Why the Government Remains Unsupportive of Regulating Third Party Funders
Once again, the issue of regulating third-party funders here in the UK is being pushed forward, this time by Conservative peer Lord Hodgson of Astley Abbotts who used parliamentary questions to ask whether the government had any intention of introducing any time soon “regulations to ensure that third-party litigation funders are subject to the same statutory duties and obligations as apply to law firms operating in the same field”.
Critics are arguing against the apparent lack of fair play and are fond of referring to the persistent lobbying of the US Chamber of Commerce which commenced in 2012 when they began lobbying Parliament for the regulation of the UK’s third-party litigation funding (TPLF) market, following Lord Justice Jackson’s recommendation in his civil costs review that statutory regulation of third party funders “ought to be re-visited if and when the third party funding market expands.”
Although their lobbying was unsuccessful during the passage of the Legal Aid, Sentencing and Punishment of Offenders Act 2012, they launched a campaign called Justice Not Profit, claiming that TPLF “fundamentally changes the English civil justice system and has matured past self-regulation.” They are hoping specifically for transparency requirements, registration of funders and prohibition on funder control of proceedings.
However, the Justice Department’s Lord Keen has reiterated that the government is unaware of any “specific concerns about the activities of litigation funders” and is therefore happy to continue with the voluntary code of conduct or membership of the Association of Litigation Funders, all of which is in line with the past government’s assurance that third-party litigation funding will remain under review should the need arise.
Interestingly, Lord Justice Jackson has been in principle supportive of funding, suggesting it may help small businesses secure access to justice despite not being able to recover success fees and insurance premiums; there is evidence of this as funders are supporting lower-value claims.
In the third-party funding environment, reality dictates that there’s little incentive for a funder to litigate unless the merits of the case tilt firmly towards success. To support this process, LHQ provides IT solutions for third party funders enabling them to control and regulate the costs of external legal teams.