The Civil Justice Council has today published its hotly awaited interim report setting out a series of questions to which it is seeking responses as part of its comprehensive review of the litigation funding sector.

Questions in the wide-ranging consultation include whether and how litigation funding should be regulated; if funders’ returns should be capped; and what role the courts should play in controlling funded litigation.

Further questions include whether the existence of funding arrangements should be disclosed to opponents, and the extent to which funders should be able to control litigation. The consultation also seeks views on questions relating to client protection, as well as the interplay between litigation finance and other sources of funding such as legal expenses insurance and crowd funding.

The deadline for responses is 31 January next year, with the CJC expecting to publish its final report and deliver it to the lord chancellor by the summer. This means that the timetable for the review is still on track despite a delay to the publication of today’s interim report, which the CJC had originally planned to publish during the summer.

The CJC’s review of litigation funding was commissioned by then lord chancellor Alex Chalk last spring. The smooth running of the review timetable will be important for the funding sector, as the government has said it plans to wait until it has considered the broad findings in the CJC’s final report before legislating to address problems with the enforceability of litigation funding agreements sparked by the Supreme Court’s ruling in PACCAR.

Meanwhile earlier this month the European Law Institute (ELI), which has also been conducting research into litigation funding, published 12 principles intended as ‘a blueprint for guidance, decisions or light-touch regulation of the burgeoning third party litigation funding market.’ The principles focus on the need to address any lack of transparency and knowledge imbalance between funders and funded parties, rather than endorsing an ‘overly prescriptive’ approach to regulation. The ELI research project was jointly led by High Court judge Sara Cockerill who also sits on the CJC litigation funding review working party.

Neil Purslow, chair of the International Legal Finance Association, welcomed the CJC’s interim report and said ILFA would ‘continue to work constructively with the CJC to help build a stronger sector that works effectively for both claimants and funders.’

He added: ‘However, while this review process continues, uncertainty from the PACCAR ruling persists. This continues to impact claimants, funders, and the UK’s position as a global legal powerhouse.

‘Solving the PACCAR problem falls outside the scope of the CJC review, and has cross-party support and backing from claimants like Sir Alan Bates. There is no reason for the government to delay bringing forward a simple and swift solution.’

 

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