Legal funders warn UK government it is easier to ‘invest elsewhere’
Litigation funders have said the sector is facing a “moment of reckoning” after a court ruling, with some blaming the lack of action from the UK government.
Last week, the Court of Appeal lifted a ‘stay’ on several appeals from the Competition Appeal Tribunal that had funders using the ‘multiple approach’ for their investment.
The ‘multiple approach’ occurs when a funder evaluates a potential investment by calculating a return based on a multiple of the amount actually spent on a case.
The court is now set to consider whether or not they can continue to fund cases through this approach. The stay in this case, which includes Apple, Sony and Mastercard, was lifted due to the inaction of the government.
Last year, the Supreme Court ruled in the so-called PACCAR case, based on a percentage of damaged recovered, were not enforceable.
The case, known as PACCAR, one of the several European truck manufacturers defendants, sued over allegation they infringed competition law.
This ruling threw the litigation funding industry into a state of uncertainty.
Last August, the newly-appointed Labour government pushed the Litigation Funding Bill back until a review was concluded which may not be until at least this Summer.
One funder has told Morning Wire that “this is a moment of reckoning for the sector.”
“The government’s refusal to even signal how it plans to solve this simple problem is helping defendants try to lock the door on access to justice for people like the subpostmasters,” they added.
While another funder stated: “The UK has a world-leading legal sector, but it’s making it incredibly challenging for us to back new cases in the market right now.”
“It’s just easier for us to invest elsewhere,” they warned.
Back in December, the chief executive of London-listed legal financial firm Burford Capital told Morning Wire it was rolling back on using London’s dispute resolution due to “uncertainties” as a result of government delays.
Chris Bogart said the government’s delays raised questions about the “suitability of London as a destination of choice for legal issues”.