Should Law Firms Steer Clients to Litigation Funders – or Steer Clear of the Funding Process?

By John Freund |

The following is a contributed piece by Ed Truant, founder of Slingshot Capital, and Andrew Langhoff, founder of Red Bridges Advisors.

When we write about litigation finance, we often assume it is easily accessible and that plaintiffs undertake most of the ‘leg work’ to secure financing.  In practice, litigation finance is often difficult to obtain, and plaintiffs typically rely quite heavily on their law firms to obtain it.  This is a very different dynamic than one sees in other areas of financial services. And because law firms may not have the expertise and bandwidth to properly broker a litigation funding transaction, their involvement in the process may be unintentionally short-changing their clients. With some law firms now entering contractual “tie-up” or “best friends” arrangements with favored funders, we thought this an opportune time to consider the law firm’s proper role in the litigation funding process.

This article will explore common but unexamined efforts by law firms to deal with funders, the practical challenges posed and suggest a preferred approach for law firms and their clients.

Executive Summary

  • Law firms may not have the practical expertise and competency to advise their clients on funding partners and terms
  • Similar to other asset classes, a specialist intermediary/broker community has emerged to assist plaintiffs/law firms

Slingshot Insights:

  • Plaintiffs should assess the potential for conflicts of interest in assessing their litigation finance
  • Law firms should ensure their clients are informed of their role and obtain waivers, where appropriate.
  • Plaintiffs should consider using an independent advisor to solicit litigation finance commitments for their case


As awareness of litigation finance grows in the U.S., law firms are increasingly confronted with the question of their appropriate role when engaging with litigation funders.  Because law firms are a primary source of new funding deals, top law firms are repeatedly approached by litigation funders in hopes of striking “strategic” relationships.  Law firms have responded to these advances in various ways – from informal promises of future consideration to formal agreements to refer their clients to a given funder.

For example, in June 2021 a major U.S. firm announced a “$50 million partnership” with a prominent litigation funder.  While it is unclear if any cases have been funded under the deal, the law firm said that the funder’s monies would be used to pay their fees for legal claims brought by their clients.  Two months later, a major UK firm stuck a deal with two UK funders to create a new entity that will provide that law firm with access to GBP 150 million in litigation financing for new cases.  The very next month, a similar “best friends” deal for the same amount was struck between another UK firm and a UK funder.[1]  A Financial Times article describing these and other “tie-ups” highlighted the fact that lawyers are duty-bound to act in the best interests of their clients, and that a partnership between a law firm and a funder adds a potential conflict of interest to the mix.

While no doubt driven by good intentions, efforts by law firms to “help” in the litigation funding process may in fact hurt their client’s interests.  As argued below, great care should be taken by law firms to avoid being viewed as “steering” clients to favored funders.  Such efforts – especially when a law firm has a public contractual relationship with a funder – may actually interfere with their clients’ chances to obtain funding.  Examined closely, practical considerations suggest that a law firm’s best approach is to stay within its role as legal counsel and to avoid any involvement in actively brokering or placing litigation financing.  Both clients and their law firms would be better served by working with the growing number of consultants and intermediaries who are dedicated to the litigation finance market.

The Issue

The U.S. litigation finance market is more competitive today than ever before.  Over the past ten years, the number of dedicated “litigation funders” has grown significantly and the market has started to specialize.  Add to this the increasing number of hedge funds which invest in litigation as part of their multi-strategy approach, and there has never been a better time to shop for litigation finance.  Clients are now able – on their own or with an experienced broker – to evaluate a broad array of funders to ensure they receive optimal pricing and competitive deal terms.  In this way, classic market forces reward both those seeking and those providing funding.

But this promise of optimal arrangements via competition is increasingly hindered by the efforts of law firms to “assist” their clients with funding.  By directing their clients to the firm’s preferred funder (or a limited number of funders with whom it is already acquainted), many law firms may be robbing their clients of the opportunity to survey the broader market, and to thus strike a better deal.  In practice, law firms are not ideally suited to the role of assessing the growing number of funders and undertaking the brokering of litigation finance – nor would they wish to be viewed as being in that business, as we will discuss further below.


Most U.S. plaintiffs seeking litigation funding are new to the practice.  This is because funding is still relatively novel – and because few clients have successive claims worth tens of millions of dollars while lacking financial resources. While there are exceptions to this rule – particularly in the patent litigation context – most plaintiffs seeking funding are doing so for the first and last time.

As such, these clients are presumably unfamiliar with the arduous process of obtaining litigation finance.  Without guidance, they have no notion of which funders to speak to, how to price a proposed transaction, the ‘tells’ that funders communicate when they are assessing opportunities or what other matters to be concerned with.  It’s thus natural that these inexperienced clients turn to their law firms for advice on how to secure funding.

And law firms are generally quite happy to assist their clients in this regard – if for no other reason than they stand to receive millions in legal fees if funding is secured.  In fact, it’s typical for law firms and their client to approach third-party funders together: they have established a mutual desire to work together, see themselves as aligned in interest, and simply need financing to pay the legal fees and costs to launch their promising case. In this sense and at a high level, there is great alignment between what is best for the law firm (current and contingent fees), what is best for the client (a potential award with minimal cash outlay) and what is best for the funder (a rate of return on their investment commensurate with the risk they have assumed).

A law firm’s approach to the market – and recommendation of specific funders – will likely depend in part on the firm’s prior experience with funders. This experience may range from:

  • Having been pitched by funders, but not having sought financing;
  • Having unsuccessfully sought financing on one or more occasions;
  • Having successfully obtained financing for its clients from one or more funders;
  • Having successfully obtained financing for the firm itself from one or more funders; and/or
  • Having executed an arrangement with a funder where the law firm has pledged to send its clients and prospective clients to that funder (a so-called “best friends” arrangement – which is becoming increasingly common).

It follows that the deeper the law firm’s prior experience with funding – especially if it has a direct contractual or working relationship with a given funder – the more likely that firm is to direct its client to such a favored funder (or two).  While this may seem practical and helpful – and even advantageous for the client – this “steering” not only limits access to the broader market (as discussed below), but dangerously ignores the lack of alignment in interests between the client and the law firm.  While there is general alignment amongst the three parties, as referred to above, the question of whether the alignment maximizes the outcome for the plaintiff should be a significant consideration for the plaintiff.

Lack of Market Experience of Law Firms Raises Practical Concerns

In fairness, most law firms are simply problem solving when they refer a client to a preferred funder. The process of obtaining funding is typically grueling, and the idea of working with a friendly and responsive funder seem obvious at first blush.  But even when a litigator takes an active role in the process – which raises many of the issues noted above – they are undertaking a typically uncompensated sideline which is well outside their core competency in the practice of law. The problems with this are severalfold.

First, the litigator working with the client – and it is almost always a litigator – will be at best an occasional and sporadic player in the litigation finance market.  As a result, their awareness of the range of options in the market (including hedge funds who do not typically visit her office with marketing literature) will necessarily be limited and may not include other tools such as insurance products or other hedging instruments.  It’s unreasonable to assume that a practicing litigator has the time to meet and evaluate the ever-increasing number of capital sources in the funding space.  Not only are there more entities offering funding – they are increasingly differentiating themselves.  Funders now vary based on the types of claims they fund, the size of investments they seek, and their underwriting process.  Critically, these funders also differ as regards the pricing structures they offer.  To be properly advised, a client should be made aware of the full range of growing options, which could extend beyond traditional litigation finance.

Second, litigation funding is a distinct form of specialty finance which raises unusual issues.  Without a firm grounding in the particulars of the practice, the typical law firm litigator is apt to overlook important questions, including ethical, regulatory, and taxation issues.  Not only are these issues unique to litigation finance, but they are often fluid, and require those in the industry to closely monitor developments.  It stands to reason that most litigators – who pursue funding only occasionally – will not maintain a constant focus on this dynamic industry.  As a result, they may well miss a trick – perhaps a critical one for their client.

Third, obtaining litigation funding takes a significant amount of time and effort.  The process will usually take two to three months – but it can often take double this.  Properly conducted, the process will involve the creation of introductory materials, initial diligence with at least five funders, the negotiation of deal structures, pricing, and terms sheets, comprehensive final diligence, and extensive deal documentation.  The time involved in running such a process should not be underestimated, and – as every deal maker knows – lack of responsiveness at any point in the process can quickly kill the enthusiasm for an investment.  Given that this “extra” work by a busy litigator is uncompensated and outside her ordinary practice, it would not be surprising if she is unable to give the process the proper attention demanded.

Before leaving the practical considerations of a law firm’s involvement in the funding process, we should consider one very significant downside of a so-called “best friends” agreement between a funder and law firm.  This is the awkward situation arising when a favored funder chooses not to fund a case for a firm’s client. As most cases that seek funding are denied – and as these agreements don’t promise funding unless a funder likes the risk of a given case – this result can occur frequently.  When it does, it deals a fatal blow to the client’s efforts to raise funding – for what other funder would choose to finance a case when the favored funder has passed?  Thus, what looked like a promising arrangement to a client may have fundamentally damaged his or her chances to obtain funding.  The law firm also needs to consider the impact a denial has on the relationship with his client.

In short, aside from potential conflict of interest concerns, law firms and their partners are not practically suited to spend their time orchestrating the pursuit of funding for their clients.  There are better options available.

No Need to Reinvent the Wheel

Given the above, what is a law firm and its client to do when seeking litigation funding?  Or, perhaps more clearly – how can a law firm and its client gain access to the whole of the market, avoid any potential conflict of interest concerns, and ensure they secure financing with the best possible pricing and terms?

When discussing nascent markets, it’s often instructive to look at other, more mature markets to see how they have dealt with similar situations in the past, either voluntarily or in response to regulation.  In the context of litigation finance, we think there are a number of similar – yet more mature – financial markets that can usefully be compared.

If we look at private equity (venture, leverage buy-out, real estate, etc.) as a proxy, there is and has been a well-established network of advisors (investment bankers and brokers) that serve to increase the efficiency of the marketplace by connecting investors / lenders with shareholders / borrowers in a way that increases transparency and ensures that the best interests of the advised party are being met.

Similarly, if we look at commercial real estate, there are networks of licensed brokers that are hired to represent the best interests of the sellers by forcing them to adhere to industry standards and practices and run sale processes to ensure the market is being adequately canvassed for buyers on behalf of the seller.

The same solution exists for litigation finance in the form of independent advisors who are knowledgeable in litigation finance, and whose interests will be solely aligned with the client.  This option is often overlooked, however, because the relationship between the law firm and the client is one of ‘trusted advisor’, and clients naturally assume the law firm will look after their best interests.  While that is often the case, plaintiffs can seek to eliminate the appearance of any potential conflict of interest by engaging a specialty advisor.  These advisors will canvass the litigation finance market and other funding sources for financial alternatives and present them to the client for consideration.  One of their objectives is to create competitive ‘tension’ in the market by running a process that ensures the best alternatives are presented, and the commitment is obtained in a timely manner.

The value of the advisor is typically inherent in their industry experience, the knowledge they possess (including relevant legal/litigation experience), the relationships they foster, the efficacy of the processes they run, the timeliness of receiving a commitment and their reputation in the marketplace.  Some of the benefits of using an advisor are as follows:

  • Ensuring that the full market of potential funders has been canvassed;
  • Having the client’s opportunity strategically presented to appropriate funders (based on the advisors’ knowledge of each funder’s diligence criteria);
  • Knowing what the “market” price is for different types of funding transactions;
  • Creating ‘tension’ in the capital raising process to produce the best outcome – for pricing and material terms;
  • Gaining support for negotiations of term sheets and deal documentation; and
  • Utilizing (if necessary) the advisor/broker as “bad cop” to obtain the optimal deal.

Perhaps as importantly, the use of an advisor will likely be more efficient and more economical for all parties involved.  This efficiency is a function of the advisor’s dedicated service to putting funding in place – which, as noted above, is a multi-month, multi-disciplinary undertaking.  As better advisors typically operate on a contingency model (i.e., they are not paid unless and until funding is secured), they are incentivized to move deals along briskly.  And while advisors will charge a contingent price for their services (typically paid by the funder in the first tranche of financing), this additional cost is usually more than made up in cost savings to the client – the result of lower pricing made possible by the advisor’s market knowledge and creation of a competitive process. Advisors for litigation finance are more easily found, as they are now rated by Chambers & Partners and other service providers to the legal community.

To be clear, law firms must continue to play a critical but discrete role in the funding process.  Working closely with an advisor, it is essential that the lawyers involved in a matter speak to the merits of the case, the potential damages to be gained, as well as issues of procedural posture, timing, and collection.  Moreover, every potential funder will be keen to assess the lawyers and law firm litigating the case to insure they have the experience and expertise required.  But by staying within their role as legal counsel – and allowing advisors to run the funding process – law firms will not only avoid any appearance of ethical conflict, but will save themselves time and money.

This article has been co-authored by Andrew Langhoff and Edward Truant.

Slingshot Insights

As the litigation finance market evolves, new issues will arise that will give pause for consideration.  The partnering of law firms with litigation funders is one of those issues that requires deep consideration by law firms, plaintiffs and funders, as inappropriate disclosures, lack of waivers and insufficient canvassing of the market may result in a series of unintended consequences which may result in litigation, ironically enough.  As this issue is relatively recent, we don’t have sufficient insight and precedent to determine how it will be viewed by the judiciary and law societies, but we can see how it differs from other industries and we can identify the potential for conflicts of interest.  As an investor in this sector, due diligence should include understanding the relationships the funder has with law firms.

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


 Andrew Langhoff is the founder of Red Bridges Advisors LLC and has been active in the litigation finance industry for more than a decade.  Following his time as COO of Burford Capital and Principal at Gerchen Keller Capital, Andrew founded Red Bridges to advise those seeking to obtain litigation finance.


 Edward Truant is the founder of Slingshot Capital Inc. and an investor in the consumer and commercial litigation finance industry.  Slingshot Capital inc. is involved in the origination and design of unique opportunities in legal finance markets, globally, investing with and alongside institutional investors.

[1] Interestingly, in yet another situation where a law firm created its own funding arm, it explicitly prohibited the use of such monies for the funding of its own cases.


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PACCAR’s tidal wave effects: Understanding the Legal, Financial and Policy impacts of a highly controversial ruling

By Ana Carolina Salomao |

The following is a contributed piece by Ana Carolina Salomão, Leila Zoe-Mezoughi, Micaela Ossio Maguiña and Sarah Voulaz, of Pogust Goodhead.

This article follows our previous publication dated 10 October 2023 regarding the Supreme Court ruling in PACCAR[1] on third-party litigation funding agreements which, very simply put, decided that litigation funding agreements (“LFAs”), permitting funders to recover a percentage of damages, amounted to (“DBAs”) damages-based agreements by virtue of s.58AA of the Courts and Legal Services Act 1990 (the “1990 Act”). As such, all LFAs (including those retrospectively drafted) were consequently required to comply with the Damages-Based Agreements Regulations 2013 (the “2013 Regulations”) or be deemed, unenforceable.

In this article, we explore the three main industry-wide changes that have arisen as a direct result of the PACCAR ruling:

  1. The diverse portfolio of LFA reformulation strategies deployed by litigation finance stakeholders.
  2.  The government response, both in terms of official statements and policy changes, which have ultimately led to the draft bill of 19 March 2024.
  3.  The wave of litigations subsequent to the PACCAR ruling, giving insight into the practical market consequences of the ruling.

Ultimately, the PACCAR impact and its proposed reversal has not undermined the UK litigation finance market, in fact the contrary; it has promoted visibility and adaptation of a litigation finance market that continues to gain significant traction in the UK. As a result, despite the concern shown by most UK industry stakeholders about the negative impacts of the PACCAR ruling, this article argues that proper regulation could indeed be highly advantageous, should it incentivise responsible investment, whilst protecting proper access to justice. However, the question does remain, will we ever get there?

The LFA reformulation storm.

As expected, the first reaction to PACCAR came from the litigation finance market. As anticipated, LFAs (those with an investor return formula based on a percentage of the damages recovered) are being amended by parties to avoid their potential unenforceability.

The majority of amendments being implemented are aimed to design valuation methodologies for the amount recovered, which are not directly related to the damages recovered, but are rather a function of some other metric or waterfall, therefore involving a process of alteration of pricing. The intention is for the agreements to fall out of the scope of the definition of ‘claims management services’ provided by section 58AA of the Courts and Legal Services Act 1990 (CLSA), which stipulates two main criteria: (i) the funder is paid if the litigation succeeds, and (ii) the amount paid back to the funder is a function of the amounts recovered by the claimant in damages. As such, novel pricing structures such as charging the amount granted in third-party funding with accrued interest; a multiple of the funded amount; or even a fixed pre-agreed amount recovered in the form of a success fee, would not meet both criteria and would hence fall outside of the legal definition of claims management services. These options would avoid the risk of an LFA being bound to the same requirements of a DBA and potentially rendered unenforceable.[2]

Another option to render LFAs enforceable following PACCAR is of course to make these compliant to the definition of DBA provided in s.58AA(2) of the 1990 Act. As such, LFAs would be subjected to stringent statutory conditions as per the Damages-Based Agreements Regulations 2013 (the “2013 Regulations”). This option has however not been the most attractive for funders, firstly due to funders not necessarily conducting claims management services and, secondly, because LFAs would automatically become subject to highly stringent rules to structure the agreements and pursue recovery. For example, such LFAs would need to comply with the cap requirements outlined in the 2013 Regulations such as: 25% of damages (excluding damages for future care and loss) in personal injury cases, 35% on employment tribunal cases and 50% in all other cases.

Ultimately, it can be argued that the choice for restructuring a single LFA or a portfolio of LFAs will vary on a case-by-case basis. Those parties who find themselves at more advanced stages of proceedings will be disadvantaged due to the significant challenges they are likely to face in restructuring such LFAs. From the perspective of the legal sector, on the one hand, we can see an increase in law firms’ portfolio lending, whereby the return to funders is not directly related to damages recovered by the plaintiff. On the other hand, there are certain actors who are remaining only superficially affected by the ruling, such as all funding facilities supporting law firms which raise debt capital collateralised by contingent legal fees.

The introduction of the proposed bill by the government (which is discussed below), is a reflection of the enormous burden the Supreme Court ruling has placed on critical litigation funder stakeholders who are likely to have invested disproportionate sums to amend their LFAs and restructure their litigation portfolios. However, the bill has also given momentum to the sector and is helping to highlight the importance of diversification in litigation funding to protect the interests of low-income claimants. The medium-term net balance of the regulation might be rendered positive if redirected at perfecting and not prohibiting third-party funding agreements to protect access to justice.

The UK Government Intervention.

The UK government has raised concerns regarding the legal and financial impacts of PACCAR relatively swiftlyfollowingthe 26 July 2023 judgement. Their first response to PACCAR came from the Department of Business and Trade (DBT) at the end of August 2023. The DBT stated that, being aware of the Supreme Court decision in PACCAR, it would be “looking at all available options to bring clarity to all interested parties.[3]

In the context of opt-out collective proceedings before CAT, the government proposed in November 2023 amendments to the Digital Markets, Competition and Consumers Bill (DMCC) through the introduction of clause 126, which sought to implement changes to the Competition Act 1998 (CA) to provide that an LFA would not count as a DBA in the context of opt-out collective proceedings in the CAT. This proposal came from the understanding that after PACCAR opt-out collective proceedings would face even greater challenges considering that under c.47C(8) of the CA 1998 DBAs are unenforceable when relating to opt-out proceedings. Proposals for additional amendments to the DMCC soon followed, many of which await final reading and approval by the House of Lords. However, in December 2023 Lord Sandhurst (Guy Mansfield KC) noted that while amendments to the DMCC would mitigate PACCAR’s impact on LFAs for opt-out collective proceedings in the CAT, “the key issue is that the Supreme Court’s PACCAR ruling affects LFAs in all courts, not just in the CAT, and not just, as this clause 126 is designed to address, in so-called opt-out cases.”

As a response to this, the Ministry of Justice announced last March that the government intended to extend the approach taken for opt-out collective proceedings in the CAT to all forms of legal proceedings in England and Wales by removing LFAs from the DBAs category entirely. The statement promised to enact new legislation which would “help people pursuing claims against big businesses secure funding to take their case to court”and“allow third parties to fund legal cases on behalf of the public in order to access justice and hold corporates to account”.[4]

Following this announcement, the Litigation Funding Agreements (Enforceability) Bill was published and introduced to the House of Lords. As promised by the government’s previous statements, the primary purpose of the Bill is to prevent the unenforceability of legitimate LFAs fitting into the amended DBA definition of PACCAR. Indeed, the bill aims to restore the status quo by preventing litigation funding agreements from being caught by s.58AA of the 1990 Act.[5]

The litigation wave.

As parliamentary discussions continue, all eyes are now in the Court system and the pending decisions in litigations arising from PACCAR. Despite the government’s strong stance on this matter, the bill is still in early stages. The second reading took place in April 2024, where issues such as the retrospective nature of the Bill, the Civil Justice Council’s (CJC) forthcoming review of litigation funding, and the need to improve regulations on DBAs, were discussed. Nevertheless, despite the arguable urgency of addressing this issue for funders and the litigation funding market, there is no indication that the bill will be expedited; hence the next step for the bill passage is the Committee stage. The myriad of cases arising from PACCAR may need to stay on standstill for a while, as Courts are likely to await the outcome of the proposed bill before deciding on individual matters.

The UK has a longstanding history of tension between the judiciary power and the two other spheres of the government, the Executive and Parliament. Most of these instances have sparked public debate and have profoundly changed the conditions affecting the market and its players. For example, in the case of R (on the application of Miller and another) (Respondents) v Secretary of State for Exiting the European Union (Appellant) [2017] UKSC 5, Gina Miller launched legal proceedings against the Johnson government to challenge the government’s authority to invoke Article 50 of the Treaty of European Union, which would start the process for the UK to leave the EU, without the Parliament’s authorisation. The High Court decided that, given the loss of individual rights that would result from this process, Parliament and not the Executive should decide whether to trigger Article 50, and the Supreme Court confirmed that Parliament’s consent was needed.

Another example is the more recent case of AAA (Syria) & Ors, R (on the application of) v Secretary of State for the Home Department [2023] UKSC 42 regarding the Rwanda deportation plan. In this case the Supreme Court ruled unanimously that the government’s policy of deporting asylum seekers to Rwanda was unlawful – in agreement with the Court of Appeal’s decision which found that the policy would pose a significant risk of refoulement.

Nevertheless, rushing the finalisation of a bill reversing PACCAR would probably be a counterproductive move. The recent developments suggest that policy makers should focus on deploying a regulatory impact assessment on any regulations aimed at improving access to finance in litigation. Regulators and legislators should ensure that, before designing new regulatory frameworks for litigation finance,  actors from the litigation finance industry are consulted, to ensure that such regulations are adequate and align with the practical realities of the market.

As the detrimental impacts of PACCAR become ever more visible, public authorities should prioritise decisions that favour instilling clarity in the market, and most importantly, ensuring proper access to justice remains upheld in order to “strike the right balance between access to justice and fairness for claimants”.  

A deeper look into the post-PACCAR’s litigations and their domino effects

Even though the English court system is yet to rule on any post-PACCAR case, it is important to understand the immediate effects of the decision by looking at a few landmark cases. We provide in this section of the article an overview of the impacts of the rulingin perhaps the three most important ongoing post-PACCAR proceedings: Therium Litigation Funding A IC v. Bugsby Property LLC (the “Therium litigation”), Alex Neill Class Representative Ltd v Sony Interactive Entertainment Europe Ltd [2023] CAT 73 (the “Sony litigation”) and the case of Alan Bates and Others v Post Office Limited [2019] EWHC 3408 (QB), which led to what has been known as the “Post Office scandal” (also referred to as the “Horizon scandal”).

Therium litigation

The Therium litigation is one of the first cases in which an English court considered questions as to whether an LFA amounted to a DBA following the Supreme Court decision in PACCAR. The case concerned the filing of a freezing injunction application by Therium Litigation Funding I AC (“Therium”) who had entered into an LFA with Bugsby Property LLC (“Bugsby”) in relation to a claim against Legal & General Group (“L&G”). The LFA stipulated between Therium and Bugsby entitled Therium to (i) return of the funding it had provided; (ii) three-times multiple of the amount funded; and (iii) 5% of any damages recovered over £37 million, and compelled Bugsby’s solicitors to hold the claim proceeds on trust until distributions had been made in accordance with a waterfall arrangement set out in a separate priorities’ agreement.

Following a settlement reached between Bugsby and L&G, Bugby’s solicitors transferred a proportion of settlement monies to Bugsby’s subsidiary, and notified Therium of the intention to transfer the remaining amount to Bugsby on the understanding that the LFA signed between Therium and Bugsby was unenforceable as it amounted to a DBA following the PACCAR ruling. Therium applied for an interim freezing injunction against Bugsby under s.44 of the Arbitration Act 1996 and argued that, as the payment scheme stipulated by the LFA contained both a multiple-on-investment and a proportion of damage clauses, and the minimum recovery amount to trigger the damage-based recovery had not been reached, no damage-based payment was foreseen.

This meant that the DBA clause within the LFA could be struck off without changing the nature of the original LFA, so that it constituted an “agreement within an agreement”. As legal precedents such as the Court of Appeal ruling in Zuberi v Lexlaw Ltd [2021] EWCA Civ 16 allowed for parts of an agreement to be severed so as to render the remainder of the agreement enforceable, the High Court granted the freezing injunction, affirming that a serious question was raised by Therium regarding whether certain parts of the agreement could be severed to keep the rest of the LFA enforceable.

By declaring that there was a serious question to be tried as to whether the non-damage clauses, such as the multiple-based payment clauses, are lawful or not, the High Court opened the possibility of enforceability of existing LFAs through severability of damage-based clauses in instances where PACCAR may also apply. The Therium litigation presents an example of another possible structuring strategy to shape LFAs to prevent them from becoming unenforceable under PACCAR. Nonetheless, as the freezing injunction will now most likely lead to an arbitration, a final Court ruling on the validity of these non-damage-based schemes appears to be unlikely.

Sony litigation

The Sony group litigation is another example of one of the first instances where issues of compliance of a revised LFA have been addressed in the aftermath of PACCAR, this time in the context of CAT proceedings. In this competition case, Alex Neill Class Representative Limited, the Proposed Class Representative (PCR), commenced collective proceedings under section 47B of the CA 1998 against Sony Interactive Entertainment Network Europe Limited and Sony Interactive Entertainment UK Limited (“Sony”). The claimant alleged that Sony abused its dominant market position in compelling publishers and developers to sell their gaming software through the PlayStation store and charging a 30% commission on these sales.

The original LFA entered between Alex Neill and the funder as part of the Sony litigation amounted to a DBA and would have therefore been unenforceable pursuant to PACCAR. On this basis, the PCR and funder negotiated an amended LFA designed to prevent PACCAR enforceability issues. The LFA in place was amended to include references for funders to obtain a multiple of their total funding obligation or a percentage of the total damages and costs recovered, only to the extent enforceable and permitted by applicable law. The LFA was also amended to include a severance clause confirming that damages-based fee provisions could be severed to render the LFA enforceable.

The CAT ultimately agreed with the position of the PCR and confirmed that the revised drafting “expressly recognise[d] that the use of a percentage to calculate the Funder’s Fee will not be employed unless it is made legally enforceable by a change in the law.” In relation to the severance clause, the CAT also expressly provided that such clause enabled the agreement to avoid falling within the statutory definition of a DBA and referred to the test for effective severance clauses.

The CAT’s approach in recognising the PACCAR ruling and yet allowing for new means to render revised LFAs enforceable in light of this decision provides a further example of a Court’s interpretation of the decision, allowing another route for funders to prevent the unenforceability of agreements. Allowing these clauses to exempt litigation funders from PACCAR will in fact allow for such clauses to become market standard for LFAs, and in this case particularly for those LFAs backing opt-out collective proceedings in the CAT.

Post Office scandal  

Although the Post Office scandal occurred in 2019, this case was only recently brought back to light following the successful tv series ‘Mr Bates vs The Post Office’ which recounts the story of the miscarriage of justice suffered by hundreds of sub-postmasters and sub-postmistresses (SPM’s) in the past two decades. In short, the Post Office scandal concerned hundreds of SPM’s being unjustly taken to court for criminal offences such as fraud and false accounting, whilst in reality the Horizon computer system used by Post Office Ltd (POL) was found to contain errors that caused  inaccuracies in the system.

Mr. Bates, leading claimant in the case, brought the case on behalf of all the SMP’s which had been unfairly treated by POL. The issuing of the claim was only made possible thanks to a funding arrangement between litigation funders and the SPM’s, used as a basis for investors to pay up front legal costs. As outlined in a publication by Mr Bates in January 2024, such financing, combined with the strength and defiance of Mr. Bates’ colleagues, allowed the case to be brought forward, a battle which in today’s circumstances the postmaster believes would have certainly been lost.[6]

The sheer scale of the Post Office scandal, and the fact that traditional pricing vehicles for legal services would have negated the claimants access to justice, placed the case near the top of the government’s agenda and called again into question the effect of PACCAR on access to justice. Justice Secertary Alex Chalk MP relied on the example of Mr Bates and the Post Office scandal to affirm that that “for many claimants, litigation funding agreements are not just an important pathway to justice – they are the only route to redress.”[7]In light of this recent statement more radical changes to legislation on litigation funding and the enforceability of LFAs appear to be on the horizon.


Assessing the long-term impact of PACCAR will ultimately need to wait until the dust in the litigation finance market settles. Nonetheless, the immediate impacts of the decision have brought four key considerations to light.

First, the relevance of the litigation funding industry in the UK is substantial and any attempt to regulate it impacts not only those who capture value from the market but also the wider society. Regulation of litigation funding could inadvertently affect wider policy questions such as equal access to justice, consumer rights, protection of the environment and human rights.

Second, there is an undeniable intention of the regulators to oversee the litigation finance market, which could reflect in stability and predictability that would be much welcomed by institutional investors and other stakeholders. However, this conclusion assumes that regulatory efforts will be preceded by robust impact assessment and enforced within clear guardrails, always prioritising stability and ensuring proper access to justice.

Third, PACCAR serves to bring awareness that attempts to regulate a market in piecemeal can lead to detrimental outcomes and high adapting costs, far offsetting any positive systemic effects brought by the new framework. Any attempts to regulate a market so complex and relevant for the social welfare should be well-thought-out with the participation of key stakeholders.

Fourth, despite the recent headwinds, the market and government reaction further prove that the litigation finance market continues its consolidation as an effective vehicle to drive value for claimants and investors. The fundamentals behind the market’s growth are still solid and the asset class is consolidating as a strategy to achieve portfolios’ uncorrelation with normal market cycles. As private credit and equity funds as well as venture capitalists, hedge funds and other institutions compete to increase their footprint in this burgeoning market, it is safe to expect a steady increase of market size and investors’ appetite for the thesis.

In conclusion, despite a first brush view of the PACCAR decision, the reactions to this decision and the subsequent developments have evidenced how litigation finance continues to be a promising investment strategy and an effective tool to drive social good and access to justice.

[1] Ana Carolina Salomao, Micaela Ossio and Sarah Voulaz, Is the Supreme Court ruling in PACCAR really clashing with the Litigation Finance industry? An overview of the PACCAR decision and its potential effects, Litigation Finance Journal, 10 October 2023.

[2] Daniel Williams, Class Action Funding: PACCAR and now Therium – what does it mean for class action litigation?, Dwf, October 25, 2023.

[3] Department for Business and Trade statement on recent Supreme Court decision on litigation funding: A statement from the department in response to the Supreme Court's Judgement in the case of Paccar Inc. and others vs. Competition Tribunal and others. Available at: <>.

[4] Press release, ‘New law to make justice more accessible for innocent people wronged by powerful companies’ (GOV.UK, 4 March 2024) Available at <>.

[5] Litigation Funding Agreements (Enforceability) Bill (Government Bill originated in the House of Lords, Session 2023-24) Available at <>.

[6] Alan Bates, ‘Alan Bates: Why I wouldn’t beat the Post Office today’ (Financial Times, 12 January 2024) <>.

[7] Alex Chalk, ‘Cases like Mr Bates vs the Post Office must be funded’ (Financial Times, 3 March 2024) <>.

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Fernando Gragera joins Aon to lead the litigation and contingency insurance practice in Iberia

By Harry Moran |

Aon strengthens its M&A and Transaction Solutions team and pioneers a local team specialising in the management of these risks

Aon plc (NYSE: AON), a leading global professional services firm, has appointed Fernando Gragera as Director of Litigation and Contingent Risks for Spain and Portugal. Fernando will join the Iberia M&A and Transaction Solutions (AMATS) team led by Lucas López Vázquez, and globally in Aon's international Litigation Risk Group. His role will be to develop the litigation insurance practice and assist Aon's clients in transferring risks arising from litigation and contingent situations.

Fernando Gragera, a Spanish lawyer and solicitor of England and Wales with more than 13 years of professional experience, comes from PLA Litigation Funding, a litigation funder specialising in the Iberian market. Previously, he worked as a lawyer in the litigation and arbitration department of Cuatrecasas and as in-house counsel at Meliá Hotels International, where he was responsible for the group's litigation and arbitration.

This appointment responds to the growing interest from investment funds, corporations and law firms in covering contingent and litigation-related risks and makes Aon the first professional services firm with a local team specialising in contingent and litigation solutions in Iberia.

Miguel Blesa, head of Aon Transaction Solutions in Iberia: "Fernando's appointment is a major milestone for the industry and embodies a commitment we have been working on for years. In this way, we reinforce our commitment to continue to support our clients and help them make the best decisions to protect and grow their business”.

About Aon

Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Through actionable analytic insight, globally integrated Risk Capital and Human Capital expertise, and locally relevant solutions, our colleagues provide clients in over 120 countries and sovereignties with the clarity and confidence to make better risk and people decisions that help protect and grow their businesses.

Follow Aon on X and LinkedIn. To learn more visit our NOA content platform. 

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Altroconsumo Secures Impressive 50 million Euro Settlement for 60,000 Participants to Dieselgate Class Action in Italy

By Harry Moran |

Altroconsumo and VW Group have reached a ground-breaking agreement, providing over 50 million euro relief to over 60,000 Italian consumers affected by the emissions fraud scandal. Celebrating this major win for Italian consumers, Euroconsumers calls on Volkswagen to now also compensate Dieselgate victims in the other Euroconsumers countries. 

The settlement reached by Altroconsumo, arising from a Euroconsumers coordinated class action which commenced in 2015 ensures that Volkswagen will allocate over 50 million euros in compensation. Eligible participants stand to receive payments of up to 1100 euros per individual owner.

This brings an end to an eight year long legal battle that Altroconsumo together with Euroconsumers has been fiercefully fighting for Italian consumers and marks a significant milestone in seeking justice for those impacted by the ‘Dieselgate’ scandal.

We extend our massive congratulations to Altroconsumo for reaching this major settlement in favor of the Italian Dieselgate victims. Finally, they will receive the justice and compensation they deserve. This milestone underscores the importance of upholding consumer rights and the accountability of big market players when these rights are ignored, something Euroconsumers and all its national organisations will continue to do together with even more intensity under the new Representative Actions Directive” – Marco Scialdone, Head Litigation and Academic Outreach Euroconsumers

Together with Altroconsumo in Italy, Euroconsumers also initiated Dieselgate class actions against the Volkswagen-group in Belgium, Spain and Portugal. While the circumstances are shared, the outcomes have been far from consistent.

Euroconsumers was the first European consumer cluster to launch collective actions against Volkswagen to secure redress and compensation for all affected by the emissions scandal in its member countries. After 8 years of relentless pursuit, we urge the VW group to finally come through for all of them and give all of them the compensation they rightfully deserve. All Dieselgate victims are equal and should be treated with equal respect.” – Els Bruggeman, Head Policy and Enforcement Euroconsumers

Consumer protection is nothing without enforcement and so Euroconsumers and its organisations will continue to lead important class actions which benefit consumers all across the single market. 

Read the full Altroconsumo press release here.

About Euroconsumers 

Gathering five national consumer organisations and giving voice to a total of more than 1,5 million people in Italy, Belgium, Spain, Portugal and Brazil, Euroconsumers is the world’s leading consumer cluster in innovative information, personalised services and the defence of consumer rights. Our European member organisations are part of the umbrella network of BEUC, the European Consumer Organisation. Together we advocate for EU policies that benefit consumers in their daily lives.

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