The shifting sands of UK litigation funding - A look ahead
The landscape of UK litigation funding is undergoing a period of transformation, marked by significant growth, high-profile cases, and increasing regulatory scrutiny. At O'Connors, we understand the critical role litigation funding plays in ensuring access to justice, and we are committed to providing our clients with clear and insightful guidance through these evolving times.
The expanding UK litigation funding market
The UK litigation funding market has experienced exponential growth in recent years. Driven by factors such as the increasing complexity of litigation, the desire to manage financial risk, and the availability of sophisticated funding solutions, the market is estimated to be worth billions of pounds. The availability of litigation funding has enabled individuals and businesses to pursue claims that would otherwise be financially prohibitive, levelling the playing field against well-resourced opponents.
The rise of Personal Contract Purchase (PCP) claims
One of the most prominent areas driving this growth is the surge in Personal Contract Purchase (PCP) claims. Millions of consumers may have been mis-sold PCP agreements, leading to substantial financial losses. Litigation funders have played a pivotal role in enabling these claims to proceed, providing the necessary financial backing to enable consumers to challenge unfair practices adopted by financial institutions and seek redress without incurring upfront costs.
Supreme Court hearing
The upcoming Supreme Court hearing related to PCP mis-selling will have significant implications for the future of litigation funding and consumer rights. This case, focusing on the interpretation of key provisions within the Consumer Credit Act and related regulations, will determine the legal framework for assessing mis-selling in PCP agreements. The outcome of this case will undoubtedly shape the legal framework governing funded litigation, particularly within the automotive finance sector, but will no doubt extend beyond.
Government intervention and consumer detriment
Recent attempts by the UK government to intervene in the litigation funding market and the financial watchdog’s proposal for a universal redress scheme for mis-sold products have raised concerns about potential detriment to consumers. Proposed legislative changes, often framed as measures to control costs, could have the unintended consequence of restricting access to justice for vulnerable individuals. Whatever the outcome, it is essential that a balanced approach is adopted that ensures that any regulation promotes transparency and fairness without stifling innovation and access to justice.
The evolving regulatory landscape of litigation funding
The increasing prominence of litigation funding has brought the sector into sharper focus, leading to a growing debate about its appropriate regulatory framework. As previously mentioned, various regulatory measures are being discussed, and the future direction of these discussions will significantly impact the market. We are actively monitoring these developments and will provide further analysis on specific proposals as they emerge. An article on the attempted regulation of litigation funding will follow soon.
Specialist help for law firms is available
As the UK litigation funding market evolves, it presents law firms with complex challenges in structuring their funding arrangements. At O'Connors, we are dedicated to staying at the forefront of developments and have extensive experience of assisting law firms in navigating the complexities of securing and managing litigation funding. We understand the unique challenges faced by legal professionals in this area and are equipped to provide tailored solutions to facilitate access to justice.
For further information, please email Craig Geraghty or call 0151 906 1000.