Policy Developments

Our Legal Future engages with policymakers from across the political spectrum to protect the integrity of the British justice system.

Third Party Litigation Funding

The growth of the third party litigation funding industry has prompted significant concerns within Parliament and the Government about the need for statutory regulation.

In February 2012, during the House of Lords debate of the Legal Aid, Sentencing and Punishment of Offenders (LASPO) bill, four Liberal Democrat peers tabled an amendment (142C) regarding statutory regulation of the third party litigation funding industry. The amendment:

• Called for a clear definition of litigation funding
• Set terms for the full disclosure of funding agreements
• Required any third party litigation funders to be licensed under conditions determined by the Lord Chancellor

A number of senior peers raised serious concerns about the industry during the debate over the amendment (see sidebar). Although the amendment was withdrawn, Minister of Justice Lord McNally acknowledged that many Peers had “given warning signals” about the practice of litigation funding.

Collective Actions

Collective actions have recently been the focus of increased attention from policymakers, and two consultations relating to the issue were issued in the first half of 2012.

Department for Business, Innovation and Skills Consultation

In April 2012, the Department of Business, Innovation and Skills (BIS) issued a consultation asking for comments on the possible introduction of “opt-out” collective actions in competition law cases.

The Institute for Legal Reform submitted a response to this consultation in July 2012 that laid out the many threats that opt-out collective actions present to the British legal system, including:

• Loss of claimant control
• Abuse of the system
• Risk of “blackmail settlements”
• Forum shopping

The ILR’s concerns were echoed in a submission by the Confederation of British Industry (CBI), which warned the proposals could spark a new harmful litigation industry around competition law and deter inward investment and growth.

Labour Party Consultation

In February 2012, the Labour Party announced a consultation on class action proposals for consumer redress as part of its broader investigation into consumer fairness. The Labour Party will host consumer hearings throughout the summer of 2012 where relevant stakeholders will give oral evidence. Written submissions are also requested. A report on proposals regarding consumer class actions is expected in Autumn 2012. The findings will directly contribute towards the Party’s future business policy platform.