Lemos: Third-party funding is crucial for access to justice
The government yesterday continued to stonewall on when litigation funding reform would happen, citing the need to find “a new legislative vehicle” to take it forward.
Speaking in a House of Lords debate on opt-out collective actions instigated by crossbencher Lord Carlile KC, justice minister Lord Lemos said: “The government recognise the critical role litigation funding plays in supporting access to justice and the need for such arrangements to be fair, transparent and commercially viable for funders.
“To support these aims, the government have accepted the Civil Justice Council’s two key recommendations.
“First, we will legislate to mitigate the effects of the PACCAR judgment. Secondly, we will introduce proportionate regulation of litigation funding agreements. We will implement these changes when parliamentary time allows.”
The government first announced last December that it would legislate to reverse the Supreme Court’s 2023 PACCAR ruling, which has brought significant uncertainty to the litigation funding market.
There was then huge disappointment when a bill did not appear in the King’s Speech in May.
The Ministry of Justice also confirmed in January that it would introduce a new regulatory framework for funders but no detail has been given on this. Lord Lemos’s statement indicated that it will take forward the CJC’s model of “light-touch regulation”.
He highlighted the need for such regulation. “Transparency is important for consumers in these situations… I know the phrase ‘light touch’ receives a hollow laugh—I used to be a financial services regulator myself. The government do feel that there is a need to get this on to a proper regulatory footing.”
Lord Lemos, a non-lawyer who joined the Ministry of Justice in Prime Minister Andy Burnham’s reshuffle last month, said there was a lot of competition for parliamentary time: “We are working urgently to identify a new legislative vehicle to take this forward.
“Legislation will clarify that litigation funding agreements are not damages-based agreements, and this will mitigate the effects of the PACCAR judgment.”
Lord Arbuthnot – who as MP James Arbuthnot played a critical role in exposing the Post Office scandal – noted that, without litigation funding, “Alan Bates would never have been able to bring his fantastic legal action against the Post Office”.
Lord Lemos responded: “We agree with Sir Alan that third-party funding is crucial for enabling ordinary people to access justice. The access to justice point is the centre of why we think this is important…
“With group and consumer claims, third-party funding under a litigation funding agreement is often the only option people have to bring a claim.”
In response to a question from Conservative peer Lord Hamilton, Lord Lemos stressed that the legislation was not being blocked by the Treasury. “The Treasury has no say in this.”
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