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When Professional Confidence Hides Risk
What Every Businessperson Must Learn from the Banksia Scandal
Published: 11 July 2024 | Reviewed: 3 December 2025
(2-minute read)
The Wake-Up Call Every Businessperson Needs
Most businesspeople trust the confidence of their lawyers.
Banksia proved that confidence can hide millions in misconduct.
If senior barristers, funders and solicitors could nearly siphon money away from 16,000 elderly investors inside a court-supervised class action, then any client can be exposed when incentives drift out of sight.
This is the lesson from Bolitho v Banksia Securities Ltd [2021] VSC 666.
It is not a story about others.
It is a warning about structures, incentives and visibility.
A Settlement Worth $64 Million Nearly Lost to Misconduct
When Banksia Securities collapsed in 2012, thousands of Australians lost their savings. A class action followed and eventually secured a $64 million settlement. It should have been a rare success for victims of corporate failure.
Instead, the Court uncovered a coordinated attempt to divert the money.
The people entrusted to fight for the investors attempted to take an improper share of the settlement. Key players inflated fees, concealed financial interests and destroyed evidence. The misconduct involved senior barristers, solicitors and the litigation funder itself.
This was not a technical breach.
It was a structural failure of oversight, incentives and role clarity.
How It Happened
When One Person Wears Too Many Hats
At the centre was lawyer Mark Elliott. He was:
the solicitor
the litigation funder
a part-owner of the funding company
financially tied to colleagues and family members involved in the case
These overlapping roles created a system where no one could independently question strategy, timing or costs. Everyone had a stake in the “spoils”.
When two investors insisted on transparency, the truth began to surface.
The Court later found dishonesty, breaches of duty and attempts to deceive judicial officers.
The consequences were serious:
several lawyers were struck off
the funder was denied its commission
$11.7 million was ordered in compensation
The lesson is not about personal blame.
It is about how easily integrity can fail when financial interests overlap.
The Real Lesson for Smart Businesspeople
Lawyers have a duty to act in your best interests.
But you have a duty to supervise the people who represent you.
When you are involved in litigation or high-stakes negotiations, you must be able to see:
Who is being paid.
How much.
For what work.
And with what incentives.
If any of these remain unclear, the risk is already present.
To protect your own organisation, insist on the following:
Clarity of roles
If one adviser stands to benefit from more work, their incentives must be visible and managed.Clarity of money
If a lawyer cannot explain timing, scope or cost in plain language, that is a warning sign.Clarity of interests
If anyone has financial ties to another party, even indirectly, it must be disclosed and understood.Independent eyes
When settlements, funding agreements or multi-party arrangements are involved, obtain advice from someone whose incentives are separate from the outcome.
These are not burdens.
They are basic governance.
Why Clean Law Exists
Banksia showed what happens when roles blend and oversight disappears.
Clean Law is built to remove those structural weaknesses:
• Settlement work and trial preparation sit in two independent lanes
• Clean Law refrains from doing any trial preparation
• Your money sits in escrow, visible and client-controlled
• Clean Law can only earn a result bonus when early resolution avoids trial costs
• There are no referral fees
• No shared profits with any courtroom firm
• No partnerships that influence recommendations
• All funds pass through audited Law Society trust-account processes
• Clean Law’s governance is public under its ACNC-regulated constitution
The structure itself aligns interests.
Integrity becomes visible because incentives stay clean.
Because It Is Not Just About Justice
Banksia proved that courts cannot police everything. Dishonesty can operate in the background when no one is watching the watchers.
A sound legal structure protects clients long before any dispute reaches the courtroom.
The Banksia scandal is not just a legal story.
It is a governance lesson for every businessperson who wants to stay in control of timing, strategy and money.
Protect Your Interests
Problems Clients Face: the hidden dangers of choosing a lawyer
When Lawyers Cost More Than the Debt
Solutions to the Problems Clients and Lawyers Face
By Nicky Wang
Principal Solicitor
Legal Liaison Ltd (trading as Clean Law)
Prepared in accordance with public-interest governance,
annual Law Society trust-account audits, and ACNC-reported standards.
Disclaimer: This page is intended to provide general information only and is not legal advice. The contents may not reflect the most current legal developments and do not take into account your individual circumstances. You should not act or refrain from acting on the basis of this information without obtaining legal advice tailored to your situation.