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Commercial Slingshot Capital

Investor Watch-Outs in the Commercial Litigation Finance Asset Class

By John Freund |

The following article is part of an ongoing column titled ‘Investor Insights.’ 

Brought to you by Ed Truant, founder and content manager of Slingshot Capital, ‘Investor Insights’ will provide thoughtful and engaging perspectives on all aspects of investing in litigation finance. 

Executive Summary

  • Gross Returns Net Returns in this asset class and the differences can be material
  • Tail risk is more pronounced in litigation finance, misleading to infer performance from early results
  • Nascent and transparent market puts the onus on investors to dedicate time to understanding the asset class
  • Single litigation investments are impossible to value accurately, don’t rely on fair value estimates for performance measurement

Slingshot Insights:

  • Investors need to dedicate resources (internal or external) to a deep dive before allocating capital
  • Managers need to ensure transparency and alignment of interests in order to attract long-term capital partners
  • Managers need to be very careful in the figures they provide to potential investors and ensure they disclose net fund returns if they are going to disclose gross case returns.

I recently moderated Litigation Finance Journal’s digital conference entitled Investor Insights into Litigation Funding, and the panelists delivered a clear message that the asset class needs to be more transparent.  Accordingly, I decided to pen this article to explore the more opaque aspects of the asset class and the reasons underlying that opacity, and what this means for investors, as well as provide some “watch-outs” for those looking to invest in the industry.

Clearly, the conference left the impression that the investor community is savvy to the fundamental economics of commercial litigation finance, despite the relative nascency of the industry.  While many investors have made investments in the asset class over the last five years, those same investors would say, when it comes to concluding about the overall merits of the asset class, that “the jury is still out” (pardon the litigation pun).  After having spent several years investing, reviewing troves of litigation finance realization data, I have come to the conclusion that it is a fundamentally strong asset class that has the extra benefits of being (i) non-correlated and (ii) ESG compliant.  However, investors should be aware that the application of portfolio theory (I have explored these concepts in-depth in a three-part series, here, here and here) and manager selection are both critical elements (emphasis added) to successfully investing long-term in the asset class.

So, why is it that after decades of investing experience, the investor community still has some trepidation about the asset class?  The answer lies in a few fundamental truths about the asset class, along with a lack of transparency—which panelists called for an increase in, and is core to the litigation finance articles I write for the industry.

Let’s start by exploring the cold hard truth about the asset class based on what we know today. It is important to note that this article makes specific reference to commercial litigation finance as distinct from the consumer side of the asset class (personal injury, divorce, inheritance/estate, etc.), which exhibits some very different characteristics as it relates to the risks highlighted below.  This article also mainly deals with portfolios of pre-settlement single case risks, as later stage cases and portfolio financings also exhibit very different risk profiles compared to those discussed herein.

Gross Net

Perhaps one of the biggest mistakes that fund managers make is not specifically referencing net returns in their fund documentation. And one of the biggest mistakes investors make is assuming that strong gross case returns will lead to strong net fund returns.

Every single manager presentation deck in litigation finance I have reviewed, with perhaps one or two exceptions, has focused solely on gross case returns.  Now, in many asset classes, there is a relatively high correlation between gross investment returns and net fund returns, and investors can extrapolate with a great degree of certainty from the gross return what the likely net fund return will be, and rules of thumb have even been developed to estimate that relationship.  This is not the case in commercial litigation finance.  Indeed, managers that market their gross case IRRs and MOICs without also referencing their net fund IRRs and MOICs are misleading investors, and this may have ramifications for their fundraising efforts and the extent to which they are in breach of securities regulations.  Managers should seek the advice of securities counsel (and perhaps litigation counsel) prior to communicating any results to potential investors, and ensure that counsel understands how the proposed data was calculated and what it does and doesn’t include.

The differences between gross case and net fund returns in commercial litigation finance are far greater than those in other asset classes, and the differences can transform high positive gross case internal rates of return (“IRR”s) into negative fund IRRs, depending on when the returns are being measured relative to the fund’s life.

So, let’s explore why this discrepancy exists.

Deployment Risk

In the commercial litigation finance asset class, there are two levels of deployment risk.  The first is the common risk among many alternative asset classes, which is the risk of whether or not the manager will be able to allocate investors’ commitments during the proposed investment period. If not, investors will be stuck paying fees on a commitment that is not capable of being allocated in a timely manner, thereby making their effective fee drag much greater than anticipated (a concept I explore in a two-part article that can be found here and here), which I will refer to as Deployment Allocation Risk. To a large extent, Deployment Allocation risk can be somewhat controlled by the activities of the manager, in the sense that they are responsible for their fund’s origination efforts.

The second deployment risk emerges once the manager has allocated (or committed) its monies to a case: What is the risk that the commitment will not be fully drawn upon? I will refer to this form of deployment risk as Deployment Draw Risk.  The real problem with Deployment Draw risk is that it is largely uncontrollable by the manager, and can have a significant effect on effective management fees. The other issue with Deployment Draw Risk is that it can have a meaningful impact on the diversification of the overall fund and thereby add volatility to a fund’s return profile.

The lack of controllability stems from the fact that once the manager has decided to invest in the case, the case is generally beyond the control of the funder, as many jurisdictions prohibit the concept of “wanton or officious intermeddling”, which would put the funder offside legal doctrines of “maintenance”. As a result, some investors view the asset class as “passive” in that once the investment is made, the manager (and hence the investor) is simply ‘along for the ride’.  While true to a degree, the degree of passivity is dependent on the jurisdiction in question, with certain jurisdictions being more permissive with respect to the influence the funder can have on determining the outcome of settlement negotiations.

In addition to the effective management fee issue, the other problem with Deployment Draw Risk is that it can have a profound impact on the diversification of a portfolio when viewed on a drawn basis as compared to a committed basis.  Take, for example, a portfolio of ten equal sized commitments where five of the commitments only draw on 50% of the commitment, and the other five draw on 100% of the commitment.  This means that the portfolio will contain five cases with 13% exposure each, and five cases with 6.5% exposure each, which means that five cases represent 67% of the drawn capital of the fund (assuming no other fund expenses).  When you then apply an overall industry win rate of 70%, you quickly see that the ultimate outcome of the fund will largely depend on whether one of five large cases is a winner or a loser (i.e. will those five have a 60% win rate (three wins) or 80% win rate (four wins), because you can’t win half of a case, and the difference is material).  This is far too much quasi-binary risk for my liking, which is why I believe a more appropriate concentration limit for this asset class is one based on 5% of capital available for commitment (after deducting a provision for management fees and operating expenses of the fund).  Unfortunately, concentration limits of 10-15% of a fund’s committed capital (not available capital), which have been borrowed from other asset classes, are more common in litigation finance funds, which is a mismatch given the risk profile of the asset class.

Duration Risk

The other non-controllable feature of litigation finance is duration risk, which is the risk that particular cases take a longer time to settle, or obtain an arbitral/trial decision than that which was underwritten. Why is this an issue?  The reason is that many times there are caps or limits on the upside available to litigation funders, because while the plaintiffs are willing to reward the funder for the risk they assume, there is a limit to their generosity which often comes in the form of economic caps on the funder’s return.  When gross dollar profits are limited, IRRs are negatively correlated with case duration, although multiples of invested capital (“MOIC”) are not impacted, unless there is also an IRR limit contained in the funding agreement (which is also common).

‘Tail’ Risk

In commercial litigation finance, tail risk can be significant.  According to Investopedia, “tail risk is a form of portfolio risk that arises when the possibility that an investment will move more than three standard deviations from the mean is greater than what is shown by a normal distribution.  Tail risks include events that have a small probability of occurring, and occur at both ends of a normal distribution curve.”

Applying this to litigation finance, the tail is influenced by both duration risk, outlined above, as well as case returns.  Since litigation finance has what I refer to as ‘quasi-binary’ outcomes (if not settled pre-trial, the longer the case goes and the further it moves down the path of a trial, the more binary it becomes), a normal distribution curve is not very applicable.  This is because the data set becomes bifurcated into winners and losers, hence, the concept of using a normal (bell shape) distribution to capture underlying portfolio dynamics (via mean and variance) is likely not appropriate, especially when infrequent but “extreme outcomes” materialize.

In litigation finance, managers can definitely find themselves in situations where they obtain favourable outcomes in the portfolio relatively quickly after the funder makes the commitment, which generally leads to strong IRRs but relatively low MOICs.

On the other end of the spectrum, a portfolio of litigation exposures, especially large ones or ones with specific attributes (international arbitration or patent), will contain cases that have longer durations, and have required more capital and have a higher propensity for a binary outcome. In addition, time is generally not your friend in litigation, as length of case duration indicates that either (i) the issue at hand is so significant or meaningful to the defendant (financially &/or operationally) that they may not have a choice but to fight until the bitter end, or (ii) the defense may be stronger (financially, counsel or case merits) than originally thought by the plaintiff.

These are the ‘tails’ of litigation finance! While a manager may not mind having a few on the front-end (early settlements), those will not likely materially contribute to your fund’s overall MOICs, but they sure make the fund’s early results seem (emphasis added) strong. This is a strong watch-out, as one should never conclude that a fund will ultimately perform consistent with its early returns, as there is no correlation of results within a fund, since each case has its own idiosyncratic risks.  In fact, I would venture to say that an investor should not get comfortable with a well-diversified fund’s performance until it is about 85% realized.  Why? Because the back-end of the tail is much riskier for the reasons articulated above, and can be very punitive to overall fund returns if the results don’t mimic those of the remainder of the fund.  It is conceivable that a fund trending toward a mid-teens IRR can ultimately turn negative, depending on the outcome of the performance of the tail if those investments are significant in size.  As an investor, if you committed to the first fund and then made another commitment to the second fund before the tail realized, you could be caught in a long tenure, double loss situation.

Portfolio Concentration

The application of portfolio theory is critical to successful investing in this asset class. As discussed previously, due to Deployment Draw Risk, estimating portfolio concentration on a drawn capital basis is inherently difficult and beyond the control of the manager.

Unfortunately, many managers don’t take this into consideration when building their portfolios, or believe that concentration limits in the 10-15% (of fund committed capital) range are more than adequate to create a diversified portfolio. They’re not!  Due to quasi-binary risk and Deployment Draw Risk, managers find it difficult to create diversified portfolios for this asset class, which means lower concentration limits than other asset classes are appropriate to protect the investor.  This was one of the main reasons for the design of the fund-of-funds I managed.

“Mark-to-Market” or “Fair Value” Accounting

It is very common and sometimes required for accounting purposes for many asset classes to mark-to-market or fair value account for their investments.  The reasons for this request are simply because investors want an accurate estimate of the carrying value of their investment, so they can judge manager performance and concentration within their own portfolios, and to serve as an early warning system for avoiding future bad allocation/funding decisions.  Investors may also require this to judge their own performance internally.

In certain asset classes there is sufficient and current data available to undertake this exercise with some degree of certainty.  However, in the litigation finance asset class, each case has its own idiosyncratic risk, and there is an element of bias in any decision-making process that makes it impossible to accurately determine outcome or damages, and hence value a piece of litigation (especially commercial litigation).  Investors should also be aware of valuations established by secondary sales in the marketplace as they do not necessarily establish credible value for a case, but rather are more likely a reflection of a fund manager’s ability to convince others that the case has a higher probability of success and collection (i.e. I wouldn’t want to borrow against that value).

As investors consider investing in the asset class, while they should look at the fair value figures provided by managers as part of their overall assessment, they should focus their decision-making on cash-on-cash returns, and understand that fair value calculations cannot be relied upon (portfolio financings have different characteristics which may make fair value less risky in this regard, as long as the portfolio is cross-collateralized and diversified).

Managers need to be very careful using fair value accounting as their basis of investor reporting, as they may assume liability in the event the portfolio’s ultimate performance does not coincide with the fair value estimates. My suggestion is that if the manager insists on providing fair value accounting estimates, they also provide cash-on-cash returns for the realized portion of the portfolio, along with associated fund fees and expenses.

Asset Class Nascency & Transparency

For those of you who have been toiling in the asset class since inception, you may have come to the conclusion that the asset class is maturing, and have gotten quite comfortable with the risk/reward profile.  However, for many investors who have been investing for the last five years, they still have yet to experience fully realized fund returns from their investing efforts, and while they have made a significant dedication to the asset class (kudos to them for believing), they are data-driven organizations that require data to make sound long-term investment decisions.  In this regard, the entire industry is very nascent in terms of having produced fully realized funds – I can only think of a handful of managers who have done so, and as I have articulated above, an investor cannot infer returns from early fund results.

However, the nascency of the industry has been aided by the transparency of the publicly-listed managers that operate in the industry (Burford, Omni, LCM, etc.).  Accordingly, the entire industry owes a debt of gratitude to the public players who have paved the way for the private players by ensuring a degree of transparency is disseminated in the market, as a result of their regulatory disclosure requirements.  Were it not for those players making their results public out of necessity, the industry would likely not have attracted the level of interest it has, and definitely not as quickly.  However, we must remember that the publicly-listed companies mainly invest from their permanent capital, and do not have fund horizons or fund management fees, performance fees and operating expenses to factor into their results (or at least they get buried within their own profit and loss statements, which are co-mingled with the costs of managing a portfolio).  Accordingly, the gross returns we see from the publicly-listed players need to be proforma’d for the expenses associated with running private funds, and those expenses are not immaterial.

In a nascent and opaque asset class with a relatively small number of managers, manager selection becomes critical. Investors who are considering investing in the asset class need to spend the upfront time to take a deep dive in the global manager community, so they can ultimately select the best stewards of their capital.  This is something I have done over the last five years, and I can definitively say it has expanded my knowledge immensely and provided me with an enhanced perspective that has served my investors well.

Slingshot Insights

For investors, the asset class presents a unique opportunity to add an asset that has true non-correlation, along with inherent ESG attributes.  This makes litigation finance a very attractive asset class.  However, an investor needs to do their homework prior to executing an investment, and needs to think about this asset class in a very different way than others in which they may have invested.  If the investor doesn’t have the internal capabilities to devote to the effort, they should consider hiring an advisor to guide their decision making, or selecting a lower risk vehicle to ‘dip their toe in the water’.

For fund managers, transparency is critical to raising significant investments from institutional investors.  The more data you can provide, and the more upfront you are about your net returns, the more success you will likely achieve.  Managers that address the risks inherent in the asset class through their fund structures and decision-making processes will likely be more successful. Aligning your fund economics as closely as possible to those of your investors will lead to long-term successful partnerships that may take managers in directions never contemplated during the early stages of the fund.

As always, I welcome your comments and counter-points to those raised in this article.

 Edward Truant is the founder of Slingshot Capital Inc. and an investor in the consumer and commercial litigation finance industry. Currently waiting out his non-compete agreement, Ed is designing a new fund for institutional investors who are interested in investing in the asset class.

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Commercial Special Features

Key Highlights from the Inaugural LF Dealmakers European Edition

By John Freund |

Last week, the LFJ team attended the inaugural LF Dealmakers European Edition, held across two days at the Royal Lancaster in London. Building on the longstanding success of Dealmakers’ New York event, the first edition of the European conference brought together an impressive selection of leaders from across the industry.

Spread across two days, LF Dealmakers featured an agenda packed with insightful conversations between some of the most prominent thought leaders in the European litigation finance market. An array of panel discussions covered everything from the looming potential of regulation to the increasing corporate adoption of third-party funding, with these sessions bolstered by a keynote interview between two of the key figures in the Post Office Horizon litigation.

A long road to justice for the postmasters

In a conference that managed to fill every single panel discussion with speakers engaged in some of the largest and most influential funded disputes taking place in Europe, the standout session of the two days provided unparalleled insight into one of the most famous cases of recent years. The keynote interview on ‘The Future of Litigation Funding in the Wake of the Post Office Horizon Scandal’ saw James Hartley, Partner and National Head of Dispute Resolution Freeths, and Neil Purslow, Founder & CIO, Therium, offer up a behind-the-scenes tale of the sub-postmasters campaign for justice.

Going back to their first involvement with the case, James Hartley reminded attendees that whilst those looking at the case post-judgement “might think it was a slam dunk”, this was not the viewpoint of the lawyers and funders who first agreed to lead the fight against the Post Office. As Hartley described it, this was a situation where you had “a government owned entity who would fight to the end”, with a multitude of potential issues facing the claimants, including the existence of criminal convictions, the limited amounts of documented evidence, and the fact that the Post Office was the party that had ninety percent of the data, documents, and evidence.

Hartley also offered his own perspective on the legal strategy adopted by the Post Office and its lawyers, noting that at every stage of the litigation, “every single issue was fought hard.” He went on to explain that whilst he was “not critical” of the defendant’s strategy in principle, there remains the underlying issue that “the arguments they made were not consistent with the evidence we were seeing.” Hartley used this particular point to illuminate the issues around defendant strategies in the face of meritorious litigation that is being funded. He summarised the core issue by saying: “There is nothing wrong with fighting hard, but it’s got to be within the rules, and in a way that helps the court get to a just outcome.”

Offering praise for the support provided by Purslow and the team at Therium to finance the case, Hartley stated plainly that “without Therium’s funding it would not have gone anywhere, it would not have even got off the ground.” Both Purslow and Hartley also used the case to highlight problems around the lack of recoverability for funding costs and how that incentivises defendants such as the Post Office to prolong litigation and inflate legal costs. Hartley said that he would welcome a change to rules that would allow such recoverability, arguing that in this case “it would have neutralised the Post Office’s strategy to just keep driving up costs on the claimants side.”

What problem is regulation solving?

It was unsurprising to find that questions around the future of regulation for the litigation funding industry were a regular occurrence at LF Dealmakers, with the event taking place only a few days on from the House of Lords’ debate on the Litigation Funding Agreements (Enforceability) bill. From the opening panel to conversations held in networking breaks between sessions, speakers and attendees alike discussed the mounting pressure from government and corporate opponents of third-party funding.

The view from the majority of executives at the event seemed to revolve around one question, which was succinctly put by Ben Moss from Orchard Global: “What are the specific issues that require regulation, and what is the evidence to support those issues?”

This question became somewhat of a rallying cry throughout the conference, with suggestions of increased scrutiny and oversight being turned back on the industry’s critics who make claims of impropriety without citing evidence to back up these claims. Whilst several speakers referenced the recent LFJ poll that found a broad majority are open to the potential for new regulation, Ben Knowles from Clyde & Co described a lot of the discourse around the issue as “a fairly partisan debate.”

Among the few speakers in attendance who offered a contrasting view on regulation, Linklaters’ Harriet Ellis argued that “regulation done right would be good for the industry.” However, even Ellis acknowledged that any rules would have to be carefully crafted to provide a framework that would work across the wide variety of funded disputes, saying that a “one size fits all approach does raise issues.”

Regarding the government’s own approach to the issue through the draft legislation making its way through parliament, all of the executives in attendance praised lawmakers’ attempts to find a solution quickly. Alongside these government-led efforts, there was also a feeling among legal industry leaders that funders and law firms have to be part of the solution by promoting more education and understanding about how litigation finance works in practice. Richard Healey from Gately emphasised the need for firms to engage in “hearts and minds work” to change wider perceptions, whilst Harbour’s Maurice MacSweeney emphasised the need to “create the environment where law firms and funders can flourish.”

Innovation through collaboration

Outside of the narrow debate around legislation and regulation, much of the conference was focused on the speed at which litigation finance continues to evolve and create new solutions to meet complex demands from the legal industry. This was perhaps best represented in the way speakers from a variety of organisations discussed the need for a collaborative approach, with executives from funders, insurers, law firms, investors and brokers, all discussing how the industry can foster best working practices.

The interplay between the insurance and funding industry was one area that offered plenty of opportunity for insightful discussions around innovation. Andrew Mutter from CAC Speciality noted that even though “insurers are not known for being the fastest and moving the most nimbly,” within the world of litigation risk “the insurance markets are surprisingly innovative.” This idea of an agile and responsive insurance market was backed up by the variety of off the shelf and bespoke products that were discussed during the conference, from the staples of After-The-Event and Judgement Preservation Insurance to niche solutions like Arbitration Default Insurance.

Delving into the increasingly bespoke and tailored approach that insurers can take when working with funders and law firms, Jamie Molloy from Ignite Speciality Risk, described how there are now “very few limits on what can be done by litigation insurers to de-risk.” Whilst there is sometimes a perception that insurers are competing with funders and lawyers for client business, Tamar Katamade at Mosaic Insurance offered the view that it is “more like collaboration and synergy” where all these parties can work together “to help the claimant and improve their cost of capital and reduce duration risk.”

Class action fervour across Europe

Throughout both days of the LF Dealmakers conference, the volume and variety of class actions taking place across the European continent was another hot topic. However, in contrast to an event focused on the American litigation finance market, the common theme at last week’s forum was the wideranging differences between large group claims across individual European jurisdictions. In one of the most insightful panels, the audience were treated to an array of perspectives from thought leaders practicing across the UK, Spain, and the Netherlands.

The example of Spanish class actions provided an incredibly useful view into the nuances of European claims, as a country that is still in the process of implementing legislation to comply with the EU’s collective actions directive, but has already evolved routes for these types of actions over the last decade. Paul Hitchings of Hitchings & Co. described how the initiative to innovate has come “more from the private sector than the legislature”, with domestic law firms having become “experienced with running massive numbers of parallel claims” as an inefficient, yet workable solution. Hitchings contrasted Spain’s situation with its neighbouring jurisdiction of Portugal, which he argued has been comparatively forward thinking due to the country’s popular action law.

Speaking to the Dutch class actions environment, Quirijn Bongaerts from Birkway, argued that the “biggest game changer” in the country was the introduction of a real class actions regime in 2020. Bongaerts explained that the introduction of this system allowed for “one procedure that fits all types of claims”, which allows not only claims for damages, “but also works for more idealistic cases such as environmental cases and ESG cases.”

LFJ would like to extend our thanks to the entire Dealmakers team for hosting such an engaging and insightful event, which not only offered attendees a view into the latest developments in litigation finance, but also created a plethora of networking opportunities throughout both days. LFJ has no doubt that after the success of the inaugural LF Dealmakers European edition, a return to London in 2025 will cement the conference as a must-attend feature in the litigation funding events calendar.

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Commercial Regulatory Issues

The Dangers of Retrospective Legislation in Litigation Funding

By John Freund |

The debate around whether the Litigation Funding Agreements (Enforceability) Bill should be retrospective is a complex one, with valid arguments on both sides. A recent op-ed makes the case that retrospectivity poses significant dangers and unfairness.

Writing in LegalFutures, Jeremy Marshall, Chief Investment Officer of Winward UK, argues that the core issue is whether it is unfair to allow litigation funders to rely on contractual agreements that were freely entered into by both parties, even if those agreements were based on a mistake of law.

Marshall claims that the common law right to recover money paid under a mistake only applies when the mistake led to one party receiving an unintended benefit. In the case of litigation funding, the only benefit that has accrued is the one that was explicitly drafted into the contract. Allowing retrospectivity would open the door to satellite litigation and unreal counterfactuals, according to Marshall.

Claimants who have already received funding and won their cases are now arguing for the "right" to renegotiate and keep all the proceeds for themselves. But what about the funders' arguments that cases may have gone on longer or become more expensive than intended? Fairness demands that both sides' positions be considered.

Marshall insists that the true drawback in retrospectivity is the inherent danger of prejudicing one party to the exclusion of the other, or conferring an unexpected benefit to one party at the expense of the other. Ironically, this is precisely what those challenging the bill are attempting to do. So while the debate is a complex one, one can make a compelling case that retrospectivity in litigation funding poses significant dangers and unfairness.

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Commercial Regulatory Issues

The CJC’s Review of Litigation Funding Will Have Far-Reaching Effects

By John Freund |

The following is a contributed piece by Tom Webster, Chief Commercial Officer at Sentry Funding.

Reform is on its way for the UK’s litigation funding sector, with the Civil Justice Council firing the starting gun on its review of litigation funding on 23 April.

The advisory body set out the terms of reference for its review, commissioned by lord chancellor Alex Chalk, and revealed the members of its core working group.

The review is working to an ambitious timetable with the aim of publishing an interim report by this summer, and a full report by summer 2025. It will be based on the CJC’s function of making civil justice ‘more accessible, fair and efficient’.

The CJC said it will set out ‘clear recommendations’ for reform in some areas. This includes consideration of a number of issues that could prove very significant for funders and clients. These include:

  • Whether the sector should be regulated, and if so, how and by whom;
  • Whether funders’ returns should be subject to a cap; and if so, to what extent;
  • The relationship between third party funding and litigation costs;
  • The court’s role in controlling the conduct of funded litigation, including the protection of claimants and ‘the interaction between pre-action and post-commencement funding of disputes’;
  • Duties relating to the provision of funding, including potential conflicts of interest between funders, lawyers and clients;
  • Whether funding encourages ‘specific litigation behaviour’ such as collective action.

The review’s core working group will be co-chaired by CJC members Mr Justice Simon Picken, a Commercial Court judge, and barrister Dr John Sorabji. The four other members are:

  • High Court judge Mrs Justice Sara Cockerill, who was judge in charge of the commercial court 2020 – 2022, and who is currently involved in a project on third party funding for the European Law Institute;
  • Academic and former City lawyer Prof Chris Hodges, chair of independent body the Regulatory Horizons Council which was set up to ensure that UK regulation keeps pace with innovation;
  • Lucy Castledine, Director of Consumer Investments at the Financial Conduct Authority; and
  • Nick Bacon KC, a prominent barrister and funding expert who acts for both claimants and defendants

The CJC had said that it may also bring in a consumer representative, as well as a solicitor experienced in group litigation.

In a sign that the review seeks to be informed by a wide range of views, the CJC has also extended an invitation for experts to join a broader consultation group, which will directly inform the work of the review and provide a larger forum for expert discussion. Meanwhile the advisory body has said there will also be further chance ‘for all to engage formally with this review’ later this year.

Given the broad remit of the review and significant impact that its recommendations may have on the litigation funding industry, litigation funders, lawyers and clients would be well advised to make the most of these opportunities to contribute to the review.

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