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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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Case Developments Commercial

Australian Federal Court Approves $24.5M Funder’s Commission for Galactic 

By John Freund |

Reporting by Lawyer’s Weekly covers a major development in two Australian class actions, where litigation funder Galactic obtained a favourable ruling from the full Federal Court to double its commission from its funding of lawsuits brought against 7-Eleven and ANZ Bank. Justices Craig Colvin, Bernard Murphy and Michael Lee, overturned a 2023 judgement by Justice O’Callaghan that refused to make Galactic’s CFO order. As a result, Galactic’s commission from the class actions will drastically rise from $12 million, to a total $24.5 million.

The Federal Court’s ruling on 2 May found that Justice O’Callaghan had been wrong to refuse making the CFO order on the basis that the court did not have the power to do so. The three Justices wrote that Galactic’s $24.5 million commission “is commercially realistic and properly reflects the costs and risks Galactic took on by funding the proceedings.”

The class actions brought against 7-Eleven and ANZ Bank focused on allegations that the fuel and convenience store chain’s standard Franchise Agreement had ‘unfair contractual terms’ that violated consumer law. ANZ Bank were targeted by the second class action over claims that it had failed to meet its obligations under Australia’s Code of Banking Practice, ‘by lending to buy into the franchise system, often up to 100 per cent of the franchise license.’

Case Developments Commercial

London’s Black-Cab Drivers Bring £250M Claim Against Uber

By John Freund |

An article The Financial Times covers legal actions being brought against Uber on behalf of London’s black-cab drivers, centred on allegations that Uber misled Transport for London (TfL) to obtain its license. Specifically, the lawsuit focuses on the claim that Uber misled TfL around its booking model, and that the company allowed its drivers to receive direct bookings from customers rather than through a central system.

The claim is being brought in the High Court by RGL Management and is representing more than 10,500 black-cab drivers, who argue that they were harmed by unfair competition and are seeking up to £25,000 in compensation per driver. The claimants are represented by Mishcon de Reya and Katch Investment group are providing the litigation funding for the claim, with the total value of the group litigation reaching £250 million.

In a statement, Uber continued to deny the allegations and said that the claims “are completely unfounded”, maintaining its position that the ride-hailing company “operates lawfully in London, fully licensed by TfL.”

More information about the group litigation can be found on RGL Management’s ‘Black Cabs v Uber Litigation 2021’ (BULit21) website.

Commercial Regulatory Issues

Legislation to ensure the enforceability of LFAs is progressing smoothly through Parliament

By John Freund |

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

So far, the Litigation Funding Agreements (Enforceability) Bill has been passing through Parliament without a hitch.

The government is bringing the legislation in response to the Supreme Court’s decision last summer in PACCAR Inc & Ors v Competition Appeal Tribunal & Ors [2023] UKSC 28, which called into question the enforceability of LFAs.

The Bill was briefly introduced into the House of Lords on 19 March, and was debated at second reading on 15 April. During the debate, while some peers discussed the need for regulation of the litigation funding industry and for careful consideration of whether the retrospective nature of the legislation was justified, no peers opposed the Bill – and many welcomed it.

More recently, during scrutiny at grand committee on 29 April, the relatively small number of peers who attended the session broadly supported the Bill, and several spoke in favour of the need for its provisions to be retrospective.

In terms of the Bill’s drafting, the government proposed some small changes at committee stage, which were waved through by peers. The most significant was to address a potential problem with the original drafting where the LFA relates to the payment of costs rather than funding the provision of advocacy or litigation services.

The problem was that, in the original wording, it could be argued that the Bill only applied to the funding of costs that relate to court proceedings, but not those relating to arbitration, or settlements. This has now been resolved by new wording to make clear that an LFA may relate to the payment of costs following court, tribunal or arbitration proceedings, or as part of a settlement. An LFA may also relate to the provision of advocacy or litigation services.

Meanwhile another government amendment was aimed at avoiding problems for litigants-in-person, by ensuring that the definition of LFAs in the Bill includes agreements to fund the expenses of LiPs, for example where they need to pay for an expert’s report.

During grand committee, peers also expressed their approval of the broad terms of reference that have now been published by the Civil Justice Council for its review of litigation funding, which will include an examination of whether the sector should be regulated; and if so, how. Peers commended the speedy timescale that the CJC has set itself, aiming to produce an interim report by the summer, and a full report by summer 2025.

As the Litigation Funding Agreements (Enforceability) Bill continues its journey through Parliament and the CJC begins work on its review, there are clearly significant changes on the way for the litigation funding sector in the UK.

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