Jennifer Morrissey looks at the Civil Justice Council’s review of litigation funding
On the last day of October 2024, the Civil Justice Council (CJC) published its interim report on litigation funding. The interim report was published, along with a number of wide ranging consultation questions and inviting responses to those questions by 3 March 2025.
The working party leading the CJC Review of Litigation Funding (the CJC Review) is chaired by Dr John Sorabji and Mr Justice Simon Picken. The working party is supported by a wider consultation group, which includes members of the legal profession and industry bodies, such as the Association of Litigation Funders and the Law Society.
A review of third-party litigation funding has not been conducted since it was considered by Lord Justice Jackson in his review of Civil Litigation Costs, published in 2009. The CJC Review therefore presents the first real opportunity in over 15 years to review the funding industry and the way in which it operates within the justice system. Within that 15-year period the funding industry has grown exponentially, to an estimated £2.2billion pound industry.
Notwithstanding the passage of time since the last consideration of the role of funding in facilitating access to justice, one of the primary drivers for the CJC Review was also the industry fallout from the Supreme Court’s ruling in the PACCAR case in July 2023. That judgment held that litigation funding agreements that provided for funders to receive a percentage of damages were in fact damaged based agreements and unless they had been drafted in accordance with the Damages Based Agreements Regulations 2013 they were unenforceable. This caused considerable uncertainty within the industry and concern for both funders and claimants alike who had entered into such funding arrangements. Much satellite litigation has followed (see for example Therium Litigation Funding A IC v Bugsby Property LLC [2023] EWHC 2627 (Comm)).
Given the industry response to the PACCAR judgment, along with support from champions of litigation funding such as Sir Alan Bates who lead the group of sub-postmasters to victory against the Post Office and had been supported by litigation to do so, it had been expected that legislation addressing the negative consequences of PACAAR would be passed in short order. Indeed, the previous Conservative Government very quickly drafted, and put to the House of Lords in March 2024, the Litigation Funding Agreements (Enforceability) Bill. Unfortunately that legislation did not make it through the wash-up once the general election had been called in May 2022. Had it been passed it would have provided immediate certainty to the litigation funding industry. As matters stand the PACCAR judgment stands and only new legislation can bring about changes to address its perceived shortcomings.
The CJC Review consultation questions cover a number of important issues including:
- a review of the ways litigation is currently used and deployed across the justice system
- whether or not the industry should be regulated and if so by whom and
- whether there should be a cap on a funder’s return. Respondents to the consultation are expected to include claimant and defendant law firms, institutional investors and commercial enterprises who have been subject to claims funded by litigation funding, and representative bodies such as the Association of Litigation Funders, the Law Society, CORLA and Fair Civil Justice.
Those interested in responding to the consultation must submit their answers by 11:59pm on 3 March 2025. The full list of consultation questions can be found here (but please note you do not have to complete all the questions if they are not relevant to your area of practice).
It is anticipated that a response to the consultation will be published along with detailed recommendations in late summer 2025.
