Next government must 'recognise the urgency' of PACCAR legislation, funders warn

The next government must ‘recognise the urgency’ of legislating to address the damaging effects of the Supreme Court’s PACCAR ruling, litigation funders have told the Gazette.

In a significant blow to the funding industry, the bespoke Litigation Funding Agreements (Enforceability) Bill brought forward to deal with PACCAR fell victim to the general election timetable.

Neil Purslow, chair of the International Legal Finance Association, told the Gazette: ‘The fall of the Bill is disappointing for us, but more importantly for SMEs and individuals, like the subpostmasters, who rely on litigation funding to hold corporate wrongdoers to account and secure justice.

‘It will also perpetuate the uncertainty that has been created by the Supreme Court’s PACCAR judgment, fuel the growth in satellite litigation that we are already seeing as interested parties seek to re-litigate previously settled cases, and undermine the sector’s ability to support meritorious cases in the future.’

Purslow noted that there had been ‘wide-ranging and cross-party support for legislation to rectify this issue to date, including from many of the UK’s leading legal experts and senior legal figures in the House of Lords’. He added: ‘It is critical that the next government picks up where the previous one left off - by recognising the urgency of this issue and prioritising a legislative solution.’

Susan Dunn, chair of the Association of Litigation Funders, said funders had been careful to secure cross-party support for the LFA Bill, while high-profile interventions from former subpostmaster Alan Bates in support of litigation funding had also been helpful. ‘So it isn’t as if we were simply saying, this is a Conservative policy, and therefore it risks not being able to go forward. It was very much [a case of having] Labour, Lib Dem support, and so we will take it up with whoever the new government is, about getting it through,’ she said.

Dunn said the ‘unknown’ question was whether there would be another bespoke bill, or whether the necessary provisions would form part of another piece of legislation. ‘We are confident that we have a path to getting this done… [but] there will now be a delay because… at the very least, we’ll be looking at the new term in September / October. And there will no doubt be lots of things that a new government has in mind to get done; so it will be a question of where it fits in that legislative timetable,’ she said.

Dunn added: ‘If it is to be a Labour government, we know they are very keen on access to justice and victims’ rights. [Labour leader] Keir Starmer has sought previously to introduce a victims’ rights bill. So it’s all right in that ball park, and therefore fits quite neatly, into an agenda that they are likely to have.’

Steven Friel, chief executive of funder Woodsford, added: ‘Given that there is a broad consensus among the judiciary and policymakers, not to mention the cross-party political support, in favour of a legislative solution to PACCAR, I am hopeful that the new government will pick back up the reins fairly soon after the election. Let’s hope that the courts don’t allow big corporate defendants and their armies of expensive lawyers to waste too much time and money pending that solution.’

Julian Chamberlayne, risk and funding partner at law firm Stewarts, added that passing a refined version of the LFA bill would be a ‘quick win for any new government’ to ‘promote access to justice’.

Last July the Supreme Court ruled in PACCAR Inc & Ors v Competition Appeal Tribunal & Ors that a litigation funding agreement amounted to a damages-based agreement, contrary to what had been widely understood to be the position. This called into question the enforceability of many litigation funding agreements.

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