Our article dated 3 June reported that the Litigation Funding Agreements (Enforceability) Bill (LFA(E) Bill) fell away, not having made sufficient progress in Parliament before the general election.

It now looks all but certain that the Bill is not going to be revived by the new government (unlike the Arbitration Bill, which has already been re-introduced in the Lords). This news emerged on 1 August in a written answer from Lord Ponsonby, the new Minister for Justice. He was asked directly by Lord Sandhurst (former Bar Council Chair, Guy Mansfield, KC) “whether they plan to by reintroduce the Litigation Funding Agreements (Enforceability) Bill”?

The Minister replied that “The Government recognises the critical role third-party litigation funding plays in ensuring access to justice” adding that the Civil Justice Council’s (CJC) review of the litigation funding sector “hopes to report in summer 2025. The Government will take a more comprehensive view of any legislation to address issues in the round once that review is concluded.”

The Bill has gone, the review remains

It is difficult to read the answer other than indicating that the previous Bill is dead and buried and that the new government is not going to consider legislative approaches for this sector until it has carefully studied the CJC’s recommendations. With the CJC’s final report due next summer, it seems now that the earliest probable timetable for legislation - if indeed there is any - would be well into the second half of 2025.

In the meantime, the CJC’s interim report – in effect, a consultation exercise to collect views on litigation funding and on its possible regulation – will be published in the next couple of months. Its timing is likely to coincide with a report from the European Law Institute (ELI) which is expected in October. The ELI has been studying what it terms Third Party Litigation Funding (TPLF) across Europe for over two years and the outputs of the project aim to: 

• guide potential litigants and beneficiaries in assessing the fairness of TPLF regimes offered to them and in negotiating their terms
• support courts, administrative authorities and arbitration bodies by suggesting a set of default rules
• serve as a source of inspiration for legislators considering regulation of TPLF arrangements

The last of these very aptly describes the new government’s position as outlined in Lord Ponsonby’s remarks above.

In addition to the CJC review, a number of appeals relating to enforceability questions may now be taken forward. They had effectively been stayed while the LFA(E) Bill was making progress, but with the Bill falling away and no prospect of a legislative solution being in place before 2026, parties may now seek decisions from the Court of Appeal or even the Supreme Court.

In summary…

The key takeaway points from all of this are that: some funding agreements have been amended to deal with the outcome of the PACCAR decision, certain questions of enforceability remain, a number of appeals look likely to proceed, and there is no prospect of legislation in the short term. In effect, we’ve reverted to something similar to the immediate post-PACCAR period in summer 2023.

However, the one important point of difference between this summer and the last is that the impartial CJC review has now taken centre stage, with its recommendations due in a little over a year or more likely to be critical to setting the direction for any future reform or regulation.