CJC final report on litigation funding and beyond: a funder’s view

This article was originally published on 17 October 2025 by Thomson Reuters Practical Law.

In this article, Sarah Breckenridge, investment manager at Erso Capital, discusses the ramifications of the Civil Justice Council's final report on litigation funding for the funding market, and sets out practical takeaways for funders and practitioners alike.

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CJC final report on litigation funding and beyond: a funder’s view

More than three months on from the publication of the CJC’s Final Report on litigation funding, we are none the wiser as to when any of its 58 recommendations will be developed, consulted on, or implemented.

Perhaps that is because there has been more recent activity related to funding and funding policy at government level, in the courts, and in various reports emanating from think tanks and lobby groups. But such activity generates more questions than answers about the current and future role of the funding industry in supporting disputes. In the meantime, practitioners will need to monitor the market, adapt, and advise clients accordingly.

Key considerations from the CJC Final Report

The headline recommendation in the CJC report was that R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others [2023] UKSC 28should be reversed. And since then, funders have taken additional comfort from the decision of the Court of Appeal in Sony Interactive Entertainment Europe Limited & Anor v Alex Neill Class Representative Limited [2025] EWCA Civ 841 that multiple-based funders’ fees effectively capped by reference to the level of the award itself will not create a DBA. The certainty which would be regained by reintroducing percentage-based fees, not to mention the proportionality a percentage fee brings to funded claimants, would revitalize the funding market.

The recommendation to introduce light-touch regulation appears to have been broadly accepted by funders, especially those already self-regulating under the auspices of the Association of Litigation Funders. But consultation on the detail is vital. For example, the requirement to disclose the "ultimate" source of funding: the report does not appear to distinguish between the various different funding structures which operate in the UK market, clarify what is meant by the ultimate source, nor identify the purpose for the disclosure. If it is to ensure the court and all parties have comfort that funding for the case is adequate, then that would be achieved, for example, by the separate regulatory recommendation that the funder maintains capital adequacy for each case.

The recommendations around non-court dispute resolution schemes need some consideration too. There has always been a troublesome chicken and egg problem as to who pays to develop a potential claim far enough to make it a viable proposition for funding. The focus on redress schemes adds a new one: who pays for the work required to develop a claim far enough to enable the court to consider whether it is suitable for the courts rather than a redress scheme? How will funders approach the risk that a claim is transferred out of the courts to a scheme?   

What else has emerged?

In August 2025, the Department for Business and Trade published a call for evidence on the opt-out collective actions regime. Its pre-amble asserts a commitment to consumer protection, which must be balanced with "limiting the burden on business". It will take into account the CJC’s report but poses a series of questions (responses are required by 14 October 2025) about the impact of cases brought so far under the opt-out regime, which have "developed in unexpected ways".

Despite the regime being 10 years old, the call for evidence comes at a time when, in fact,only a few cases have settled or reached judgment. The sample is too small for a meaningful assessment of the opt-out regime. Additionally, the Competition Appeal Tribunal has most recently grappled with some difficult funding and distribution issues, such as in Merricks and Gutmann. Whilst the impact of those early, difficult cases must be considered, it should be placed properly in context (against a wider sample of concluded cases). Without further evidence, the decisions should not be taken as a signal that the opt-out regime favours lawyers and funders over consumers or is disproportionately burdensome on business.

But those seem to be the messages circulating in the market and adding to the ongoing debate. The long-standing acceptance that the UK legal market, including the elements underwritten by litigation funders, is a positive for "UK PLC" is undermined by the emerging arguments  that the scope for business growth and innovation in the UK is damaged by increasing "predatory" litigation. Both the legal system and the business community make a positive contribution to a growth economy. Arguments that big business’ interests are damaged by a healthy litigation funding market are simplistic but also seem to sideline the right of consumers and smaller businesses to have access to justice and appropriate redress.

The effect for practitioners

The CJC recommendations, and potentially any changes to the collective actions regime, will require legislative change (on an unknown timetable). Meanwhile, funders are left with uncertainty which continues to ripple through the disputes market.

Such uncertainty doesn’t help anyone: investors may prefer to put their money elsewhere than litigation funding; funders may be more cautious in the UK market or for certain case types; claimants and their lawyers may have to search longer and harder for funding.

Practitioners should remain in touch with funders and continue to consider funding as part of a client’s needs, but they should also respond to the changing market. Where less funding is available, or harder to obtain, comprehensive advice to clients on alternative fee arrangements and the options for insurance to mitigate own (as much as adverse) costs risk becomes all the more important.