At last week’s litigation funding conference held by Brown Rudnick, the topic of collective actions in the UK generated an interesting discussion, with panelists noting that the upcoming Supreme Court decision could impact the entire third-party funding industry. As LFJ reported last month, the DAF appeal resulting from lawsuits brought at the Competition Appeal Tribunal (CAT), has put UK funders on alert, as many are carefully watching to see how the Supreme Court will act.
An LFJ Conversation with Michael Kelley, Partner, Parker Poe
At last week’s litigation funding conference held by Brown Rudnick, the topic of collective actions in the UK generated an interesting discussion, with panelists noting that the upcoming Supreme Court decision could impact the entire third-party funding industry. As LFJ reported last month, the DAF appeal resulting from lawsuits brought at the Competition Appeal Tribunal (CAT), has put UK funders on alert, as many are carefully watching to see how the Supreme Court will act.
In an article for The Law Society Gazette, Rachel Rothwell takes a look at the background to this appeal which had its hearing in front of the Supreme Court last month, and also looks forward to what the potential consequences could be if the judges were to side with DAF and rule that litigation funding agreements (LFAs) should be classified as ‘damages-based agreements’ (DBAs).
Rothwell points out that while the general assumption may be that the Supreme Court will not side with DAF’s arguments, having been rejected twice by both the CAT and a Divisional Court of the High Court of Justice, there is no guarantee as to the outcome. Analysing the history of past Supreme Court decisions, Rothwell highlights that the two judges who did not side with the majority in the claimant-friendly decision in Merricks v Mastercard, were both also present in last month’s hearing.
If the Supreme Court does side with DAF’s appeal, Rothwell suggests that whilst some LFAs could be renegotiated to adhere to the regulations for DBAs, this would not be a solution for opt-out collective actions due to the Competition Act 1998 stating that DBAs are unenforceable in those proceedings. As a result, if this worst-case scenario for funders does come to pass, Rothwell argues that only the government may be able to take swift action by amending the legislation relating to DBAs.
