The King’s Speech this July included an ambitious total of 40 bills – but there was no mention of the litigation funding bill that the last government introduced in March.
Now, the government has confirmed that it will not legislate to overturn the effects of the Supreme Court’s July 2023 PACCAR decision, which prohibited litigation funding agreements (LFAs) that allowed funders to recover a percentage of damages, until summer 2025 at the earliest.
Legal Business caught up with those who know the market to explore what this means for the sector.
For Pallas Partners managing partner and Legal 500 Hall of Famer Natasha Harrison, the new Labour Government’s decision not to include the litigation funding bill in its first King’s Speech was a ‘missed opportunity’.
Neil Purslow, co-founder of and UK chief investment officer at Therium and International Legal Finance Association executive committee chair, takes a similar view. ‘It’s disappointing the government hasn’t included a fix in the King’s Speech to safeguard access to justice for those who need it. We urge the Government to find a way of fixing this issue quickly to ensure individuals and businesses like the subpostmasters can continue to secure justice.’
Access to justice remains at the forefront of conversations around litigation funding. And Purslow’s reference to subpostmasters highlights the importance of funding to the ongoing Post Office Horizon scandal – a powerful recent example of the role that litigation funding can play in supporting claimants.
Hausfeld commercial disputes co-head Ned Beale argues that the system in the UK remains underdeveloped, and so ‘it should be a priority to develop it, to minimise satellite litigation and support claimants effectively,’ and Harrison supports the view that amended legislation ‘needs to be pursued.’
But Susan Dunn, founder of Harbour Litigation Funding and director of the Association of Litigation Funders of England and Wales, is more optimistic. ‘Just because it’s not in the King’s Speech doesn’t mean it’s not going to happen’, she says, underlining her belief that ‘there is total support for getting this done.’
Dunn acknowledges the disappointment in the sector, and puts the absence of the litigation funding bill down to timing: ‘Everybody is frustrated that the election is the only thing that’s stopped the bill getting through.’
For some, timing issues could explain the bill’s absence in other ways. Penny Madden KC, co-chair of the international arbitration practice group at Gibson Dunn and a Legal 500 international arbitration leading partner, argues that ‘there is not yet enough understanding of how the rules should best work’, and that ‘one doesn’t want to go in prematurely.’
Sophie Lamb KC, global international arbitration group co-chair at Latham & Watkins and Legal 500 international arbitration Hall of Famer, takes a similar view of the complexity of the situation: ‘There are nonetheless some policy decisions to be made with regards to what litigation funding looks like in this country.’
Questions remain over how to regulate the sector, whether further legislation is needed, and what those policies would look like.
And the government is set to wait for answers to these questions before moving ahead with any legislation to address litigation funding. The Civil Justice Council is conducting a review of litigation funding, with an interim report due this year and the full report due in 2025. It is expected that the report will address many of the questions that remain around the regulation of the industry and clarify what decisions will be made.
In a written response to a question in parliament this month, justice minister Lord Ponsonby said: ‘The government recognises the critical role third-party litigation funding plays in ensuring access to justice. Following the PACCAR judgment, concerns have been raised about the need for greater regulation of Litigation Funding Agreements, or greater safeguards for claimants. The government is keen to ensure access to justice in large-scale and expensive cases, whilst also setting up adequate safeguards to protect claimants from unfair terms.
‘The Civil Justice Council is considering these questions and others in its review of third-party litigation funding, and hopes to report in summer 2025. The government will take a more comprehensive view of any legislation to address issues in the round once that review is concluded.’
Beale emphasises the importance of the report, and remains ‘hopeful that the government picks it up quickly to put in place new legislation.’
