Third party litigation funding has not helped ordinary consumers

Third party litigation funding has not helped ordinary consumers

The first academic study on whether third party litigation could give people with limited means greater access to the justice system has revealed its initial findings.

The research team from Oxford and Lincoln universities says preliminary findings show that although litigation funding has increased access to justice for companies, individuals do not benefit from the funding models currently available.

The research team is looking at the emergence of third party litigation funding in Britain for civil cases. Litigation funders are companies capable of raising vast sums of money to allow claimants in civil litigation cases to pursue justice through the courts or arbitration. In return for their finance, the funders retain a share of any damages awarded.

Collaborating on the study are Dr Christopher Hodges from the University of Oxford, and Professor John Peysner and Dr Angus Nurse, from the University of Lincoln. The preliminary findings show that most of the claims levels currently involved in cases paid for by a litigation funder are relatively high, usually well in excess of 100,000. This suggests that ordinary consumers would be unlikely to use this model. The researchers’ view is that a new, different model of litigation funding needs to develop for the ordinary person in the street to benefit.

Dr Angus Nurse from the University of Lincoln said: ‘Much has been said about access to justice over the last decade. There is a principle in this country that everyone should have equal access to the courts but in reality that just is not the case.

'In reality, you have more chance of getting justice if you have money. In this research we are considering whether third party litigation funding can provide a solution to problems with access to justice in cases where people want to take legal action but cannot get legal aid and do not have the money to fund the case themselves.’

Principal investigator Dr Christopher Hodges from the University of Oxford said: ‘Our research shows that litigation funding currently benefits SME companies in accessing justice. This new form of funding has revealed an unknown area of demand for enforcement of civil law, which is of considerable potential benefit to the economy. Ensuring that small companies are able to claim when they are commercially disadvantaged, such as where contracts or licensing agreements are breached, is important for maintaining a healthy economy.’

The study also showed that litigation funders in Britain are primarily corporate entities working with large funds rather than smaller funders. The researchers found that concerns about litigation funding presenting possible risks for the consumer are currently of little concern since litigation funding is primarily a commercial product aimed at corporate clients. However, there is concern about the potential for unfair contract terms in future, if funding is made available to ordinary people who may have little understanding of their rights.

Although in British law it is illegal for a third party to interfere with or control another party’s litigation, it is not illegal for a third party to fund another’s litigation, provided they do not dictate legal strategy.

Interviews conducted for the study with funders and consumer groups indicate that both groups would welcome more government regulation in this area. The funders would like to see regulation brought in that prevents rogue traders from entering the market place and they believe it might even help to make third party litigation more popular. Consumer groups interviewed said the current situation of self-regulation was inadequate.

The preliminary findings were unveiled at an international conference at the University of Oxford. The International Conference on Litigation Funding was organised by Oxford’s Centre for Socio-Legal Studies and the University of Lincoln’s Centre for Dispute Resolution.

This site uses cookies and analysis tools to improve the usability of the site. More information. |