I am looking forward to moderating a discussion about Ethical Considerations in Litigation Funding at the National Forum for Environmental and Toxic Tort Issues ("FETTI") in Chicago next month with Daniel Furshpan and Dr. Maria-Vittoria Carminati, Esq. We are getting the band back together after having a lively discussion at the American Bar Association's Toxic Tort and Environmental Law Section's PFAS conference earlier this year in Scottsdale.
But as the moderator I have to keep it fresh and last week the Supreme Court of the United Kingdom in a 4-1 decision ruled that certain types of litigation funding agreements are not enforceable in England and Wales because they fall within a statutory definition of prohibited damages-based agreements (DBAs).
In 2021, the Court of Appeal held that the DBA statute did not include litigation funding agreements. The Supreme Court disagreed with Lord Sales noting, “[p]articipants in the third party funding market may have made the assumption that such arrangements are not DBAs and hence are not made unenforceable by section 58AA(2). But this would not justify the court in changing or distorting the meaning of “claims management services” as it is…”
To what extent, if any, this decision will impact litigation funding across the pond here in the US is unknown. At a minimum, until specific regulations for litigation funding are passed people will continue to debate whether current regulations on contingency fee arrangements, loans, or champerty.
Champerty, you say? Yeah, I had never heard of it either before looking into these issues. Champerty usually bars a stranger from funding litigation fees and costs in return for a financial interest in a case's outcome. Last I checked most state's allow Champerty, some don't and some are unclear. For example, earlier this year there was litigation pending in Mississippi to repeal its prohibition on Champerty. So, here in the US the trend seems to be for permitting these type of arrangements.
I suspect that we will see increased regulation in the upcoming years, but litigation funding is already a multi-billion dollar industry. Does it level the playing field? Is it out of control? Come to Chicago and find out. No place better in September.
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