For those of us with more than a passing interest in litigation funding, we will all have noticed that barely an hour goes by without a new article adding to the pool of knowledge. Some of that material is highly technical; some is more news based; but in the last few months, particularly in the UK, we have seen more that is in the nature of ‘lobbying’ on the part of various legal or more likely commercial interests.
There is nothing wrong with the ‘lobbying’ per se, but there can be a risk that the ‘lobbying’ can obscure the real debate, distorting perceptions and, ultimately, leading to regulation or indeed legislation, that is introduced on the basis of false premises.
There has long been a debate in the US, about the use by claimants of contingency or funded proceedings. In short, the thesis is that the broad availability of contingency proceedings, allied with the growth in litigation funding, has placed an intolerable burden on Defendants and their insurers.
In the context of a system that allows for punitive damages which may be a multiple of any compensatory damages awarded, and where there are little or no adverse costs risks for losing Plaintiffs/Claimants, so minimal risk in commencing ‘speculative’ proceedings, one can see the genesis of that debate.
However, elements of the US debate have crept into debates in other jurisdictions, particularly the UK, and I wanted to share some observations as to why, perhaps, the arguments raised in the US debate are not necessarily relevant elsewhere, and risk obscuring the issues which should properly form the heart of the debate outside the US.
Litigation Funding in the UK: Post-Paccar Stall Setting
By way of recap, the debate around litigation funding, particularly, in the UK, became invigorated with the Supreme Court decision in Paccar (Paccar Inc v Competition Appeals Tribunal) in July 2023, which had the effect of prohibiting the use of funding agreements based on a recovery of a percentage of damages, in certain circumstances. That led to an active debate around the ambit of the decision, the potential consequences, and the cost of litigation funding, amongst other things.
As a result, legislation was proposed, to reverse the decision in Paccar (the effect of the decision was much criticized) but with the quid pro quo that there should be a review of the litigation funding market, in England and Wales. That review, by the Civil Justice Commission, reported, after lengthy submissions and much public debate, in June 2025. I think it would be fair to say that most if not all stakeholders, accepted that the extensive report produced was thorough and balanced, and addressed many of the detailed concerns around the operation of litigation funding, that had been raised during the course of the review.
It was anticipated that the CJC report would lead to further legislation and regulation, in accordance with its guidance, including a reversal of the Paccar decision.
Somewhat unexpectedly, in August 2025, the Department of Business and Trade, launched a review into the operation of the Competition Appeal Tribunal, which touched on many of the issues addressed by the CJC review. The deadline for evidence for that review, has just closed, and it is expected to report in due course.
There is a perception (rightly or wrongly) that the Department of Business and Trade launched its review of the Competition Appeal Tribunal, on the back of lobbying from US corporates, who purported to be concerned about excessive litigation risk in the Competition Appeal Tribunal, (many of the highest profile Competition Appeal Tribunal cases have involved household name US corporates as defendants). What has followed is a much more polarised debate around the Competition Appeal Tribunal, and, indirectly, litigation funding, because most of the cases in the Competition Appeal Tribunal have been funded.
So with apologies for the long recap, this is where the debate, in my view, has lost its way.
The UK Is Not The US
Much of what is now being said in the UK appears to be a direct import from the US debate. One of the loudest voices in the space, is Fair Civil Justice, which advocates alternatives to litigation and says it seeks to protect businesses from ‘the growing threat of predatory litigation.’ Fair Civil Justice state in their FAQs section, ‘Because we know from the U.S. and other countries that an overly litigious system is ultimately harmful to consumers, employers and the wider economy, our mission is to drive a better policy framework that levels the playing field for consumers, businesses and the courts. A profit-driven litigation culture does not benefit consumers – it pushes up costs and therefore prices and clogs up the civil courts.’
I would respectfully suggest that the comparison with the US is misguided, and risks skewing the debate.
The US is a far more litigious society than the UK, and there are good reasons to assume that there is no foreseeable risk that litigation levels in the Courts of England and Wales will reach anything like those in the US. In the US, there can be very large damages awards, made by Juries, including punitive damages that can be multiples of the compensatory damage’s element. Those very high damages awards are uncommon in England and Wales, and punitive damages are extremely rare. We also have a costs shifting regime (loser pays) which discourages Claimants from bringing speculative claims.
The Real Debate
So bringing this back to litigation funding in England and Wales, there is a consensus that we could do litigation funding better. There is also a consensus amongst users of the Competition Appeal Tribunal, and the Tribunal itself, that processes need to be improved, not least so as to manage costs more effectively, and speed up the outcomes. It is in the implementation of improvements, where the real debate lies.
There is simply no evidence, that there is an existential threat to corporates in the UK, as a result of litigation funding, not least because of the relatively low proportion of funded cases in the Courts, and the small number of cases in the Competition Appeal Tribunal that have reached judgment.
Indeed the Competition Appeal Tribunal has recently rejected a number of collective actions for certification (effectively bringing them to an end), has only approved a handful of settlements, and of the small number of cases to reach final judgment on the merits, at least two were not successful (Le Patourel v BT) and, most recently, Gutmann v South Western Trains. Nonetheless, I would expect success rates to go up, over time, as Claimants and funders have better visibility of the sorts of cases that are likely to be successful, and decide not to pursue claims that are inherently riskier.
One response
I agree with all of your comments. The oxymoronically named Fair Civil Justice is a lobbying vehicle for big business which, naturally, would prefer to be allowed to exploit their monopolistic advantages over consumers and smaller businesses without interference.
As it is, the CAT have demonstrated an assiduously impartial approach towards big business. For example, In Le Patourel v BT, the CAT determined that BT’s pricing for the consumers in question ( essentially the elderly) was excessive but fair! A finding that only a Tribunal of academic neutrality could reach or find satisfactory; certainly, hardly a decision leaning in favour of consumers, let alone one comprehensible to them.
Further, the CAT has not appreciated (to the extent of doing much about it) how big business through the FCJ, on the one hand complains about the cost of the process yet on the other, is the major driver of those costs; indeed, big businesses use their ability to spend any amount of money defending cases to wage a war of attrition on claimants. This is, of course , until they are restrained, a legitimate tactic but not one to cry or complain about when they are using it to their best advantage.