence of crowdfunding could be evidence of inability to pay damages: Clinch v Rep (Discrimination) [2020] ACAT 13).

Crowdfunding shows that significant numbers of people support the objectives of the respondents, which are lawful, even though the respondents’ actions were not, and this is relevant to the fashioning of an award of exemplary damages: The Game Meats Company of Australia v Farm Transparency International Ltd [2024] FCA 1455.

Regulators sought orders seeking to prohibit respondent from crowdfunding to pay penalty. On the other hand, the subject should personally feel the sting of the penalties for the penalties to have the specific deterrent effect; on the other hand, having to crowdfund to pay the penalty may be a greater deterrent: Fair Work Ombudsman v Bushnell [2023] FedCFamC2G 848; Fair Work Ombudsman v Blakeley [2023] FCA 1597; Australian Building and Construction Commissioner v Construction, Forestry, Maritime, Mining and Energy Union (the Titan Cranes Case) [2022] FCA 774.

In extreme circumstances, knowingly misleading representations in a crowdfunding campaign and an associated email were found to bring the profession into disrepute, and the practitioner was struck off the roll: Legal Services Commissioner v Sewell (No 2) [2023] QCAT 374. Crowdfunding for the purposes of conducting litigation has been found to be marketing or promotion. False, misleading, or deceptive representations in crowdfunding campaigns have been the subject of discipline: Council of the Law Society of New South Wales v Buckley [2024] NSWCATOD 44.