The case most talked about in funding circles last year was PACCAR, and perhaps the term most closely linked with it was “shockwaves”. The tremors seem to have passed though, and 2024 may see some repairs made to those shaken foundations:
- In the Competition Appeals Tribunal (Neill v Sony) the tribunal has held enforceable an LFA revised post-PACCAR to provide an enhanced multiple return or a percentage of proceeds should a future change to the law permit it, although that decision is to be the subject of an appeal.
- The UK government has proposed amendments to the Digital Markets, Competition and Consumers Bill which address the enforceability of percentage based LFAs for opt-out claims in the CAT.
- There is increased recognition in government that a wider legislative solution needs to be found for bilateral litigation too, although that may not come within the Bill above.
In the long-term, funders may find themselves again able to offer funding terms for English cases on % basis as well as multiples. But that is not about the ability of funders to profit more from claims; we have written before about the benefits to claimant parties of %- based funder’s returns which are inherently proportionate to the quantum achieved. Without the ability to structure litigation funding to include % -based returns certain classes of claimants – often those who most need funding for access to justice – are likely to miss out.
But does the PACCAR decision, the mess of regulation and legislation which got us there, and indeed some of the schadenfreude which the decision attracted at the time, point to a wider issue, namely that the wider disputes community thinks it is time UK funders were more closely regulated? The Law Society Gazette reported at the end of 2023 that a “staggering” 90% of litigators surveyed by the LSLA thought it was.
Erso is proud to be a funder member of the Association of Litigation Funders, and takes seriously its requirements, including its self-regulating code of conduct. Funded parties and their lawyers can and should take comfort from that. But we agree that funders should offer more than just compliance with ALF. Claimants and their lawyers should have confidence in their funder and be able to build a strong working relationship which is likely to endure the inevitable ups and downs of litigation. However, regulation can’t provide that. In our view, it is those who’ve had their fingers burnt by one particular funding experience who call for regulation, when realistically the solution is more open and frank discussions between claimants and funders from the outset of a relationship. That leads to a smoother funding process: in negotiating funding terms, navigating changes, and dealing with the case’s outcome.
Like it or not, funding has a necessary and important role for justice, especially in costs-shifting jurisdictions. The answer cannot be to hinder funders’ ability to strike commercial deals which litigants are willing to accept and which ultimately facilitate access to justice.