The Civil Justice Council’s litigation funding working group will address the UK government in the summer of 2025, presenting the findings of its report on third-party litigation funding with the aim of forcing legislation that will regulate how third-party litigation funders operate, who they can help, and how much they can be paid.
Why is regulation necessary?
Litigation funding specialists such as Novo Modo currently operate under a voluntary code of conduct set by the Association of Litigation Funders of England & Wales. Critics suggest this code of conduct is limited in its scope, does not adequately protect confidentiality, inadequately specifies a lawyer’s professional duties, and does not sufficiently detail how settlements are achieved and the funding agreements are terminated.
At present, not all funders abide by this voluntary code of conduct; therefore, it is suggested that the government should regulate third-party funding and only make it available where it will deliver fair and equal treatment or facilitate an individual or corporation’s access to justice.
Areas under investigation.
In drafting its report, the Civil Justice Council’s litigation funding working group aims to establish the regulatory approach the government should take, whether the financial returns for lenders should be capped, and whether the plaintiff’s funding arrangements should be disclosed.
The working group will explore different regulatory approaches, considering in depth the advantages and disadvantages of each approach and debating whether a one-size-fits-all solution can exist.
When will the report be complete?
Consultation is currently underway, with the Civil Justice Council’s litigation funding working group keen to speak to businesses in England and Wales that have experience of third-party litigation funding.
The consultation period will end on Friday 31 January 2025, with the data gathered being used to inform the final report. This report will be presented to the government with a recommendation in the summer of 2025. Depending upon the outcome of this report, the government may introduce legislation to regulate and control the way in which third-party litigation funders can operate in the UK in the future.