The UK government has revealed that it has no plans to revive the Litigation Funding Agreements (Enforceability) Bill, which foundered ahead of the general election, until a review into funding reports next summer. 

The decision to await the result of the Civil Justice Council’s (CJC's) review was revealed by justice minister Lord Ponsonby in an answer to a written question to the Ministry of Justice by the Conservative peer Lord Sandhurst (former Bar Council chair Guy Mansfield KC).

The legislation had been fast-tracked by the previous government with cross-party support in a bid to end the uncertainty created by last year’s House of Lords PACCAR judgment, which was considered to have rendered thousands of litigation funding agreements (LFAs) unenforceable by determining that they were damages-based agreements (DBAs). 

In his written answer, Ponsonby recognised “the critical role third-party litigation funding plays in ensuring access to justice” but also pointed to the fact that “following the PACCAR judgment, concerns have been raised about the need for greater regulation of LFAs, or greater safeguards for claimants”.

He concluded: “The government will take a more comprehensive view of any legislation to address issues in the round once that [CJC] review is concluded.”

Reactions to the ministerial statement varied. Clyde & Co partner Ben Knowles suggested the decision balanced continued short-term uncertainty with the prospect of greater certainty following changes to litigation funding in the medium term. “We now appear to have more clarity about the journey but less about the destination,” he added. 

Tanya Lansky, managing director of litigation funders LionFish, said one upside was that the CJC review could look to broader structural issues impairing access to justice, adding: “Some may not like a broader agenda, but the broader the review, the better informed the likely outcome.”

The executive director of Fair Civil Justice – former Tory MP Seema Kennedy OBE – said: “In the 12 months since the PACCAR ruling by the Supreme Court, and despite the claims from funders and law firms about the existential risk to the industry, there has been a sustained growth of new group action claims.”

She added that her organisation would continue to campaign for transparency and consumer safeguards. 

Last week, Kennedy was drawn into a war of words between herself and litigation funders following CMS’s recent report on class actions, which one funder called “nakedly one-sided”, an accusation denied by CMS. 

The tussle took place against the background of the Competition Appeal Tribunal’s (CAT’s) decision to approve the Trucks Cartel litigation, which partly inspired the PACCAR Supreme Court action and marked the first approval of an opt-in collective claim.

The CJC’s terms of reference were published in April. It will assess the current position of third-party funding, consider whether these arrangements deliver effective access to justice, and make recommendations for reform. An interim report will be published this summer, on which comments will be sought, with the final report due by the summer of 2025.