School of Law Westminster Legal and Policy Forum Keynote Seminar: - - PowerPoint PPT Presentation

School of Law

Westminster Legal and Policy Forum Keynote Seminar: Third Party Litigation Funding and the Future of the Voluntary Code Hall of India and Pakistan, London, 28 November 2012 ‘Next Steps for Regulating the Sector: Reflections One Year On, and Future Challenges’

• Prof. Rachael Mulheron

Department of Law Queen Mary University of London r.p.mulheron@qmul.ac.uk

IN SUMMARY: Three forms of Third Party Funding regulation, going forth:

• Via judicial scrutiny
• Via ‘soft regulation’: the impact of the

Code of Conduct for Litigation Funders ('the Code'), and the incorporation of the Association of Litigation Funders (ALF)

• Via other entities/avenues

(A) Judicial scrutiny:

• the legal consequences of s 14 of the Criminal Law Act 1967, especially

s 14(2):

The abolition of criminal and civil liability under the law of England and Wales for maintenance and champerty shall not affect any rule of that law as to the cases in which a contract is to be treated as contrary to public policy or

• therwise illegal.
• recent judicial endorsement of third party funding: Sibthorpe v Southwark LBC

[2011] EWCA Civ 25, [2011] 1 WLR 2111

Judicial scrutiny — where judicial scrutiny may emanate from, drawing upon

previous caselaw, e.g.:

• Barclays Wealth Trustees (Jersey) Ltd v Equity Trust (Jersey) Ltd

(Royal Court of Jersey, Samedi Division, 28 Aug 2012)

• In re Valetta Trust (Royal Court of Jersey, Samedi Division, 25 Nov 2011)
• Sidthorpe v Southwark LBC [2011] EWCA Civ 25, [2011] 1 WLR 2111;

Stocznia Gdanska SA v Latreefers Inc [2000] EWCA Civ 36

Judicial scrutiny — some matters which matter, e.g.:

• independent ‘checks and balances’? (Code, cl 7(a));
• potential conflicts of interest (but not the ‘theoretical’) (Giles v Thompson [1994] 1 AC 142 (HL))
• any monopolisation of the litigation? (Code, cl 7(c))
• the size of the fee (Factortame (No 8)) [2003] QB 381 (CA)

Per: R Mulheron and P Cashman, ‘Third Party Funding of Litigation: A Changing Landscape’ (2008) 27 Civil Justice Quarterly 312

(B) ‘Soft Regulation’: The Code and the ALF

• to whom the Code applies (Code, cl 2)

A Funder has access to funds immediately within its control, or acts as the exclusive investment advisor to an investment fund which has access to funds immediately within its control

• the (deliberate) effect of that limitation upon membership

The Code and the ALF — some important criteria:

• capital adequacy (Code, cl 7(d))
• independent advice (Code, cl 7(a))
• no inappropriate control of the conduct of the litigation (Code, cl 7(c))
• termination provisions (Code, cll 9(b), 10)
• settlement discussions (Code, cl 9(a)

The Code and the ALF — re adverse costs:

• any provision in the Litigation Funding Agreement? (Code, cl 8(a))
• will the Arkin principle change? Sir Rupert Jackson (Civil Costs Enquiry) thought that it

should ...

• some important observations in In re Valetta Trust (Royal Court of Jersey, 25 Nov 2011)

The Code and the ALF — comparison with DBAs:

• The Damages-Based Regulations 2012 (draft), and the SRA Code of Conduct 2011 (vn 5,

1 Oct 2012)

• comparisons (in the Third Party Funder’s favour), re:
• conflicts of interest;
• termination provisions;
• covering expenses for the funded claimant;
• input into settlement decisions;
• disputes re termination or settlement

(C) Other means of (implicit) control

• solicitors who arrange funding for their clients (ch 1, ‘Client Care’):

SRA Code of Conduct 2012 (Indicative Behaviours, IB 1.16 and IB 1.17): discussing how the client will pay, including whether public funding may be available, whether the client has insurance that might cover the fees, and whether the fees may be paid by someone else such as a trade union where you are acting for a client under a fee arrangement governed by statute, such as a conditional fee agreement, giving the client all relevant information relating to that arrangement

• the role of ATE insurance providers, and brokers
• the role of other regulatory bodies, actual or potential

CONCLUSION:

• Re the Code/ALF — potential areas of supplementation — e.g., a complaints

procedure?

See, e.g.: SRA Code of Conduct 2012, IB 1.22, ‘Complaints handling’

• Re judicial scrutiny — ongoing and impactful, across all contexts:

See, e.g., Simpson v Norfolk & Norwich University Hospital NHS Trust [2011] EWCA Civ 1149, [2012] QB 640

• The impact (if any) of collective redress reform