UK Litigation Funding Market Could See Growth if EU Imposes Restrictions

The shadow of the Voss Report’s recommendations looms over the future of litigation funding in Europe, as firms evaluate where the best opportunities will be in 2023. As some in the industry fear that overly zealous regulation of the practice could seriously hamper funder activity in the European Union, there is growing speculation that the United Kingdom could be one of the largest beneficiaries if the report’s proposals are enacted.

Writing in City A.M., Glenn Newberry, head of litigation at Eversheds Sutherland, offers an optimistic outlook for the potential growth of Litigation Finance in the UK. Newberry points out that there is still an issue with policymakers maintaining misconceptions about third-party funding, particularly around the idea that funders are predatory investors who seek to control litigation while exploiting plaintiffs for their own financial gain.

Newberry highlights that the use of litigation funding is far broader than simply financing class action cases, and instead has become a multi-faceted tool which can be used by companies to pursue meritorious litigation. He argues that with the variety of funding options and different types of fee arrangements, the practice has become a sophisticated asset for the legal industry, and one that requires investors to take on commensurate risk in return for their potential return on investment.

If Europe does move forward with restricting the use of litigation funding, Newberry suggests that this should only encourage the UK to create a welcoming market to benefit claimants, law firms and investors.