Retrospective or not retrospective, that is the question

Posted by Jeremy Marshall, chief investment officer at Winward UK Ltd

Marshall: There is nothing inherently unfair in following the terms of a negotiated agreement

I need to start by declaring an interest in that Winward is a litigation funder whose launch post-dates the PACCAR decision.

As such, it is not impacted by the debate as to whether the Litigation Funding Agreements (Enforceability) Bill should be retrospective because we do not have any funded claimants seeking to unwind their agreements.

This good fortune provides an opportunity to debate the issue objectively at a time when two businesses in dispute with their litigation funders have threatened a judicial review over the bill’s retrospective effect.

The phrase “very opportunistic lobbying” was uttered during the course of the recent debate on the bill in the House of Lords and it is crucial to understand what is the true vice in retrospective legislation.

No statute is to have retrospective effect unless it says so. The rationale is that Parliament is presumed not to have intended to alter the law applicable to past events and transactions in a manner which is unfair to those concerned in them, unless a contrary intention appears.

Indeed, one of the leading cases refers to the fact that the basis of any presumption in this area of law is no more than simple fairness.

In respect of litigation funding, therefore, the argument really boils down to whether it is unfair to a claimant that a funder is able to rely on a contractual agreement that was freely entered into by both parties even though the parties contracted on the basis of a mistake of law – both thinking that the agreement was lawful when in fact the Supreme Court held that it was not.

The common law right to recovery of money paid under a mistake has been held by the highest court to be allowed wherever the mistake led to one party receiving an unintended benefit.

So the debate needs to be had within the parameters of fairness and unintended benefit. When looked at though this lens, it is apparent that there is an inherent danger and illogicality in looking backwards when the whole difficulty in funding exists in looking forwards.

Unpacking this oddity is the fact that claimants who have received their funding and completed their successful claims are now complaining that they are deprived of the opportunity – as the lawyers who wrote the letter before action for the judicial review put it (somewhat optimistically) – to argue for “the right to retain the proceeds of their respective litigation without disbursing any part of those proceeds” to their funders.

It seems to be suggested that claimants should have a chance to renegotiate, now that the claims are completed, on the basis that the outcome is unfair – and potentially keep everything for themselves?

But what of the funders’ respective arguments that they may feel that the cases have proceeded in a way that was not intended at the time of the original agreements – perhaps the cases went on for too long, or became too expensive? Does not fairness demand that the position of both sides is considered?

Both sides have their arguments, but there is nothing inherently unfair in following the terms of a negotiated agreement. There is no conferring of an unintended benefit when the only benefit that has accrued is one that was drafted in a contract.

When the funding agreement was originally put in place, there was no certainty of a success. A case is not bound to win. As Lord Wolfson observed in the recent debate@ “There is no such thing as a case that is bound to win.”

So, absent retrospectivity, you would start having to explore unreal counterfactuals. It would allow satellite litigation to develop which would quickly embroil the funding industry – to no real benefit because the chances are that any cases based on such a counterfactual could fail on causation grounds – because funders simply would not have funded the claims on a different basis.

The vice in retrospectivity is the inherent danger in prejudicing one party to the exclusion of the other. Or conferring an unexpected benefit to one party at the expense of the other. Oh, hang on, isn’t that what is trying to be done by those who challenge this bill?

    Readers Comments

  • Steven Marcus says:


    The given rationale for this bill is untrue and there has been no evidence to support it. There, in fact, is ample evidence that the opposite is true. Interested in your remuneration for such posts.

    We draw your attention to the Impact Assessment for the proposed bill. The Government has admitted that they do not have any evidence for the alleged benefit of the bill. As from 5) of the Impact Assessment:

    As a result of the judgment, there is a risk to litigation funders’ investments in closed cases as a result of the relevant agreements now being unenforceable. The risk to previous investments in turn creates risk for future investments, as litigation funders may have less capital to commit to claims and less motivation to do so in a market that is judged unpredictable and unfavourable to litigation funders. While this is not yet evidenced as the post PACCAR-funding landscape is relatively new, any threat to investments is likely to have a negative impact on the willingness of funders to continue investing, and thus remains an access to justice concern.

    The impact asserted is derived solely from the threat by litigation funders not to ‘continue investing,’ which cannot be defensible and is not fact but mere allegation. Omni Bridgeway, a significant funder in the UK market, contemporaneously corroborated that they saw PACCAR as a non issue and not a surprise. Their public statement to the ASX stock exchange in July 2023 said as much:

    “We do not anticipate any material impact. We have been providing for this possible outcome in any recent UK litigation related agreements.”

    There is little to no justification for the bill; let alone the ‘special justification’ required for retrospective legislation. The bill threatens to violate our (and others, likely including the 555 subpostmasters) HRA and ECHR rights. This unjust burden would sit unfortunately with UK taxpayers.

    Finally, we couldn’t afford advice entering into LFAs that were our only chance. Your employers had the benefit of advice that these were DBA’s all along and they chose not to change them.

  • David Arkin says:

    Agree with Steven on this one.

    Jeremy’s analysis completely fails to acknowledge the asymmetry of information between the parties. Purely self-serving to suggest agreements were between willing and informed parties when almost invariably the offer was a take-it or leave-it contract handed to a first time litigant.

    Funders knew the risk, that’s now in the public domain, though highly doubt they ever shared that with claimants. It is also interesting to see the post-Paccar severance provisions vis-a-vis pre-Paccar.

    As to so-called “fairness”, seriously? Every authority on the matter disposes of this without hesitation – see Wilson and Diag for example.

    Let’s get the debate focused on the “facts” and rationale presented by the government; the true facts now in plain view; and the actual law on retrospectivity and incompatibility. If that occurs (a bit question mark), the real answer on this fundamental rule of law topic will become clear.

    All these types of articles serve to do is feed the echo chamber.

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