Yesterday, 19 March 2024, the UK Government published its Litigation Funding Agreements (Enforceability) Bill. As the phrase goes, it does what it says on the tin.

In this context, that’s to re-affirm that LFAs are not to be retreated as damages-based agreements and will therefore be legally enforceable: ie funders will be sure that they can secure the return specified in the LFA should the funded claim succeed. It’s important to point out that this reform will have retrospective effect, meaning that when it’s in place it will validate those LFAs which were clouded by uncertainty following last year’s decision of the Supreme Court in PACCAR. 

The new LFAE Bill is very brief: just two clauses. It will apply to all types of LFAs in any type of civil claim in England & Wales.

A standalone Bill was necessary here because the approach taken by the government to date in the Digital Markets, Competition and Consumers Bill - that being to rectify only those LFAs directly caught by PACCAR - could not, given the proper scope of that Bill, be broadened to apply to all LFAs. The government came under significant pressure to do just that when the Lords debated the DMCC Bill in February. Its response to that pressure has been to pull the narrow litigation funding clause from the DMCC Bill and rework its provisions into the new, two-clause LFAE Bill which now has the necessary, formal wider scope. The extract below from the Bill's explanatory notes re-emphasises the policy goals the government is seeking to address here.

Such a short Bill could move very quickly through Parliament and might be in place before the summer break. It seems likely that funders will be anticipating that and might either seek to progress funded claims on an express understanding to that effect or to suspend/stay them (subject to limitation etc) pending the legislation taking effect in short order.