When Lawyers Go Rogue
What Every Businessperson Must Learn from the Banksia Scandal
(2 min reading)
In one of the most extraordinary legal scandals in Australian history, the Supreme Court of Victoria exposed how lawyers and litigation funders betrayed the very clients they were meant to serve. The case of Bolitho v Banksia Securities Ltd [2021] VSC 666 should serve as a wake-up call for every businessperson: you must know how to manage your own lawyers — their time, your money, and the legal strategy they execute on your behalf.
A $64 Million Settlement Nearly Lost to Fraud
When Banksia Securities collapsed in 2012, it left 16,000 elderly investors with hundreds of millions in losses. A class action was launched, and it eventually secured a $64 million settlement - a rare success story for victims of corporate failure.
But what followed shocked the legal profession.
The very people entrusted to fight for the investors - senior barristers, solicitors, and a litigation funder - tried to take an improper share of the funds. They plotted to divide the “spoils”, inflate legal fees, and siphon off money meant for the victims. Some even falsified documents and destroyed evidence.
How Could This Happen?
At the centre of this misconduct was the failure to manage legal and financial conflicts. One of the lawyers, Mark Elliott, wore multiple hats: solicitor, litigation funder, and part-owner of the funding company. His family, colleagues, and even senior barristers were financially tied to the outcome of the case. What started as legal representation turned into a self-serving financial venture.
This web of interests created a system where no one was watching the watchers.
When two investors questioned the fees, their persistence helped expose the misconduct. The Court later found that the litigation funder and its legal team had acted dishonestly, breached their professional duties, and attempted to deceive the court. The outcome? The funder was denied its commission, several lawyers were struck off the roll, and $11.7 million was ordered in compensation.
The Real Lesson for Businesspeople
Legal professionals have a duty to act in your best interests. But you have a duty to supervise them.
Whether you’re involved in litigation, corporate restructuring, or regulatory defence, you must:
Understand who is getting paid, how much, and why. Don’t leave this to chance.
Insist on clear communication. If a lawyer can’t explain the strategy or costs in plain terms, that’s a red flag.
Beware of conflicts. If your lawyer has financial ties to other parties in the case — even indirectly — it must be disclosed and managed.
Use independent advice. Especially when settlements, funding agreements, or joint ventures are involved.
Because It’s Not Just About Justice
As this case shows, legal proceedings can be hijacked. Even in a court of law, dishonesty can thrive when no one is watching. The system depends on clients — like you — being alert, informed, and willing to ask the hard questions.
The Banksia case isn’t just a legal scandal. It’s a business lesson in governance, oversight, and accountability.
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.