Some of you may recall that the Civil Justice Council (CJC) extended the deadline for submissions to its high-profile review of the litigation funding sector, to 3 March 2024. Despite the extension, the advisory body confirmed that the final report will still be published this summer, as originally planned. The extension was intended to allow for greater engagement with stakeholders, rather than being prompted by any significant developments affecting the review or the litigation funding market.

The review, (itself launched in response to growing concerns about the regulation and practices of the litigation funding sector) is being closely monitored by funders, legal professionals, and policymakers. This is particularly significant given the government’s stance that it will await the CJC’s final report before addressing the challenges posed by the PACCAR ruling and implementing broader reforms in the sector.

Re-cap - Scope of the Review

The CJC’s review is examining a wide range of issues, including:

  • The need for formal regulation of litigation funding;
  • Whether funders’ returns should be capped;
  • The role of courts in overseeing funded litigation; and
  • The extent to which the presence of litigation funding should be disclosed to opposing parties.

An interim report published in October 2023 outlined the key questions for consultation, setting the stage for stakeholder input.

Stakeholder Submissions: A Push for Regulation

Now, it has been revealed that initial submissions to the review have strongly advocated for formal regulation of the litigation funding sector, which has experienced dramatic growth over the past decade. The Legal Services Board (LSB), the oversight regulator for legal services in England and Wales, has emphasised that regulation is “necessary to protect consumers from harm and to further the public interest.”

The LSB’s response highlights the need for both financial and legal services regulators to address the risks posed by third-party litigation funding. It argues that financial services regulation should replace the current self-regulation model, while legal services regulators should use their existing powers to ensure that law firms and legal professionals engaging with funders comply with their obligations.

The LSB also raised concerns about the imbalance in the relationship between funders and claimants, noting that funders may exert undue influence over litigation to serve their own financial interests, which may not align with the broader goal of advancing access to justice.

Looking Ahead

The CJC’s review is expected to provide much-needed clarity on the future of litigation funding in England and Wales. With the preponderant message from stakeholders supportive of some form of regulation, the final report will likely address key questions such as the appropriate level of oversight, the role of courts, and the balance between protecting claimants and ensuring fair returns for funders.

As the summer publication date approaches, the legal and funding communities will be watching closely to see how the CJC’s recommendations shape the future of this rapidly evolving sector. The government’s response to the report, particularly in relation to the PACCAR ruling, will also be a critical factor in determining the trajectory of litigation funding reforms.

Some of you may recall that the Civil Justice Council (CJC) extended the deadline for submissions to its high-profile review of the litigation funding sector, to 3 March 2024. Despite the extension, the advisory body confirmed that the final report will still be published this summer, as originally planned. The extension was intended to allow for greater engagement with stakeholders, rather than being prompted by any significant developments affecting the review or the litigation funding market.

The review, (itself launched in response to growing concerns about the regulation and practices of the litigation funding sector) is being closely monitored by funders, legal professionals, and policymakers. This is particularly significant given the government’s stance that it will await the CJC’s final report before addressing the challenges posed by the PACCAR ruling and implementing broader reforms in the sector.

Re-cap - Scope of the Review

The CJC’s review is examining a wide range of issues, including:

  • The need for formal regulation of litigation funding;
  • Whether funders’ returns should be capped;
  • The role of courts in overseeing funded litigation; and
  • The extent to which the presence of litigation funding should be disclosed to opposing parties.

An interim report published in October 2023 outlined the key questions for consultation, setting the stage for stakeholder input.

Stakeholder Submissions: A Push for Regulation

Now, it has been revealed that initial submissions to the review have strongly advocated for formal regulation of the litigation funding sector, which has experienced dramatic growth over the past decade. The Legal Services Board (LSB), the oversight regulator for legal services in England and Wales, has emphasised that regulation is “necessary to protect consumers from harm and to further the public interest.”

The LSB’s response highlights the need for both financial and legal services regulators to address the risks posed by third-party litigation funding. It argues that financial services regulation should replace the current self-regulation model, while legal services regulators should use their existing powers to ensure that law firms and legal professionals engaging with funders comply with their obligations.

The LSB also raised concerns about the imbalance in the relationship between funders and claimants, noting that funders may exert undue influence over litigation to serve their own financial interests, which may not align with the broader goal of advancing access to justice.

Looking Ahead

The CJC’s review is expected to provide much-needed clarity on the future of litigation funding in England and Wales. With the preponderant message from stakeholders supportive of some form of regulation, the final report will likely address key questions such as the appropriate level of oversight, the role of courts, and the balance between protecting claimants and ensuring fair returns for funders.

As the summer publication date approaches, the legal and funding communities will be watching closely to see how the CJC’s recommendations shape the future of this rapidly evolving sector. The government’s response to the report, particularly in relation to the PACCAR ruling, will also be a critical factor in determining the trajectory of litigation funding reforms.