Article | Crowdfunding: A balance of accessibility and risk
This article is written by TLF Victoria Program Director Cristabel Gekas and TLF Victoria member Andrix Lim.
Crowdfunding campaigns have been used in legal, social and political matters with varying levels of success. While these tech platforms have the potential advantages of reach and usability, these must be balanced with the inherent risks and legal grey areas of practitioners’ duties. A considered approach is needed when using crowdfunding with appropriate considerations of the surrounding issues to ensure the best outcome for clients, users and donors alike.
The rise of crowd funding
There has been a notable rise in the use of crowdfunding within the legal sphere. For example, environmental groups have used this to fund public interest environmental litigation, such as the 2014 Great Barrier Reef dumping case. The Sisters Inside FreeHer campaign, raising money for single Aboriginal mothers who are unable to pay fines and therefore face imprisonment in WA, not only paid the fines in full but also heralded law reform in the state. More controversially, Israel Folau’s campaign against his contract termination by Rugby Australia also raised debates around theological perspectives, employment law, and charitable institutions.
Services such as GoFundMe or Kickstarter provide a platform for people or organisations to raise money for particular people and causes, or to bring certain projects to life. While the use of these online platforms are becoming more popular and allows greater reach, crowdfunding within the legal sphere may give rise to a whole host of legal, ethical and practical issues for organisations and lawyers alike.
The advantages of crowd funded campaigns
Tech makes things easy and convenient
Using crowdfunding platforms to raise money has several advantages. The first, of course, is the convenient method of receiving and tallying donations. Rather than having to create one’s own infrastructure, it is increasingly easier to use pre-existing platforms with their in-built security, payment system and even mechanisms to create campaigns from nothing. It allows greater exposure and a reliable service.
However, this does mean that there is some element of the process that is outside the creator’s control. Some campaigns have been de-listed and blocked from platforms which they believe may harm their public reputation, taking an ideological stance but also acting as gatekeepers rather than opening access to all. Users should be aware that using these platforms means they are at the mercy of said platforms’ decision on whether to host these campaigns in a way that private or third-party funding isn’t.
A more effective form of advocacy
The second advantage is that crowdfunding can be used not only to raise money but to draw attention to a particular legal, social or political problem in a different way than the traditional methods of advocacy. It not only provides a platform to promote issues, but also allows an easy way for supporters and the general public to be involved by donating, and in doing so allows them to visibly express their opinion on the matter at large. In that sense, it is a new form of internet petition, allowing donors to demonstrate how much they care by the amount of money they give.
While there have been success stories with crowdfunding and successful advocacy, the difficulty in its popularity is for new causes and campaigns to ‘stand out’ among other local, national and international campaigns. ANU Honorary Lecturer Matthew Wade has described this as ‘competing for attention in markets of sympathy’, where most fundraising campaigns are used to correct suffering caused by private interests or failures of the state. It becomes more difficult to garner interest in one’s advocacy topic when there are thousands like it, or where an emergency situation such as raising money for bush-fires takes up public focus.
The Sisters Inside FreeHer campaign has been effective in raising funds for single Aboriginal mothers imprisoned for being unable to pay their fines, and to advocate for law reform in WA. Image taken from the FreeHer fundraising webpage on GoFundMe.
Using crowd funded campaigns in the legal sphere
As noted, crowdfunding can be used as advocacy for a particular social or legal topic. But as it is more commonly used in raising money for legal costs, crowdfunding may have a useful role in the legal sphere. As with third-party litigation, this allows funding arrangements that offer access to justice and important matters litigated whereby a lack of funds or legal aid would prohibit otherwise. Unlike commercial funding, the focus here is on the public interest (or more specifically, what the public is interested in) and not on the likelihood of success or monetary returns.
In addition, there may be issues for practitioners arising from using crowdfunding in legal proceedings. The Law Council of Australia released a Crowdfunding Guidance Note in December 2019 warning legal practitioners to be aware of:
The use of confidential information as part of the advocacy campaign, where clients may disclose too much information, or legal advice, in efforts to solicit funds and leading to a waiver of privilege;
The risk of money laundering and other criminal activities around funding, as online crowdfunding platforms may be used to conceal the origins and purposes of financial transactions;
Misrepresentation and fraud around the information disclosed and promises made as part of the campaign – for example, what the funds are intended to be used for, and what happens with a surplus of funds should legal costs be met.
Using crowdfunding platforms may also give rise to matters impacting on the case and the consequential tactical considerations, such as deciding what model or platform of crowdfunding to use, how the funds are solicited and what information to provide, the availability of the funds, the advice given to the client, and even the terms of the retainer and costs agreement.
At the time of writing, there is no specific legislation or regulation on crowdfunding, and no direct authority on this matter, although the guidance notes suggests that civil remedies are an available (although imperfect) recourse for donors. The Law Council has noted that they may in the future consider recommendations for specific regulatory measures or ethical rules. Nevertheless, lawyers should be aware of the legal and ethical risks that may arise should they or their clients use crowdfunding.
The verdict?
Overall, crowdfunding platforms are a useful tool in this modern age of legal disputes, allowing people to provide access to the courts and legal redress and directly engage the public on important social and legal matters. However, as it stands, there needs to be appropriate and measured consideration of the legal, ethical, practical and social issues by practitioners, advocates and donors alike. Having the right approach now in handling this technological shift will do much to facilitate access to justice for today and the future.
References
Law Council of Australia, Crowdfunding: Guidance for Australian legal practitioners (Guidance Note, 18 December 2019).
Matthew Wade, ‘Crowdfunding: when the government fails to act, the public wearily steps up’, The Conversation, (Web Page, 20 April 2020) <https://theconversation.com/crowdfunding-when-the-government-fails-to-act-the-public-wearily-steps-up-128924>.