Class action lawyers have hailed Victoria's move to establish contingency fees as "a game changer" that could force other jurisdictions to follow suit and encourage more claims.

The Labor state government on Wednesday introduced legislation that will allow plaintiff lawyers to claim a percentage of the amount recovered for the costs of a group claim.

The Justice Legislation Miscellaneous Amendments Bill adopts a recommendation by the Victorian Law Reform Commission in 2018. A similar proposal was made by the Australian Law Reform Commission in its report to the federal government earlier this year.

Under the current system, which operates in both federal and state courts, class actions can only proceed if a law firm agrees to act on a no-win, no-fee basis or if another party – usually a litigation funder – agrees to cover the costs in return for a percentage of the settlement.

Decision to make

Herbert Smith Freehills partner Ruth Overington said if the bill were enacted it would move class action work away from other forums, such as the Federal Court and NSW Supreme Court.