The Evolving Landscape of Litigation Funding in 2024

The core point: funding certainty is now part of access to justice

Litigation funding is not an abstract commercial product. In many high-value, complex or collective claims, it can determine whether the claim is brought at all.

The attached draft correctly identifies litigation funding as an access-to-justice mechanism. A claimant who cannot afford years of expert evidence, disclosure, adverse-costs exposure and trial preparation may be unable to proceed unless a third party funds the case. That is particularly true where the defendant is a large company, public body or institution with far greater resources.

But funding also creates risk. A funder may seek a percentage of damages, a multiple of capital deployed, priority over recoveries, influence over settlement, or rights that affect the claimant’s practical control of the litigation. The policy question is not whether litigation funding is good or bad. It is how the law should make it enforceable, transparent and fair.

What PACCAR decided

The Supreme Court case concerned proposed competition collective proceedings arising from the European Commission’s trucks cartel decision. The proposed claimant representatives relied on litigation funding agreements to show that they had adequate funding arrangements for their own costs and possible adverse-costs orders.

The issue was whether funding agreements under which the funder’s return was calculated by reference to a share of damages were damages-based agreements within the statutory regime. If they were DBAs, and they did not comply with the DBA requirements, they were unenforceable.

The Supreme Court allowed the appeal by majority. The decision meant that certain percentage-based litigation funding agreements could be treated as DBAs. That changed the risk profile for funders, law firms and claimants who had assumed that passive third-party funding sat outside the DBA regime.

Why it matters: the technical point became a funding-market problem

On paper, PACCAR was a statutory interpretation case. In practice, it affected the economic structure of funded litigation.

Funders need confidence that their agreements are enforceable. Claimants need confidence that funding will remain in place. Law firms need confidence that the funding structure will survive challenge. Defendants need confidence that funded claims are properly backed and that adverse-costs risk is addressed.

Once enforceability is uncertain, litigation can become dominated by satellite disputes about funding rather than the underlying wrong. That is a poor outcome for claimants, defendants and the courts.

Access to justice: the Post Office lesson

The access-to-justice argument is strongest where litigation funding enables claims that would otherwise be practically impossible. The Post Office Horizon litigation is often cited as a prominent example of funded group litigation exposing serious institutional failure.

That example does not mean every funded claim is meritorious. Nor does it mean every funder return is fair. It does show why a blanket chill on funding can harm public accountability. Some claims require collective organisation, technical evidence and financial backing before the truth can be tested.

Client protection: funding must not become a second injustice

The criticism of litigation funding is not trivial. If funders take excessive returns, influence settlement strategy, conceal the economics of the arrangement, or leave claimants with limited practical benefit, the access-to-justice argument weakens.

That is why reform should not simply make all funding agreements enforceable without safeguards. The funded party needs to understand the structure. The court may need to know that funding exists. The opposing party may need assurance about adverse costs. In consumer, collective or group claims, additional protection may be needed because individual claimants may have limited bargaining power.

The Civil Justice Council’s approach is important because it separates two questions. First, should PACCAR’s effect be reversed? Secondly, what regulatory structure should govern third-party funding after that reversal?

The reform position: reversal, regulation and delay

The Civil Justice Council’s June 2025 final report recommended reversing the effect of PACCAR through legislation, both retrospectively and prospectively. It also recommended light-touch statutory regulation, including baseline requirements such as capital adequacy, funder non-control, conflict provisions, anti-money-laundering requirements and early disclosure of the fact of funding.

For consumer claims, collective proceedings, representative actions and group litigation, the report recommended additional safeguards. These included independent legal advice and, in appropriate cases, court approval or scrutiny of whether the funder’s return is fair, just and reasonable.

The problem is delay. The 2024 Bill fell with the general election. Later government statements and reporting indicated an intention to legislate, but public reporting in June 2026 continued to describe concern that the PACCAR uncertainty had not yet been fixed.

The practical test: what lawyers, funders and claimants should check

For practical purposes, the question is no longer simply whether a case has funding. It is whether the funding structure can survive challenge and whether the client understands the economic consequences.

Any funded case should be approached with a written funding map. That map should identify the funding model, the return formula, control rights, termination rights, adverse-costs cover, disclosure requirements, settlement mechanics, court-approval needs and client-advice record.