There has been speculation for some time that third-party litigation funding will soon become a more regulated industry. This topic was discussed recently at the Westminster Legal Policy Forum on innovation and the business of law. This took place on the 25th of January 2017.
The litigation funding sector has grown in recent years. A large part of the reason for this is due to cost reforms brought in by the Legal Aid, Sentencing and Punishment of Offenders Act in 2013. Other growth can be attributed to the industry gaining more mainstream awareness. The merger between Burford Capital and Gerchen Keller Capital will no doubt spur interest.
Other jurisdictions have seen regulation introduced. The industry is also gaining approval which is demonstrated by Singapore’s Parliament. They passed the Civil Law (Amendment) Bill 2016, on the 10th of January 2017, thereby allowing third-party litigation funding.
Conservative peer Lord Hodgson of Astley Abbotts has called for the litigation funding market to be more transparent. Lord Hodgson’s biggest concern is that funders operate under a “voluntary code of conduct without any mandatory rules to safeguard against potential abuses.” The full article can be found here.
At the Westminster Legal Policy Forum on innovation and the business of law, on the 25th of January 2017, Lord Keen responded to a written parliamentary question from Lord Hodgson. He said the government was happy with the status quo.
The minister stated:‘The market for third-party litigation funding remains at a relatively early stage in its development in this jurisdiction and we are not aware of specific concerns about the activities of litigation funders.’
‘The government has not therefore undertaken a formal assessment of the effectiveness of the voluntary code of conduct or the membership of the Association of Litigation Funders.’
‘The last government gave parliament an assurance that it will keep third-party litigation funding under review and this government is ready to investigate matters further should the need arise.’