It is not an exaggeration to say that the recent Mastercard-Merricks settlement marked a watershed moment in the world of litigation funding. The company and class action representative (Mr Merricks) settled proceedings after a decade of litigation, only for the third-party funder to turn around and sue Mr Merricks for settling—leaving Mastercard to step in and make £10m available to Mr Merricks to defend himself because he does not have the means. You couldn’t make it up.
The fall-out led the former Chair of the Association of Litigation Funders (ALF) to state that it would take “a long while for the funding market to recover” with the industry remaining uncharacteristically quiet. Unsurprisingly, there were not many in the litigation funding industry that would come out at the time to explain why consumers should be entitled to compensation as low as £2.27 while the lawyers and funder would walk away with tens of millions.
The details of the row are of course well known by now, so it is interesting that a commentary piece published earlier this week by a prominent figure in the litigation funding industry completely avoided the subject altogether.
If the reader was expecting a hint of contrition or sympathy with Mr Merricks’ position, or some words about the bad deal for consumers, I’m afraid to say that they were left disappointed. What we were left with instead was a full-throated defence of the sector, with carefully constructed arguments and suppositions that do not stand up to scrutiny.
Mr Merricks’ own solicitor Boris Bronfentrinker states that the system is driven by “funder greed”, but the article decides not to grapple with that point, and instead says it is actually all about access to justice. Readers can take a look at the evidence and make their own minds up who is right.
Additionally, the article alleges widespread support for reversing the Supreme Court’s 2023 ruling on PACCAR, while overlooking the overwhelming calls for greater regulation of the industry from the Legal Services Board, CILEX, the Class Representatives Network (CRN), and the majority of British businesses.
Litigation funding: a booming industry
There is no evidence that the PACCAR ruling has damaged the funding industry. Has any funder left the jurisdiction? No. Are cases still being funded and certified? Of course they are. The funders have simply adapted their models, shifting to multiples invested rather than percentages, in some cases demanding up to 12 times their initial investment made in cases.
The Civil Justice Council’s interim report recently highlighted that the TPLF industry expanded from £198 million in 2011-2012 to an estimated £1.5 billion to £4.5 billion in 2023. The cumulative damages across the 60 cases in the Competition Appeals Tribunal today amounts to £160 billion. This is clearly not a shrinking market.
Just this week, a major City investor announced that she is raising funds to lend to law firms involved in mis-sold car finance and referred to it as “the biggest thing likely to happen in litigation funding in the next 15 years”.
With over 60 third-party litigation funders active in the U.K. market, and investors making positive announcements every day about future plans for the sector, any claims about a downturn should be taken with a serious pinch of salt.
Funders prioritise profit
Behind these profits lies a troubling reality for consumers. The article in question cites the Post Office case as an advert for the sector’s role in facilitating access to justice – yet fails to mention that the claimant lawyers and funders received 80% of the damages in the case, leaving the subpostmasters with the other 20%. It is no wonder that one subpostmaster has called for the SRA to investigate.
Receiving a negligible payout is the norm, not the exception, for consumers.
The need for reform
Calls for TPLF reform are on the rise and rightly so. The ALF’s model of self-regulation has failed—evidenced by funders suing their own clients.
The problem is not PACCAR but with the lack of a fair, transparent regulatory framework. A robust, enforceable code of conduct is essential to ensure the system works for all—not just those with the deepest pockets.
This article first appeared in the 2nd April 2025 edition of Law.com.
Seema Kennedy is the Executive Director of Fair Civil Justice. She began her career as a lawyer in the City of London before working in business and frontline politics. During her time as a Member of Parliament she served as a minister in the Department of Health and the Home Office, and also as Prime Minister Theresa May’s Parliamentary aide during the Brexit negotiations.
Fair Civil Justice is a campaign to level the playing field for British businesses and consumers from the growing threat of predatory litigation.
We do that by promoting alternatives to litigation which are faster and more effective in resolving disputes, as well as promoting clear rules for business to ensure that the onslaught of litigation is not damaging the long-term growth of the economy.
When going to court is the best course of action, we also argue for stronger safeguards in the process, to ensure that consumers keep more of the proceeds rather than lose the lion’s share to lawyers and litigation funders.
