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• Legislation to ensure access to funding for ordinary people in ‘David vs Goliath’ cases confirmed
• Safeguards will mean more collective action proceedings can be brought against rich and powerful opponents
• Measures will bring stability to the litigation funding sector after the PACCAR ruling

Ordinary people will have greater access to justice thanks to Government’s plans for legislation to help claimants receive the funding they need to take on powerful organisations in court.    

Since the Supreme Court ruling in PACCAR in 2023, claimants have faced uncertainty about whether they can secure funding from third parties in order to bring a civil case against a well-resourced opponent.  

Third-party litigation funding allows people to bring complex legal cases against powerful organisations when they cannot afford the costs themselves. Under these arrangements, a funder pays for the legal case in exchange for a share of any compensation won.   

The PACCAR judgment, which classed these funding arrangements as ‘Damages Based Agreements’, made it harder to access to third-party funding and has resulted in a drop in collective action lawsuits.   

Today (Wednesday 17 December), the government is confirming that it will take action to remove this barrier to justice by clarifying that Litigation Funding Agreements are not Damages Based Agreements, protecting victims and claimants.   

Minister for Courts and Legal Services, Sarah Sackman KC MP, said:   

The Supreme Court ruling has left claimants in unacceptable limbo, denying them of a clear route to justice.  

Without litigation funding, the Sub-postmasters affected by the Horizon IT scandal would never have had their day in court.  

These are David vs Goliath cases, and this Government will ensure that ordinary people have the support they need to hold rich and powerful organisations to account. Justice should be available to everyone, not just those who can afford it.   

The Supreme Court ruling has also threatened the UK’s status as global leader in dispute resolution – a cornerstone of our booming legal sector and vital to driving economic growth.   

The UK’s legal services industry is worth £42.6 billion a year to the economy, with a highly skilled workforce of 384,000.     

A new framework will ensure that agreements are fair and transparent, so that third-party litigation funding actually works for all those involved.   

These changes follow a comprehensive and wide-ranging review by the Civil Justice Council (CJC), published earlier this year. The government will continue to consider the recommendations set out in the CJC review.  

Notes to editors:   

• In the 2023 PACCAR judgment, the Supreme Court ruled that third-party litigation funding agreements are legally classed as ‘damages-based agreements.’  
• This decision means funding agreements are only valid if they meet strict rules and are banned in certain group claims.  
• The Government will introduce legislation to address this when parliamentary time allows