Study Finds Litigation Funding Supports Regulatory Objectives and Access to Justice

The Legal Services Board (LSB) has released a report commissioned by Professor Rachael Mulheron KC (Hon) of Queen Mary University in London, which delves into the world of litigation funding and its impact on consumers in England and Wales. The report identified 44 cases over the past five years where litigation funding played a crucial role in supporting access to justice.

Litigation funding, which allows cases to be funded that would otherwise not be financially viable, serves a public interest by improving access to justice, according to the report. However, there are concerns about the potential use of litigation funding for economic crime, as it can be difficult for law firms to ascertain the ultimate source of funds provided by litigation funders.

The report highlighted the importance of litigation funding in supporting the interests of consumers, promoting competition in legal services, and ensuring that lawyers are paid for their work. It also addressed the need for proper anti-money laundering checks to be carried out by law firms when engaging with funders, particularly those that are not members of the Association of Litigation Funders.

The report concluded that if the Litigation Funding Agreements (Enforceability) Bill 2024 is passed, litigation funding is likely to continue developing as a niche but vital aspect of legal services provision. Richard Orpin, interim LSB chief executive, emphasized that while litigation funding plays an important role, it alone cannot address the significant access to justice gap.

The findings of the report have been shared with the Civil Justice Council to inform its review of litigation funding, and are expected to be of interest to policymakers and regulators in the legal industry. Shrutika Gandhi, a doctoral student with the Institute of Advanced Legal Studies, collaborated with Professor Mulheron on the research project.