Third-party litigation funders are to form an industry association to oversee a new voluntary code of conduct, the Gazette can reveal.

The moves – which have been under discussion for two years – were given impetus by the Jackson report’s recommendation that all funders sign up to a voluntary code that includes provisions on capital adequacy and restrictions on when funders can withdraw their support.

In return, they would be protected from claims of maintenance and champerty.

A Civil Justice Council (CJC) forum last week backed the creation of a trade association, which would be responsible for a short code of conduct supported by guidelines. Some participants voiced concern about the need for any formal provision on capital adequacy, but the majority said the draft’s proposal to require funders to have enough in the bank to cover liabilities for three months was insufficient.

The draft code and association is being worked on by a group whose members are Susan Dunn of Harbour Litigation Funding, Christian Stuerwald of Calunius Capital, Wayne Attrill of Australian funder IMF and Timothy Mayer of Allianz Litigation Funding.

Robert Musgrove (pictured), CJC chief executive, welcomed the association’s formation and said he expected a draft code to be ready in publishable form by early summer.