Civil Justice Council opens three-month consultation on litigation funding

On 31st October, the Civil Justice Council’s review of third party litigation funding entered an important phase with the publication of a comprehensive analysis of the sector and by posing structured questions, the responses to which will inform its ultimate report to Ministers in the second half of 2025.

The new report, and a related publication by the European Law Institute (ELI) were noted in our August 2024 update on developments in litigation funding in England & Wales: Litigation Funding: legislation highly unlikely before the second half of 2025

Styled as an interim report, the CJC’s analysis is set out in seven parts and runs to more than 100 pages. The various parts address the development of the sector and of its self-regulatory model, different forms of regulation (both conceptually and as operated in other jurisdictions), other forms of funding claims and the relationship between litigation costs and funding.

There are thirty nine detailed questions for consultation which are structured around the CJC review’s terms of reference. The questions touch on issues such as access to justice, terms of agreements (notably caps, controls, and conflicts), options for future regulation, and the potential for changes to rules of procedure and/or costs.

The high level of detail sought across these topics and the clear statement in the accompanying press release states “that the Working Group is not making any recommendations at this stage” point to the review being a thorough and evidence-based examination of possible approaches to structural regulation of the sector, and of certain terms of litigation funding agreements, which is neither starting from any pre-conceived position nor proceeding towards any particular preferred outcome. This openness should be welcomed, as should the opportunity to engage with the review during its three-month consultation period, ending on 31st January 2025.

The CJC interim report does not have an executive summary and we do not propose to recreate one in this short article. However, each of its seven parts includes a section A setting out key points and these together serve as an excellent summary of the document overall. Approaching the report this way is likely to make it much more accessible.

A little under a month earlier, the European Law Institute published an equally comprehensive report under the title “Principles Governing the Third Party Funding of Litigation”. Unlike the CJC review, which will culminate in formal advice to the government (the Lord Chancellor), the ELI principles are much more of a guide for courts and  legislators and are presented as a “blueprint for guidance, decisions or light-touch regulation” of the sector.

The CJC and ELI reports are both impressive and important documents which should merit serious scrutiny by those operating in the third party funding (TPF) sector and by those facing claims supported by funding. The ELI report marks the ending of a project, whereas the CJC’s is very much the start of activity that will deliver advice to government in 2025 and, very possibly, policy responses from the government in 2026, which could include primary legislation in this area for the first time. As the report observes:

“The single legal jurisdiction of England and Wales is unique in its approach to the regulation of TPF. Other jurisdictions either have no regulatory regime or make it subject to formal, statutory regulation.”

Clyde & Co will be responding to the report and will be arranging briefings and further articles and insights during the consultation period. Please contact either of us, or your usual Clyde & Co contacts, if you would like any further information. The reports are available on the following links. 

Litigation Funding - Courts and Tribunals Judiciary

ELI Publishes Principles Governing the Third Party Funding of Litigation (TPFL)