A justice minister paid tribute to the ‘huge economic function’ performed by litigation funding yesterday - but made it clear the government will not be rushed into taking action to resolve PACCAR-related uncertainty.
Sarah Sackman, minister for courts and legal services, also said it was 'highly unlikely' that any legislation to deal with PACCAR will be retrospective in effect.
Speaking at a Westminster Hall debate tabled by Conservative MP Sir Julian Smith to discuss the Civil Justice Council’s review of litigation funding, Sackman recognised the importance of funding for access to justice in claims against the Post Office, equal pay claims, environmental challenges and consumer claims against multinationals.
The former practising barrister said: ‘It also performs a huge economic function. Along with the quality and calibre of our judiciary and legal services, third-party funding is an important factor in attracting international business to England and Wales as a jurisdiction of choice… because [it] is also used in high-value commercial cases.’
Sackman noted that legal services had contributed £42 billion to the economy last year, but the Supreme Court’s ruling in PACCAR had created uncertainty for both funders and litigants. She said: ‘There’s a very real risk that funders are beginning to pivot away from London, from England and Wales, and look at other jurisdictions such as New York, Paris [and] Singapore more favourably. In short, that’s not good for the UK plc.’
The minister added: ‘But the PACCAR judgment and the [CJC] report that followed present an opportunity for [debate] as to what it would look like to reverse PACCAR: do we want to go back to exactly the regime that applied before, [or] can we evolve an even better regime; one which provides the right regulatory balance.’
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Sackman echoed a call by Smith for all those operating in the litigation funding industry to now bring themselves within the remit of the Association of Litigation Funders’ voluntary code of conduct. She added: ‘Not all feel that current third-party funding arrangements always work in the client’s best interests. Some have questioned funders’ role and level of control in legal proceedings, and that’s something, these weaknesses in the Pre-PACCAR regime, [that] we recognise… We’re now taking the time to consider the CJC report and its recommendations very, very carefully. It is essential to take this detailed and considered approach to what is a technical area.
'We’re aware that many are eagerly awaiting the government’s response and I look forward to announcing our way forward in due course,' she added. 'The stakes here are high: access to justice; consumer protection; economic growth. We’ve got to get this right.’
Responding to an earlier question in the debate, Sackman also addressed the issue of whether any legislation to resolve PACCAR would apply retrospectively. The CJC report recommended the reversal of PACCAR with full retrospective effect and the last government’s 2024 Litigation Funding Agreemnents (Enforceabilty) Bill, which fell due to the general election, would also have have been restrospective.
However, Sackman said: ‘On [the] question of retrospectivity, I think it’s highly unlikely, given the general rule of law principle against retrospectivity, that we would look to do that.’
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