By Tom Callaghan, Director of Partnerships at Legal Futures Associate Sentry Funding
The uncertainty created by the Supreme Court’s ruling in PACCAR looks set to continue for the time being.
Earlier this month the new government confirmed it will not be legislating on the enforceability of litigation funding agreements until after the Civil Justice Council has completed its review of the sector – and a final CJC report is not expected until summer 2025.
Answering a parliamentary written question this month, justice minister Lord Ponsonby noted that ‘The government recognises the critical role third-party litigation funding plays in ensuring access to justice.’
He added: ‘Following the PACCAR judgment, concerns have been raised about the need for greater regulation of Litigation Funding Agreements, or greater safeguards for claimants.
‘The government is keen to ensure access to justice in large-scale and expensive cases, whilst also setting up adequate safeguards to protect claimants from unfair terms.
‘The Civil Justice Council is considering these questions and others in its review of third-party litigation funding, and hopes to report in summer 2025. The government will take a more comprehensive view of any legislation to address issues in the round once that review is concluded.’
Clearly this delay is disappointing for the litigation funding industry, which had come very close to a swift solution through the previous government’s bespoke Litigation Funding Agreements (Enforceability) Bill; which had been enjoying a smooth passage through Parliament before it fell victim to the timing of the general election.
Responding to the news, the International Legal Finance Association’s chair Neil Purslow said: ‘It’s deeply disappointing the government has taken the decision to seemingly deprioritise access to justice for people like the sub-postmasters by kicking the can down the road. As the Justice Secretary [Shabana Mahmood] herself has said, “justice delayed is justice denied”.
‘When people like Alan Bates, a former lord chief justice, and politicians from across the political divide are all united in backing a fix, it’s difficult to understand why the government won’t bring forward a simple and speedy solution for the benefit of claimants and the wider legal sector.
‘The issues are clear, the solutions are known, and the need is urgent. The government needs to take action now to restore the UK’s position as a global leader in legal services and access to justice.’
At a major litigation funding conference hosted by law firm Brown Rudnick in March, before the LFA Bill was published, industry experts expressed nervousness that the PACCAR problem might become tied up with broader, yet unrelated, questions about regulation of the funding sector – and that this might prevent a quick solution being reached. It seems this is now precisely what has happened.
Much will now hang on the outcome of the CJC review; and crucially, the speed with which it can reach its conclusions.
- Sentry’s Rapid Raise funding is calculated by an additional sum, based on the length of time that capital is deployed. Rapid Raise panel funders are therefore unaffected by the Supreme Court’s ruling in PACCAR
