The Civil Justice Council is expected to agree a new code of conduct for third-party funders of litigation by the end of the year, to be combined with the launch of a new association of litigation funders.

Compliance with the new voluntary code will be monitored through membership of the new association, which will be open to litigation funders and brokers.

The voluntary code will set out rules on the amount of capital funders must have available in order to take on cases. It is also expected to set out a mechanism for dealing with disputes between funders and litigants over whether a case should be settled. The code is likely to provide that such disputes must be settled by a QC.

A CJC working party chaired by former Law Society president Michael Napier has been working on a revised version of the draft code.

A spokesman for the Judicial Communications Office said the working group had already held several meetings on the revised code, and was expected to agree a draft by the end of October.

Barrister Bill Evans, co-founder of funder Vannin Capital, which entered the litigation funding market earlier this year, said the new code was expected to be completed by the end of the year.

He said the code was needed to ensure that organisations involved in litigation funding would have to be clearer about whether or not they had direct access to funds.

Evans added that while the new association of litigation funders would initially be set up to ensure compliance with the code by those parties that had signed up to it, he believed it should also have a wider role in educating parties about the role of litigation funding.