The Civil Justice Council has published its final report in its review of litigation funding, making a raft of recommendations to introduce ‘light touch regulation’ in order to “promote effective access to justice, the fair and proportionate regulation of third party litigation funding, and improvements to the provision and accessibility of other forms of litigation funding”.

The review (which we previously commented upon here) was prompted by the Supreme Court judgment in R (PACCAR) v Competition Appeal Tribunal [2023] UKSC 28 (PACCAR) which held that certain types of third party funding agreements were unenforceable damages-based agreements, casting into doubt the validity of many third-party funding agreements and, in turn, the future of the litigation funding industry.

Since PACCAR, there have been numerous calls for it to be reversed, prompting the drafting of legislation to that effect which ultimately failed to become law before last year’s general election. The current Government decided not to reintroduce the proposed legislation immediately, but instead to wait for the conclusions of the Civil Justice Council as it considered a wide range of matters relating to litigation funding.

The report is extensive, making some 58 recommendations, including the following:

• Introducing legislation with prospective and retrospective effect to reverse the consequences of PACCAR;
• Considering the introduction of alternative means to secure access to justice for low value or small claims (particularly low value or small mass or collective claims);
• Introducing a “formal, comprehensive regulatory scheme” which replaces the current self-regulatory approach;
• Imposing capital adequacy and money laundering requirements on litigation funders;
• Introducing additional requirements where the funded party is a party to collective proceedings, a representative action or group action, or is a consumer (including the requirement that independent legal advice be provided by a KC prior to the funded party entering into a funding agreement);
• Enabling civil courts and the Competition Appeal Tribunal (CAT) to manage the pre-action phase of funded litigation and considering the development of a pre-action protocol for mass claims in both civil proceedings and those in the CAT;
• Replacing the current Conditional Fee Agreements and Damages-Based Agreements legislation with a “single, simplified legislative contingency fee regime”; and
• Repealing existing legislation in this area and introducing “new and comprehensive legislation concerning litigation funding…contained in a Litigation Funding, Courts and Redress Act”.

To read the review in full, click here.