Legislation introduced by Alex Chalk, Lord Chancellor, will make it easier for people to secure litigation funding from third parties when pursuing complex claims against wealthy corporates or other large organisations such as the Post Office. Litigation funding was essential to the subpostmasters’ claim, led by former subpostmaster Alan Bates, which challenged the Post Office’s reliance on its flawed Horizon accounting system.
It will effectively reverse R (PACCAR) v Competition Appeal Tribunal [2023] UKSC 28, in which it was held that litigation funding agreements where payment is based on the amount of damages recovered are damages-based agreements, and therefore mainly unenforceable.
Chalk said: ‘It’s crucial victims can access justice—but it can feel like a David and Goliath battle when they’re facing powerful corporations with deep pockets.’
He said the government is considering options for a wider review of the litigation funding sector and how third-party litigation funding is carried out, including whether more regulation and safeguards are required.
Martyn Day, co-president of the Collective Redress Lawyers Association (CORLA), said: ‘This is a very sensible and welcome development from government.
‘It will ensure that groups of claimants seeking redress resulting from wrongdoing by large corporations and other bodies will be able to focus on bringing claims without those corporations tying up court time and money in trying to unpick the funding agreements that make the claims possible.
‘Collective redress is a vital legal mechanism by which ordinary people can seek justice when wrong is done to them by mighty corporations and other bodies. We will work closely with government on any reform that gives clarity, certainty and fairness to claimants and those who support them in bringing their claims.’
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