Risky Business - Ep 6: Litigation Financing – risk and return

Associate Steven Bird and Partner Ian Hopkinson discuss litigation financing.

The litigation funding market in England is currently undergoing a period of significant transformation, driven by recent legal developments and ongoing reviews. The Supreme Court’s decision in Paccar introduced substantial uncertainty, as it ruled that litigation funding agreements (LFAs) entitling funders to a percentage of damages are Damages-Based Agreements (DBAs) and are consequently unenforceable unless they comply with specific regulatory requirements. This ruling particularly impacted collective proceedings before the Competition Appeal Tribunal, prompting funders to reassess their strategies and funding models. Concurrently, the Post Office scandal has highlighted the critical role of litigation funding in enabling access to justice. The successful claims by sub-postmasters, who were wrongfully convicted due to faulty IT systems, underscore the importance of third-party funding in supporting large-scale, complex litigation.

Amid these developments, the Civil Justice Council is conducting a comprehensive review of the litigation funding market to consider issues including whether third party funding provides effective access to justice and whether the sector should be regulated. It is clear that the landscape of litigation funding never stands still, and for more insights, Ian Hopkinson and Steven Bird, members of our global disputes team based in London briefly discuss another aspect of the market in this podcast.