Risk and Funding Partner Julian Chamberlayne spoke to The Times following the justice secretary’s initial announcement. He noted that “the devil will be in the detail”, and that funders and other interested parties will hope said detail follows quickly.

In the aftermath of the Supreme Court’s decision in PACCAR the Government announced a very targeted change which will reverse the effects of the decision on Competition opt-out claims only.  While this was a welcome development, it was conspicuous in what it did not address – namely every funding agreement outside the Competition opt-out regime.

On 4 March the Government announced the introduction of new legislation which appears to be aimed at addressing the broader effects of PACCAR, beyond the Competition opt-out sector. At the moment, we only have the wording of the announcement itself to guide us, which stated: “Today’s news will restore the position that existed before the Supreme Court’s ruling last year, which made many litigation funding agreements unenforceable. As a result, cases can continue being funded.” That suggests that this new announcement will be wide reaching.

However, the devil will be in the detail – those with an interest in litigation funding are now awaiting with bated breath the draft legislation so we can see exactly what is covered, and crucially, what might be left still subject to the PACCAR ruling. Will these new changes be focussed only on “David vs Goliath” disputes against “big, powerful companies” where access to justice is most in need or will the changes actually “restore the position that existed before” PACCAR?

The announcement included a reference to a wider review of the litigation funding sector which “could consider whether there is a need for increased regulation or safeguards”. Just over ten years ago, the Jackson reforms looked at possible regulation of the sector, but ultimately recommended against it. The timeframe and scope for this new review is wide open, and the industry will be keeping a close eye on this. It is to be hoped that the timeframe is kept short to remove the uncertainty created by PACCAR.

Given the spike in debate on litigation funding arising from the Horizon/Post Office scandal, perhaps the focus of that review will be on consumer protection. That would need to be counterbalanced against the risk of turning existing and would-be funders away from the UK market, if increased regulatory burdens made the risk/reward ratio insignificantly attractive.

Again, we will need to wait for the detail, but it seems more interesting times ahead for the growing litigation funding sector.



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