Group claims should be subject to costs budgeting and parties required to consider non-court forms of redress, the Civil Justice Council has recommended in its landmark review of litigation funding. 

Lawyers and funders should also have to certify to the court that they have not approached clients either directly or indirectly about issuing proceedings.

This week’s CJC report covered a large range of costs issues, including the potential reversal of the Supreme Court's PACCAR judgment to make clear when litigation funders are underwriting claims.

The report also targets the issue of collective actions which have become increasingly prevalent as consumers join claims for competition law breaches, data privacy breaches and financial service mis-selling.

The headline recommendation is that costs budgeting and costs management should be mandatory for all funded collective proceedings, representative actions and group actions.

Some respondents to the CJC working party complained that collective proceedings provided only a benefit to lawyers and funders rather than consumers, and were harmful to business because they divert resources away from innovation and growth. Others pointed out that group litigation was the only way for consumers to secure access to justice.

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The CJC report said that the benefits of a consistent, expert approach to costs budgeting were ‘self-evident’, but it noted judges need specific training in costs budgeting and the management of complex, multi-party and collective proceedings.

David Bailey-Vella, chair of the Association of Costs Lawyers, said that in recommending a statutory power to enable courts and Competition Appeal Tribunal to manage the costs of funded claims pre-action, the working party may be implying that funders cannot drive sufficient discipline from the lawyers they pay.

‘The recommendation for mandatory and enhanced costs management for funded group actions – and that it should start as early as possible – recognises how costs can quickly escalate in cases like this and that lawyers need to have much more focus on them from the start,’ he added. ‘Every lawyer needs to recognise the danger of getting caught up in the excitement of launching a case without keeping track of how much it is costing.

‘Nobody is pretending that costs budgeting has been perfect over the past 12 years but the CJC’s 2023 costs review found it was having a positive effect and needed to become more bespoke, which is why three pilots for different types of cases began in April. These latest recommendations mark the next stage of that process – the profession must accept that tight costs control is needed if group actions in their various guises are to retain public confidence.’

The CJC report also recommended that crowdfunding, where it is provided on the basis of a financial return to the crowdfunders, should be regulated as a form of litigation funding. But where the donor is not to receive a financial benefit for winning the case it should be subject to minimum regulatory requirements.