In an article first written for The Yorkshire Post, partner Stuart Carson stressed the importance of litigation funding in ensuring access to justice, and why a Bill to address PACCAR should be a priority for the next government.
Following the Post Office scandal, access to justice became one of the most talked-about issues in our country. While the snap general election has quickly moved the conversation on to other concerns, there are still issues to resolve in the wake of the sub-postmasters’ battle for compensation and to clear their names.
In July 2023, the Supreme Court of England and Wales ruled in a competition law case involving truck manufacturer PACCAR that a litigation funding agreement (like the one that funded and made the sub-postmasters group action possible) amounted to a damages-based agreement and was unenforceable by law. The significance of that decision went far beyond this one case – the regulations governing damages-based agreements are prescriptive and will render many litigation funding agreements across the country unlawful, potentially denying claimants access to justice.
Litigation funding by third parties has a long tradition and has been broadly accepted in our justice system for decades, offering access to justice to parties that would otherwise be unable to afford legal expenses. The funder provides the money up front to bring the claim, paying legal fees and other expenses, and in turn hopes to make a profit on its investment either by taking a cut from a settlement with the defendant pre-trial or from the damages awarded at court if the claim is successful.
Funding agreements have become commonplace. The Supreme Court’s decision in the PACCAR case came as a surprise to many and has thrown a spotlight onto how precarious the status of third-party funding is in this country, by coincidence just as the Post Office litigation has dominated headlines.
It is testament to how important this subject is that the Government quickly introduced the Litigation Funding Agreements (Enforceability) Bill in March 2024 specifically to address the mischief cased by the PACCAR judgment. According to the cover note, the Bill intends to “allow the government to deliver a return to a litigation funding regime which promotes access to justice, as well as enhancing the competitiveness of the jurisdiction.”
Access to justice aside, this latter point is a key one – legal services are a multi-billion pound segment of the UK economy and have remained competitive on an international scale even post-Brexit, thanks in part to the broad acceptance of third-party funding. If the courts of England and Wales are to remain attractive to overseas parties, a return to the previous status quo or a comparative regime is essential.
The Litigation Funding Bill was due to pass into law this summer, but has now been shelved after Parliament was dissolved for the election and was not selected for the ‘wash up’ of last-minute legislation. Questions now remain over whether it will return to Parliament in the same form post-election, though the wording of the Bill did appear to have cross-party support and action to address litigation funding is broadly popular.
While there are still specifics to be hashed out (including whether or not to introduce more explicit regulation of funders and funding agreements, for example), clarifying the state of play for litigation funding would be a quick win for whichever party forms the next government. Demonstrating commitment to access to justice can be done in tandem with safeguarding the attractiveness of England and Wales as a place to do legal business.
You can find further information regarding our expertise, experience and team on our Litigation Costs and Funding and Competition Litigation pages.
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