Levitt: Funding plays a critical role in access to justice
The government has confirmed that it will introduce a new regulatory framework for third-party litigation funding.
However, whether this will be the model recommended by the Civil Justice Council is not clear from the comments of justice minister Baroness Levitt.
Last month, the government announced it would legislate [1] to reverse the Supreme Court’s 2023 PACCAR ruling, which has brought huge uncertainty to the litigation funding market.
This was the urgent recommendation of last June’s CJC report on litigation funding [2] but the Ministry of Justice has still not set out its views on any other of the recommendations.
These included legislation setting a baseline level of regulation, with enhanced provisions where the client was a consumer or it was a group action of whatever kind. Arbitration proceedings would be excluded from its scope.
The CJC conceded there was “a great deal of force” in calls for Financial Conduct Authority regulation.
Baroness Levitt made her comments in response to a written question from Conservative peer Lord Patten about the protections available to consumers who seek compensation via class actions.
She said: “We are aware of concerns around fairness and transparency in cases funded by third-party litigation funders, many of which are collective action cases.
“In light of these concerns, the Civil Justice Council carried out a thorough and wide-ranging review of litigation funding which has been critical in informing our policy development in this area.
“As recommended by the council, we will introduce a new regulatory framework aimed at enhancing claimant protection, transparency, and the effectiveness of the litigation funding market.
“We recognise the critical role third-party litigation funding plays in access to justice. That is why we are committed to ensuring it works fairly for all. We will outline next steps in due course.”
Meanwhile, the Competition Appeal Tribunal (CAT) has certified a £656m collective action against Valve – owner of gaming platform Steam – brought by children’s rights campaigner Vicki Shotbolt.
The claim alleges that Valve has abused its dominant position in the PC gaming market by imposing excessive commission charges and anti-competitive restrictions on game developers selling gaming titles on the Steam platform, which have been passed onto consumers through increased prices.
The CAT decided the claim should be made on an opt-out basis, having considered last month’s Supreme Court ruling [3] that another claim should be on an opt-in basis.
It said this was kind of case described by the Supreme Court as a “paradigm” of where an opt-out certification was appropriate.
Opt-in collective proceedings “would simply not be practicable for a proposed class estimated to include up to 14 million individuals, many of them minors, with the average losses estimated to be in the region of £22 to £44 per class member”.
Ms Shadbolt is advised by Milberg and funded by Bench Walk Advisors.