CJC unveils members and terms of reference for litigation funding review

Picken: Co-chair

A High Court judge and the former principal legal adviser to the Lord Chief Justice have been named as co-chairs of the Civil Justice Council (CJC) review of third-party litigation funding.

The review, commissioned by Lord Chancellor Alex Chalk, will consider the regulation of the market, as well as capping the returns funders can make.

The prospect of the review was first made public in February as an adjunct to efforts to reverse last year’s Supreme Court ruling in PACCAR, which ruled that litigation funding agreements (LFAs) were damages-based agreements.

This has now taken the form of the Litigation Funding Agreements (Enforceability) Bill, which received its second reading in the House of Lords last week. There was widespread support for some form of regulation of the industry.

The CJC working party will, as expected, produce an interim report this summer and a final report next summer.

It is headed by Mr Justice Simon Picken and Dr John Sorabji, who left his work for the judiciary in 2020 to return to practise as a barrister at 9 St John Street in Manchester. He remains general editor of The White Book. Both are CJC members.

The other members are:

  • Mrs Justice Sara Cockerill, former judge in charge of the Commercial Court;
  • Professor Chris Hodges, Emeritus Professor of Justice Systems at Oxford University with a particular interest in consumer redress, and chair of the Regulatory Horizons Council, an independent expert committee that advises government on the regulatory reform needed to support technological innovation;
  • Lucy Castledine, director of consumer investments at the Financial Conduct Authority; and
  • Nick Bacon KC, a leading barrister in the world of legal costs and funding.

The working group “may additionally look to co-opt a consumer representative, and solicitor with expertise in group litigation”, the CJC said.

The terms of reference require the review to set out the current position of third-party funding, explore whether it currently delivers effective access to justice and identify possible alternatives and limitations.

It has been charged with setting out “clear recommendations” for reform. This will require it to consider regulation, capping a funder’s return, how funding “should be best deployed relative to other sources of funding, including but not limited to legal expenses insurance and crowd funding”, and the role that rules of court and the court itself may play in controlling the conduct of litigation supported by funding.

The other key issues are the relationship between funding and litigation costs, potential conflicts of interest, and whether funding encourages specific litigation behaviour, such as collective actions.

The CJC is chaired by the Master of the Rolls, Sir Geoffrey Vos. He said: “The Civil Justice Council has worked for many years towards ensuring that citizens without means are not excluded from the civil justice system. The council’s review of litigation funding will form an important staging post in realising that objective.”

Mr Chalk commented: “Access to justice is essential for a free and fair society, and litigation funding makes an important and positive contribution.

“This review by the respected CJC will ensure that it operates with fairness, balance and proportionality.”

Organisations representing funders were quick to set out their stall. Susan Dunn, chair of the Association of Litigation Funders, said: “Litigation funding is still a niche industry and self-regulation through the UK’s Association of Litigation Funders has been very effective and it continues to support high standards of conduct and governance amongst its members.

“We look forward to working closely with the CJC working group on its review of third-party funding and how it can be further strengthened to fulfil its important role in our civil justice system.”

Neil Purslow, chair of the International Legal Finance Association, added: “As the government, victims like Alan Bates, and leading legal experts have all recognised, litigation funding plays a critical role in ensuring businesses and consumers can secure justice and hold large corporations to account.

“We will work with the review to share ideas to further level the playing field for claimants facing defendants with deep pockets and cynical tactics.”

Martyn Day, senior partner of Leigh Day and co-president of the Collective Redress Lawyers Association, said it would be “making the case for third-party funding to be embedded into the civil litigation landscape”.

He continued: “We will encourage the review to carefully consider the pitfalls of ‘over regulating’ the sector and the inherent dangers of artificially limiting the remuneration available to funders.

“At CORLA, we believe expanding access to justice through the availability of funding is in the interests of everyone, save for the corporate behemoths. Collective actions are a proven tool for achieving just that.”

The government and others have cited the Post Office scandal, and the vital role of funding in supporting the Bates group action that burst it open, in support of litigation funding. It is notable, therefore, that Professor Hodges is also chair of the Horizon Compensation Advisory Board.

  • The CJC working group has invited expressions of interest to join a wider consultation group. For details, see here.

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