A new report from Civitas, the independent think tank which strives to inform public debate by providing accurate factual information on the social issues of the day, outlines the extensive growth of litigation funding in the UK, with assets projected to exceed £3.7bn by 2028.
In the report’s foreword, Seema Kennedy argues that the legal system must be fair for both claimants and defendants engaged in the litigation funding regime, and that true access to justice can only be realised through regulation that ensures honest and proper disclosure of funders.
Read the full foreword below:
“The English legal system has long been regarded as a gold standard: predictable, commercially sophisticated, and underpinned by judicial independence. Ensuring that we protect the civil justice system, ensure effective access to justice and uphold the highest standards of ethics is at the heart of my organisation, Fair Civil Justice’s mission.
This report should unsettle anyone who assumes that UK courts always know who is standing in front of them. It shows, that in one of the fastest-growing corners of our legal system, that assumption no longer holds.
Litigation funding assets in England and Wales have grown from roughly £198 million in 2011 to £2.2 billion by 2022. They are projected to pass £3.7 billion within the next two years. But the true scale is unknown. There is an almost complete lack of transparency. Including, as to where the funds come from and where they go once defendants pay out.
Growth on that scale, in almost any other financial service, would come with a licensing regime, a fitness test, and a regulator asking tough questions about where the money originates. But unlike many financial services activities, litigation funding is not currently regulated through a mandatory authorisation regime.
Fair Civil Justice believes that litigation funding can improve access to justice, but a market that profits from the justice system must be transparent, accountable, and subject to proportionate oversight.
The Civil Justice Council was right to call for disclosure of the ultimate source of funds. This report insists that disclosure requirements be given teeth. At a minimum, funders should be required to identify ultimate beneficial owners and certify that relevant sanctions checks have been carried out. None of that is radical. It is the minimum a mature financial market would already expect of itself.
Lady Justice is traditionally depicted blindfolded to demonstrate the impartiality that justice requires. Defendants, courts and sometimes even claimants may be unable to identify the ultimate source of the capital financing a claim. Naming the fund is treated as the end of the inquiry, when it is barely the beginning. Justice may be blind to status and power; it should not be blind to who is financing litigation.
The lack of transparency affects consumers and businesses alike. The same structural gap sits behind the transnational claims now reshaping liability for UK-incorporated multinationals. Nor is there sufficient public visibility over how returns are structured, where profits are booked, or what tax treatment applies.
Fair Civil Justice argues for a legal system that is fair to claimants and defendants alike. We want to see consumers receiving fair redress when there has been wrongdoing. Used properly and disclosed honestly, litigation funding can improve access to justice.
The Government has recognised that legislation is needed, but the scope of that legislation remains crucial. This report should leave no one in doubt that what we need to see is more transparency.”
Read the report here: https://www.civitas.org.uk/publications/litigation-nation/
