There has been an exponential rise in interest and approaches for litigation funding in the last few years. Lawyers and their clients across the globe are becoming increasingly aware of litigation funding and its benefits.
However, as with most things, increased popularity has resulted in increased scrutiny of the industry, with funding and its implications being considered by governments in a number of jurisdictions.
For example, the Jersey Law Society is running a review of their Royal Court Rules. One of their considerations is whether litigation funding agreements in the jurisdiction should require approval from the Royal Court.
The Hong Kong Law Reform Commission has issued a consultation paper on third party funding in arbitration. The authors of that consultation paper recommend “…that Third Party Funding for arbitration taking place in Hong Kong [be] permitted under Hong Kong law.” They also recommend “…that clear ethical and financial standards for Third Party Funders…should be developed.”
In the UK, the introduction by Schedule 8 of the Consumer Rights Act 2015 of a so-called ‘class action’ in the context of competition claims, for which funding is likely to be required before any such ‘class actions’ can be brought, has brought discussions of funding and its regulation to the fore once again.
I say ‘once again’ because regulation of litigation funding in the UK was considered by Lord Justice Jackson in his detailed review of civil litigation costs. His conclusion was that self-regulation of the litigation funding industry was sufficient and appropriate. As a result, the Association of Litigation Funders (ALF) was founded in the UK in November 2011. ALF is, in accordance with Jackson LJ’s recommendations, a self-regulatory body. As professional litigation funders, all members of ALF must adhere to a code of conduct which, among other things, has strict capital adequacy and confidentiality requirements and complaints handling procedures.
It is widely accepted that self-regulation of litigation funding in the UK is working. There is no reason why such self-regulation would not be effective in other jurisdictions which are considering litigation funding and its impact on the dispute resolution landscape. Indeed, given the globalised nature of dispute resolution in the modern world, for jurisdictions which over-regulate funding or which disregard it completely, there may be a risk that claimants who might otherwise have chosen to litigate there may look elsewhere.
For more information on Vannin Capital, please contact: Leanne Harker, Marketing at Vannin Capital, T: +44 (0)1624 615 111, E: email@example.com