London, England — The landscape of mass litigation in England is shifting dramatically, spurred on by a burgeoning litigation funding industry over the past decade. Unlike in the United States, where complex multi-claimant lawsuits are a staple of the judicial process, England’s legal framework is adapting to accommodate this growing trend.
While litigation funding was once rare in the UK, it has seen exponential growth, with financial backing soaring from £198 million in 2011-2012 to approximately £2.2 billion by 2022. This significant tenfold increase positions the UK among the largest markets for litigation funding globally, a change bolstered by various mechanisms that allow for collaborative legal actions.
Despite ongoing legal challenges and restrictions, claimant attorneys are creatively maneuvering to structure funding agreements that navigate existing regulations. The recent Supreme Court ruling in the case of PACCAR has raised questions about the enforceability of certain funding arrangements. The court determined that agreements where funder returns are calculated based on a percentage of damages may violate current legislation governing damages-based agreements—essentially a setback for the future of litigation funding.
Critics view the ruling as a potential threat to the viability of many funding agreements, with legal experts like Lady Rose anticipating that it could invalidate numerous contracts established since the inception of litigation funding in England. However, subsequent rulings indicate a willingness among some courts to adapt, as the Competition Appeal Tribunal allowed modified funding agreements to proceed, even in cases where funder returns were linked to damages.
Recognizing the pivotal role litigation funding has in ensuring access to justice, the Conservative government introduced the Litigation Funding Agreements (Enforceability) Bill in March 2024. This legislation aimed to restore legal interpretations prior to the PACCAR decision, asserting that such agreements should not be categorized as damages-based agreements. However, it failed to pass before the July 2024 general elections, leaving the future of the bill uncertain under a new Labour government, which has indicated a more comprehensive review will follow.
In addition to these developments, the Competition Appeal Tribunal has recently certified a class action against Google concerning alleged anti-competitive practices in its app store. Despite defense objections around funding consents, the tribunal permitted the case to move forward, pending revisions to the funding agreement.
An important voice in this ongoing discourse is the Civil Justice Council (CJC), which is evaluating the state of litigation funding in England. Marking its commitment to transparency and careful regulation, the CJC has published an interim report that examines the advantages and potential pitfalls of litigation funding. Although the report identifies key concerns—such as the risk of under-compensation and the possibility of incentivizing frivolous litigation—it stops short of making formal recommendations at this stage.
The innovative nature of litigation funding in England is underscored by collaborations between law firms and litigation funders, exemplified by a newly established entity that integrates various legal and financial services into a single organization. This kind of synergy highlights how involved litigation funders are willing to become in the cases they support, a contrast to practices commonly seen in the United States.
As the dialogue surrounding litigation funding evolves, the recent EU Product Liability Directive, which came into effect in 2024, may further influence growth and practices across Europe, including the UK. The new directive aims to make it easier for plaintiffs to pursue product liability claims, potentially leading to more mass tort litigation.
The litigation funding environment in England remains dynamic, demonstrating resilience amid various judicial and legislative challenges. Despite the uncertainties posed by the PACCAR decision, the industry continues to innovate and expand, shaping a robust landscape for collective legal actions.
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