MoJ not minded to regulate third-party litigation funding

The government has said the case has yet to be made for bringing in statutory regulation for third-party litigation funding.

The litigation funding sector has grown in recent years following costs reforms brought in by the Legal Aid, Sentencing and Punishment of Offenders Act in 2013.

Regulation has been discussed and progressed in other jurisdictions, and last year Conservative peer Lord Hodgson of Astley Abbotts called for the litigation funding market to be more transparent.

Responding to a written parliamentary question from Hodgson, justice minister Lord Keen of Elie said the government was happy with the status quo.

The minister added: ‘The market for third-party litigation funding remains at a relatively early stage in its development in this jurisdiction and we are not aware of specific concerns about the activities of litigation funders.

‘The government has not therefore undertaken a formal assessment of the effectiveness of the voluntary code of conduct or the membership of the Association of Litigation Funders.

‘The last government gave parliament an assurance that it will keep third-party litigation funding under review and this government is ready to investigate matters further should the need arise.’

In October 2016, the Hong Kong Law Commission published a report expressing support for the use of third-party funding in arbitration, with legislation set to be introduced to abolish barriers to arbitration funding in Hong Kong and to introduce light-touch regulation.

In Singapore, legislation was started this month to open the doors to third-party funding, again limited to arbitration.

Writing in the ConservativeHome blog last summer, Lord Hodgson, an investment banker, said litigation funding was ‘notoriously secretive’ about the methods being used and the scope of the sector.

‘There is a strong argument for a full parliamentary review of the extent of TPLF,’ he wrote. ‘This also could usefully consider potential safeguards, including transparency requirements, registration of funders and prohibition on funder control of proceedings.’

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MoJ not minded to regulate third-party litigation funding