Analyzing EU Regulatory Reforms Against the Australian and British Systems

Following last year’s release of the Voss Report and its recommendations for further regulation of litigation funding within the European Union, there has been much discussion over the individual proposals within the report. However, it is also worthwhile to look at the proposed reforms through a comparative lens and see how their impact could mirror or differ from regulatory structures in other key markets for litigation funding.

A new piece of analysis from Chris Martin of Augusta Ventures looks at the future of litigation funding regulation in the EU, comparing the potential outcomes against the existing regimes in Australia and the UK. 

Martin highlights the recent developments in Australia, where the government has rolled back certain pieces of regulation to ensure that litigation funders are able to facilitate access to justice. However, Martin points out that Australia’s previous regulatory regime created an environment in which certain cases, ‘particularly class actions against large and well capitalized corporate wrongdoers’, were no longer viable investment opportunities for smaller funders. 

The analysis contrasts this stricter approach with the more ‘self-regulating’ model that exists in the UK, where the Association of Litigation Funders (ALF) provides an industry body that can set standards that ensure there is a competitive market and level playing field. Martin argues that the ALF’s code of conduct tackles the same issues that the EU is trying to solve through regulation, including issues such as ‘control of case strategy, approval of settlements and withdrawal from cases’.

Martin concludes by suggesting that the EU should not ignore the potential for increased regulation to ‘end up limiting funding options for litigants’, by increasing barriers to entry and driving up existing funder prices.