Civil Justice Council Review of Litigation Funding
Debate between Jim Shannon and Julian Smith(1 week ago)
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Sir Julian Smith
I agree with the hon. Member; the Vodafone case, which involved franchisees across the UK, is another example of how litigation funding can help.
The Supreme Court’s judgment in the PACCAR case in July 2023, which involved a claim against truck manufacturers for anti-competitive behaviour, rendered many third-party funding agreements unenforceable by bringing them in scope of another type of legal funding agreement, damage-based agreements. The impact of the judgment on the litigation funding market has been two years of instability and a lack of clarity about its contractual operating terms. The last Government sought to remedy the issue by introducing the Litigation Funding Agreements (Enforceability) Bill, which had reached Second Reading in the House of Lords immediately prior to the election.
Jim Shannon (Strangford) (DUP)
I commend the right hon. Gentleman for securing the debate; he was right to do so. Although no win, no fee seems like the only reasonable option for those seeking compensation in the civil courts to fund their cases, they can be easily taken advantage of, so does he agree that we need a framework that allows for a reasonable exchange of risk and benefit to consumers, rather than putting the ability to fight for justice just beyond their reach?
Sir Julian Smith
I agree with the hon. Member; I will come to some protections that I think he might be attracted by.
The last election stopped the Litigation Funding Agreements (Enforceability) Bill, which was going to overturn the PACCAR judgment, but on 1 August 2024, Lord Ponsonby said in a written answer to a parliamentary question that the new Labour Government
“recognises the critical role third-party litigation funding plays in ensuring access to justice.
Following the PACCAR judgment, concerns have been raised about the need for greater regulation of Litigation Funding Agreements…The Government is keen to ensure access to justice in large-scale and expensive cases, whilst also setting up adequate safeguards to protect claimants from unfair terms.
The Civil Justice Council is considering these questions and others in its review of third-party litigation funding, and hopes to report in summer 2025. The Government will take a more comprehensive view of any legislation to address issues in the round once that review is concluded.”
The Civil Justice Council review concluded in June this year. The litigation funding industry, businesses and the legal sector await the Government’s response. The current lack of response to the report is causing significant uncertainty to the sector and additional costs for those fighting for businesses and consumers. Although the Government are inevitably busy on many fronts, action on this is needed now and will be positive for the UK economy.
I will return to the recommendations of the CJC report shortly, but I just want to emphasise two broader points. First, the legal sector in the UK was worth about £52 billion in 2024, up by about 10% on the previous year. Litigation funding is estimated to have quadrupled since 2013, with more than £1 billion capital estimated as currently available to litigation. In 2023, PwC UK predicted growth at a compound annual growth rate of more than 8% over five years.
On a global basis, the global litigation funding market was approximately $20 billion in 2025 and is expected to be closer to $49 billion in 2035. Legal services with litigation funding are an important component and a vital export opportunity as the UK continues to be the leading centre for global disputes of all kinds and can stand to win significant revenues from deals such as the ones the Government have done with India, the US and, this week, Turkey. Services of all shapes and sizes, but particularly legal services, are a key UK economic sector and we should bear that in mind during this debate.
The second broader point is that litigation finance significantly assists with access to justice, as we have heard, discouraging large companies from anti-competitive or anti-consumer behaviour. Litigation finance funds cases of all shapes and sizes, but particularly class actions where there is a potential case against large and often global firms who unknowingly—or often knowingly —have breached the UK’s competition law.
UK competition law was crafted over many years to ensure an efficient market protecting consumers and fostering fair competition between companies, encouraging better and more effective growth. Both issues matter to UK citizens as they directly impact incomes and financial costs for families across the United Kingdom. We need one of our most successful service sectors to operate with a full focus on expansion and growth. That means more jobs, which mean more tax revenue. We need UK consumers to have routes to take on the huge might of the global companies from which they buy products and services, but that have such large market share and resources that they can more or less do what they want.
The Competition Appeal Tribunal was extended in 2015 by the coalition Government to include opt-out collective actions to enhance competition, ensure prices stay fair and that businesses do not abuse their position and keep innovating. As Ministers said at the time:
“Competition is one of the great drivers of growth”,
For many consumers, who are often on low incomes, cases in the CAT, funded by third-party litigation funding, is the only route to challenge and hold large companies to account.
Neither point is intended to imply that everything is perfect, but the PACCAR judgment and the need for legislation to remediate the situation, the CJC report that is the topic of this debate and a recent call for evidence on the opt-out regime at the Competition Appeal Tribunal, run by the Department for Business and Trade, all risk slowing down an important growth market for the UK if Government responses are not executed quickly, proportionately and with vision. Improvements can clearly be made to the oversight of the litigation funding sector, and also in the operation of the Competition Appeal Tribunal. Having said that, despite heavy lobbying for change, there is no evidence that the UK’s ranking as a destination for foreign direct investment has been affected by our vibrant competition regime. Moreover, private enforcement of the regime through the CAT seems to be good value for money, with just over £5 million in costs for the Competition Appeal Tribunal and £118 million for the Competition and Markets Authority.
The first recommendation of the CJC report is:
“Legislation should be introduced to make clear that litigation funding is…a distinct form of funding”.
It also recommends that the effect of the PACCAR Supreme Court judgment should be overturned. Although the market has, to an extent, adapted to that judgment in June 2023, the bulk of submissions to the review and elsewhere highlighted the impact on the provision of funding. Less money has been delivered to claimants, and there has been a reduction in the number of CAT cases. The report’s main ask is to get legislation in place and to overturn PACCAR. I would be interested to hear the Minister’s response on when that will happen, and a clear timeline. It would be good to get it done in this Session of Parliament. I would also be interested in the Minister’s comments on the change being retrospective, which seems fraught with complications. On the previous Bill’s Second Reading debate in the House of Lords, Members raised concerns.
Other flagship recommendations in the CJC review relate to the move from self-regulation by the Association of Litigation Funders not to the Financial Conduct Authority, which some proposed, but to light-touch regulation put in place by the Lord Chancellor. The proposals are for differential regulations for the type of claimant: very little for commercial disputes, and lighter touch for consumer, representative or class actions.
The review proposes a minimum baseline set of regulatory requirements, focusing on case-specific capital adequacy, codification that litigation funders should not control the litigation process, conflicts of interest and money laundering. Additional light-touch regulation is proposed for groups and consumer claimants, to include a consumer duty, early court approval of the funding agreement and a court assessment of whether the lender’s return is reasonable. Further measures include the provision of independent legal advice for consumers before entering into funding agreements, and a prohibition on litigation funders controlling proceedings or settlement proceedings.
In reflecting on the proposals, the Government must be alive to the risk of fettering an innovative and successful industry that enables consumers to mount challenges against Goliath-sized firms. I encourage them to take a pragmatic view, driven by the market. There may be merit in applying some elements of the CJC report through regulations, but it is worth considering strengthening the current self-regulation regime, including by getting all players operating in the UK market to join the Association of Litigation Funders—it is a self-regulation body has a code of practice, but not all litigation funders are in it. I call on the industry to get everybody operating in litigation funding in the UK on board in the association.
There are proposals to use redress schemes and other forms of non-court-based resolution more regularly. I believe strongly in alternative routes to settlement, so I agree strongly with those proposals. Much more can be done to offer settlement options, including encouraging settlement rather than litigation, offering mandatory mediation in parts of the CAT process, and making mediation a clause within the process for litigation funding agreements. Avoiding costly disputes is generally a good thing. Focusing on settlement, not litigation, in the Government response would help in that regard. Mandatory mediation would also help to ensure that disputes between litigation funders and law firms are handled more clearly.
Although I acknowledge that improvements need to be made, I hope that the Minister and the Government will reflect on the potential motivations of some of those who look to impose heavy changes on opt-out. Opt-out, and its reliance on litigation finance, offers consumers a powerful opportunity for redress. The Government opt-out review, introduced earlier this year, references perceived burdens of the current regime on business, but there seems to be little evidence of our competition law putting off inward investment. The UK is seen to be a great place to invest and the same arguments that helped to build the UK competition rules stand today. If there is no fear of being brought to book, some companies will continue to rip off and abuse consumers. If they are abiding by UK competition law, they have nothing to fear.
While acknowledging that improvements can be made, we should be sceptical of those who seek to fetter consumer rights and should instead make the case for an expansion of those rights in the interests of our citizens and UK economic growth. A strong defence of consumer rights is the best way for the UK to continue to thrive, for the UK economy to grow, and for inward investors and domestic businesses to stay lean and competitive.
Whatever the Minister’s response today, I hope that the Government will soon introduce a Bill to address PACCAR, the primary recommendation of the CJC report, and will seek to look at practical ways to implement elements of that report while avoiding adding burdens, cost and micromanagement on to an innovative and important sector.
United Kingdom Internal Market
Debate between Jim Shannon and Julian Smith(1 year, 9 months ago)
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Julian Smith
I absolutely agree with those comments. We see that in the Command Paper with Intertrade UK, which I hope will have excellent subject matter experts to build trade opportunities further, as well as with the East-West Council and various other groups.
The Command Paper is much more than a constitutional or legislative document. It is the basis for building on the already extremely exciting opportunity that Northern Ireland has to conquer in multiple sectors of the economy. I presume we will now be moving on to looking at talent and skills, and at how people from poorer nationalist areas or poorer Unionist areas can maximise these economic opportunities. This document is the basis for moving forward for Northern Ireland under a new devolved Executive, and for Northern Ireland knocking the lights out in various sectors of the economy in years to come.
Oral Answers to Questions
Debate between Jim Shannon and Julian Smith(5 years, 9 months ago)
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Ben Bradley (Mansfield) (Con)
The Secretary of State for Northern Ireland (Julian Smith)
The UK Government are providing the restored Executive with a £2 billion financial package that delivers for the people of Northern Ireland and supports delivery of the “New Decade, New Approach” agreement. This financial commitment represents the biggest injection of new money in a Northern Ireland talks deal in well over a decade. The £2 billion of extra investment gives the Executive the means to transform the lives of people in Northern Ireland for a generation.
Jim Shannon
In January 2020, when making a statement about the “New Decade, New Approach” deal, the Secretary of State told the House that the financial package was a good start. I love a good start, but I also like good progress. Will he update the House on what progress has been made in building on the good start to ensure investment in better mental health services and dealing with the legacy of the past?
Julian Smith
Indeed, the hon. Gentleman is right. There has been a very good start, and there have been multiple meetings here in Whitehall with joint Ministers. We have had a Joint Ministerial Committee in Cardiff, and yesterday both the First and Deputy First Ministers attended, for the first time ever, a recruitment drive by the Police Service of Northern Ireland. We have seen a very positive start, and I hope that that continues.
Northern Ireland Executive Formation
Debate between Jim Shannon and Julian Smith(5 years, 9 months ago)
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Julian Smith
My hon. Friend is right about the need for reform and change. I pay tribute to David Sterling and his team at the Northern Ireland civil service who for three years have had to step in in the absence of political decision making from the devolved Assembly and Executive. I also remind all those supporting the new Executive that, as well as funds, we must focus on reform, change and transformation.
Jim Shannon (Strangford) (DUP)
I thank the Secretary of State for his commitment, dedication and strength of character in getting the deal over the line. On nurses, the extra £109 million to maintain an equal pay standard for this year and next year is welcome, but will he outline the steps he has taken to enhance the block grant, which will enable our staff to provide bursaries to keep training, increase the numbers of frontline, highly trained staff and reduce and keep waiting lists at an acceptable level?
Julian Smith
As I said earlier, about £245 million is going into the transformation of public services and £550 million into resource support, of which £200 million will resolve the nurses’ pay dispute. It is up to the Executive and the Assembly to work out how they want to spend that money and to address any other opportunities that they may find coming from the Budget in March.
Historical Institutional Abuse (Northern Ireland) Bill [Lords]
Debate between Jim Shannon and Julian SmithTuesday 5th November 2019
(6 years ago)
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Julian Smith
I thank the right hon. Gentleman for all that he and his party have done to help to deliver this Bill.
Jim Shannon (Strangford) (DUP)
The House is clearly united on seeing justice and doing right by those who have been abused and who have waiting too long for recognition and a form of restitution. I thank the Government for prioritising this Bill and for getting it through before Dissolution.
I particularly want to mention some of those with whom I have worked closely: Gerry McCann and others from the Rosetta Trust; Margaret McGuckin, who is in the Gallery and who has been working on this since 2008; and Anne Hunter, who is also in the Gallery and whose sister, Sadie, died at Nazareth House in 1974. Although we celebrate the Bill, it is bittersweet for those who were abused, physically and otherwise, and who cannot be here today to see the conclusion of something for which we have worked very hard.
Julian Smith
The hon. Gentleman is absolutely right. I will return to some of those examples, but the fact that so many survivors and victims have died is one of the tragedies of this period.
Julian Smith
I will come on shortly to deal with that question. The second part of this Bill creates a statutory commissioner for survivors of institutional childhood abuse for Northern Ireland, who will act as an advocate for victims and survivors and support them in applying to the redress board. Whether in fighting for support services or in ensuring that payments are made as quickly and as fully as possible, the commissioner will play a key role in delivering for victims.
Jim Shannon
It is important not only that we have the commissioner in place, but that the moneys available for compensation will range from £10,000 to £80,000. I wish to make the point about the De La Salle Brothers and what happened in my constituency at Rubane House, outside Kircubbin, where institutional abuse, both physical and sexual, against some young boys took place over a period. Those young people are adults now but they are traumatised. How will the trauma, and the physical and emotional effect it has upon them, be taken into consideration whenever they apply to the commissioner for help?
Julian Smith
I hope that one of the commissioner’s focuses will to be look at the services to support those who come forward. That will require money and organisation, but it will be a key part of the role for whoever takes on the position of commissioner.
I have just been asked about this, so let me say that one of the key concerns of parliamentarians and victims’ groups alike is the swift payment for victims and survivors after the passing of this legislation. Victims have already waited too long for redress, and as we have heard, many have died doing so. Our thoughts are with their families. Clause 14 contains provisions that allow the redress board to pay an initial acknowledgement payment of £10,000 to eligible victims before the full determination of the total compensation is payable. Clause 7 allows the redress board to take a flexible case-management approach to claims to ensure that those who are elderly or in severe ill health are considered as a priority. Those in greatest need of redress will get their payment more quickly. Clause 6 allows claims to be made on behalf of a deceased person by their spouse or children.
Other key aspects of the Bill that are important to victims and survivors include provisions that allow the redress board to convene oral hearings, but in a way that should not create an unnecessary delay for those cases in which oral evidence is not required; the ability of the redress board to determine the rate of compensation based on a number of factors, including the duration of stay in an institution; and the ability of the commissioner for survivors of institutional child abuse for Northern Ireland to make representations to any person, including to the redress board. I also wish to confirm to the House that my Department is working closely with the Northern Ireland civil service and David Sterling to ensure that there is adequate resource and capacity for this redress scheme, so that it can get going as urgently as possible.
Northern Ireland: Restoring Devolution
Debate between Jim Shannon and Julian Smith(6 years ago)
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Julian Smith
We will bring forward a consultation in the coming days. As I have said, decriminalisation and the moratorium on criminal cases will take effect from tomorrow. We will be delivering in the new year on the law that has now changed.
Jim Shannon (Strangford) (DUP)
As the Secretary of State will know, the Assembly tried to meet today, when some 33-plus Members tried to initiate a debate to stop the abortion legislation going forward. Unfortunately, Government acquiescence to the legislation ensured that it went through this place. Does he not understand the anger that people in Northern Ireland feel about the abortion changes, and will he bring in changes for the Department of Health, which will have a deficit of £20 million this year, to ensure that it can do what it needs to do in the year ahead?
Julian Smith
I understand the huge sensitivities around this issue, but there was a free vote in this House and the law was clear that if the Assembly and the Executive were not up and running by today, the law relating to same-sex marriage and abortion would change. We have now reached that point. With regard to funding for abortions, the Government will continue to pay for travel to England during this period, and we will ensure, as part of the consultation and the changes, that the health service in Northern Ireland has every resource it requires.
Wrightbus (Ballymena)
Debate between Jim Shannon and Julian Smith(6 years, 1 month ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
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Julian Smith
I am very happy to pay tribute to Sue. As colleagues from across the House know, she played a very important role in the civil service here and continues to do so in Northern Ireland.
Jim Shannon (Strangford) (DUP)
One of the best things that the Secretary of State and the Government could do would be to encourage and fund Translink to the tune of £40 million, to enable it to buy the new buses it needs, which would enable Wrightbus to survive, thrive and retain jobs. Will the Secretary of State consider that?
Julian Smith
The £220 million announced by the Chancellor of the Exchequer a few hours ago will be of benefit to all bus companies and will ensure that the market for buses in both GB and NI will continue to thrive.
Northern Ireland
Debate between Jim Shannon and Julian Smith(6 years, 2 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Julian Smith
We are fully committed to no hard border between Northern Ireland and Ireland.
Jim Shannon (Strangford) (DUP)
In the Sunday papers at the weekend, there were indications that dissident republicans are contacting experienced bomb makers in the IRA to make a spectacular big bomb. What is being done to prevent dissident republicans from making contact with the bomb makers, to ensure that those bombs never happen in Northern Ireland or anywhere in the United Kingdom of Great Britain and Northern Ireland?
Julian Smith
The PSNI and the security services have done an exceptional job over the summer. I pay tribute to them and their families, because people are trying to kill them—that is on the increase and certainly was over the summer. I have decided to convene a weekly security meeting that includes the PSNI to make sure that in the coming weeks and months I am apprised on a regular basis and meeting those people who are leading these teams putting their lives on the line.