The United Kingdom rightly is regarded as the world's foremost centre for dispute resolution. Our legal system is the envy of the world, built upon centuries of common law development, an independent judiciary, and a culture of procedural fairness. But its foundation is legal certainty, and that foundation is now cracking.
Third-party litigation funding is an essential piece of our legal infrastructure. Without it, the legal rights parliament creates exist on paper but often cannot be enforced in practice. Meritorious claims go unpursued, well-resourced defendants avoid accountability simply by outspending their opponents, and access to justice becomes a privilege reserved for those who can already afford it. When we look at the landmark victory of the sub-postmasters in the Post Office scandal, it was external funding that permitted ordinary individuals to expose the truth and clear their names when otherwise they lacked the means to pursue their case.
Yet the legal framework underpinning this market is in disarray. The Supreme Court's 2023 decision in PACCAR introduced a fundamental ambiguity into the enforceability of litigation funding agreements, and the consequences were immediate: a collapse of more than 75% in anticipated domestic funding activity. The previous government recognised the urgency and introduced corrective legislation with cross-party support, but that bill fell when parliament was dissolved. While the current government confirmed in December 2025 its intent to legislate, the proposed fix would have prospective effect only. A purely prospective fix is fundamentally flawed. Future claimants would be free to proceed on stable terms, while historic funding agreements remain exposed to challenge. There are already rumblings that such challenges are being readied, and the longer the uncertainty persists, the greater the incentive to bring them.
The case for retrospective correction is overwhelming. The government has already acknowledged the need for a legislative fix. The Civil Justice Council has been clear that this is an urgent priority, with some of its review's authors going further, accusing the government of jeopardising the UK's legal standing through dither and delay. And yet no bill was announced in the King's Speech.
Litigation funding has become an established alternative asset class, attracting capital from private equity firms, hedge funds, and family offices precisely because its returns are uncorrelated with broader economic cycles. That capital is highly mobile, and the investors deploying it are rational actors. When the rules governing the enforceability of their agreements are unclear, they will deploy their resources elsewhere. A newly published international competitiveness report by Angeion Group International confirms what the market already senses: the UK is falling behind. Singapore and the United States now offer funders greater certainty and commercial predictability than we do, and there is no shortage of alternative destinations ready to receive the capital we are losing.
Funders will adapt, but the claimants who depend upon funded litigation to hold powerful defendants to account cannot. It is the individuals and small businesses who most need our courts to be open to them who suffer when the market that supports their claims is allowed to wither through inaction.
The United Kingdom's standing as a global centre for dispute resolution depends upon a functioning litigation funding market. That market depends upon legal certainty. And legal certainty requires decisive legislative action, not at some unspecified future date, but now. Ministers must deliver a swift and retrospective reversal of PACCAR, adopt a regulatory model that preserves the market's commercial viability, and send a clear signal that this country remains open for business to those who fund access to justice. The cost of further delay will not be borne by funders or lawyers, but by the people who need our courts to be genuinely open to them.
Lord Carlile of Berriew KC CBE is former chair of the Competition Appeal Tribunal
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