The fallout from the issues raised and uncertainty caused by this judgment will have a far-reaching impact on the industry as a whole, and serve to be a retrogressive step for an industry still in its infancy
Director Mohsin Patel comments on the recent ‘blow’ to litigation funding in The Times
Following a recent UK Supreme Court judgment which made many litigation funding agreements unlawful and unenforceable overnight, Director Mohsin Patel comments on the wide-reaching impacts of this decision on the litigation funding industry.
Mohsin’s comments were published in The Times, 31 August 2023, and can be found here.
“This judgment will have a significant and immediate negative impact on the funders in this case and more generally, as they find that their agreements are now potentially unlawful. This will have serious repercussions, particularly for claims that have been brought on an ‘opt-out’ basis which now face the double whammy of their funding agreements not only being in breach of the DBA regulations but also being unable to cure any breach through renegotiation as DBAs are not permitted in opt-out claims.
“Whilst many litigation funders will be reviewing their LFAs and considering their next steps in light of this judgment, the consequences may well not be as widespread as expected. Given that funder returns in many LFAs are structured as multiples of funds invested as opposed to a fixed share of damages, these should therefore fall outside of the DBA regulations.
“Needless to say, the fallout from the issues raised and uncertainty caused by this judgment will have a far-reaching impact on the industry as a whole, and serve to be a retrogressive step for an industry still in its infancy. Overall, a bad day for consumers, funders and lawyers as a whole.”