The Civil Justice Council (CJC) has released its interim report on litigation funding.
- The report highlights concerns about the effectiveness of current funding regulations.
- It raises questions about the role of before-the-event (BTE) insurance in legal funding.
- Stakeholders are invited to provide evidence before the final report is released.
- The publication anticipates further government action following the report’s findings.
The Civil Justice Council has recently circulated an interim report examining the landscape of litigation funding. The report emerges in the wake of regulatory challenges, particularly spotlighting the current mechanisms governing third-party funders and the unexpected downfall of SSB Law. This preliminary document posits significant doubts about the adequacy of existing regulatory frameworks, especially critiquing the Association of Litigation Funders’ code of conduct for its perceived insufficiencies.
Despite the comprehensiveness of the report, it refrains from reaching any definitive conclusions. Instead, it serves as a platform for dialogue, underlining issues such as the control funders exert over damages and the potential for BTE legal expenses insurance to assume a larger role in litigation funding. Discussions led by co-chairs Dr John Sorabji and Mr Justice Simon Picken have set the stage for legislative reconsiderations pending further evidence and consultation, which closes on January 31st.
An estimated 44 funders are operating in England and Wales, with ALF voluntarily regulating 16 of these. The interim report questions whether a £500 misconduct fine offers enough deterrence and suggests reviewing compensatory provisions to prevent additional legal disputes. While some international associations impose rigorous standards, the report suggests the necessity of enhanced professional advisements for those entering funding agreements.
Furthermore, the report notes an evident government tendency to minimize formal regulation where alternative solutions might suffice. It debates the fairness of imposing cost regulations on financial claim mechanisms paralleling those on legal expenses, especially when the costs of funding significantly outstrip litigation costs. The ongoing discussions extend to conditional fees, damages-based agreements, and new propositions for a unified regulatory scheme encompassing all contingent funding agreements.
The analysis also reflects on SSB Law’s collapse, raising pertinent questions about the adherence of legal advisors to their professional responsibilities. The CJC emphasizes that while such cases could be anomalies, they might also signal broader systemic problems requiring address through strengthened legal service regulations. As evidence gathering continues, stakeholders are encouraged to contribute insights on the functioning of the BTE market and the viability of introducing publicly managed legal expense insurance schemes.
Sir Geoffrey Vos, chair of the CJC, underscores the importance of this report in conjunction with a separate review of the Solicitors Act 1974. The intersection of insights from these reports is anticipated to offer a holistic understanding necessary for coherent legal reforms. Vos assures that the shared findings will inform future legislative processes, aiming for consistency and improved regulatory oversight.
As the CJC awaits further evidence and responses, the interim report sets a critical foundation for potential reforms in litigation funding.
