In 2017, personal injury law firm Shine Lawyers (ASX: SHJ) ran two class actions against Johnson & Johnson Medical Pty Ltd and Ethicon on behalf of Aussie women who suffered devastating complications after receiving faulty vaginal mesh and tape implants (to prevent stress incontinence and support damaged tissue).

It transformed into one of the largest women’s health class actions of its kind in Australian history. The applicants noted that Ethicon was negligent in evaluating the implants before releasing them, didn’t conduct post-market evaluations, and failed to provide adequate warnings about potential complications. Additionally, they accused Ethicon of engaging in misleading and deceptive marketing practices for the implants.

On September 9, 2022, Shine settled the case. The Class Actions were resolved with a settlement amount of $300 million, pending approval from the Federal Court of Australia. The Court granted approval on March 16, 2023, with the condition that the distribution of the sum be decided separately and at a later date.

Managing Director Simon Morrison said, “This has been one of the longest running medical device class actions in Australian legal history, spanning more than a decade. The respondents fought the action at every juncture including all avenues of appeal. Shine is proud to have stayed in the fight and ultimately procure a $300 million settlement on behalf of the thousands of Australian women affected by these devices.”

The Class Actions were conducted on a ‘no win, no fee’ basis, meaning Shine Lawyers wouldn’t recover their fees or expenses unless the cases were successful. Shine Lawyers covered all costs, including payments to third parties, for several years. As the Class Actions continued and expenses grew, Shine Lawyers needed external funding at reasonable commercial terms to keep funding the expenses. This funding was necessary to support the ongoing Class Actions. The amount deducted from the Settlement Fund for Shine Lawyers’ professional fees is anticipated to be determined in H1 FY24.

The Court rejected Shine Lawyers’ request to recover the entire amount of the Interest from the Settlement Fund, but it allowed for the possibility of submitting another application on the same matter. Nine News reported that Shine Lawyers has received $82 million from the settlement funds for handling the 11-year-long class action. The additional $32m claim rejected by the Court represents the interest paid by Shine after obtaining external funding to manage the lawsuit. 

Shine Lawyers will now prepare additional arguments regarding the recovery of the Interest.

According to the ruling by Justice Lee, Shine Lawyers already received a payment of $41.3 million based on existing cost orders. Additionally, the Company requested further amounts for past costs and disbursements, amounting to $38.13 million. This includes $37,459,569.29 for unrecovered fees and disbursements in the Gill Proceeding and $671,527.24 for unrecovered fees and disbursements in the Talbot Proceeding. Moreover, Shine Lawyers sought an additional sum of $26,030,878 to cover the accrued interest on the disbursement funding facility.

The judge added, that Shine’s urgency to inform the market about the revenue increase was not matched by a speedy completion of the settlement documentation. This delay triggered an obligation for the $300 million to be paid later, causing interest to accrue for the benefit of group members.

The news comes as Shine is already struggling with its cash reserves. In H1 FY23, the Company had already taken a hit of over 18% to its profit, falling from over $13 million in H1 FY22 to about $10 million. Its cash in hand also fell significantly from over $50 million in June 2022 to about $23.4 million in December. Its FY23 results will paint a more accurate picture of the Company’s current situation. 

Though the outcome is excellent for the plaintiffs, a similar celebration might not be inundating the Shine Lawyers office. Further appeals will reveal if the Company is able to recover all costs.