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Legislation to be unveiled to reverse Supreme Court's ruling in PACCAR

Much awaited legislation to overturn a Supreme Court judgment threatening the future of litigation funding is to be introduced by the government today. According to a Ministry of Justice announcement, Alex Chalk MP, the lord chancellor, will introduce a measure to make it easier for members of the public to secure the financial backing of third parties when launching complex claims.

The government also announced plans to review of the entire litigation funding sector.

Today's legislation will reverse the Supreme Court's ruling last July in PACCAR that a litigation funding agreement amounted to a damages-based agreement (DBA), contrary to what had been widely understood to be the position. This has called into question the enforceabilty of many litigation funding agreements. Announcing the measure, Chalk cited the role of litigation funding in the Horizon Post Office scandal. 

'It’s crucial victims can access justice – but it can feel like a David and Goliath battle when they’re facing powerful corporations with deep pockets,' Chalk said. 'This important change will mean more victims can secure vital third party funding to level the playing field and support their fight for justice. The sub-postmasters were able to secure third party funding in their legal action against the Post Office. Now others will too.'

Meanwhile the government said it is considering options for a wider review of the sector and how third-party litigation funding is carried out. This could consider whether there is a need for increased regulation or safeguards for people bringing claims to court, particularly given the growth of the litigation funding sector over the past decade. Further details will be set out in due course, the government said. 

Law Society president Nick Emmerson welcomed the government's aim of widening access to justice. 'Too frequently it is said that justice is not a priority for this government, but we would hope recent events will call for reflection on how it supports access to justice through the court system for all those without independent financial means,' Emmerson said.  'The public do care about justice and are vocal about when it is lacking.'

On the review announcement, Emmerson said: 'There could be merit in a review, but it would be worth considering the risk of the funding arrangement rendering any victory hollow for the consumers affected.'

Martyn Day, co-president of the Collective Redress Lawyers Association, said:  'This is a very sensible and welcome development from government and follows calls from funders, lawyers and claimants, including former sub-postmaster Alan Bates, who have used third party funding agreements to access justice in the past. It will ensure that groups of claimants seeking redress resulting from wrongdoing by large corporations and other bodies will be able to focus on bringing claims without those corporations tying up court time and money in trying to unpick the funding agreements that make the claims possible.

Today’s announcement will bring much needed clarity to claimants, the courts and those funding claims.'

Day stressed that any reform of the collective redress sector 'must build on today’s welcome announcement and not undermine it. Collective redress is a vital legal mechanism by which ordinary people can seek justice when wrong is done to them by mighty corporations and other bodies. We will work closely with government on any reform that gives clarity, certainty and fairness to claimants and those who support them in bringing their claims.'

Gary Barnett, executive director for the International Legal Finance Association, said: 'We’re pleased to see the government grasp the importance and urgency of this issue with a commitment to introducing a dedicated bill.'We hope ministers continue to push the bill through at pace to resolve the uncertainty created by the PACCAR decision. We are fully aligned with the government on the importance of legal finance to the UK legal sector, business and citizens.'

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