Recent developments point to it being anything but a quiet summer for litigation funding in England & Wales

Following the publication of the Civil Justice Council's (CJC) final report on litigation funding at the beginning of June, it might have been expected that summer 2025 would have been a fairly quiet period for the sector.

The likelihood then appeared to be that the Ministry of Justice (MoJ) would consider the CJC’s recommendations during the summer recess, with a view to indicating its preferred way forward sometime in the autumn. New legislation to implement the type of statutory regime recommended by the CJC – Litigation Funding: Civil Justice Council recommends a statutory regulation regime which it describes as “light touch” – might have been expected to be introduced in the following months, perhaps early in 2026.

Things may now turn out to be a little different from that, however, and this article explores recent developments which suggest that the next couple of months are likely to be anything but quiet as regards scrutiny of the litigation funding sector by the government and in the courts.

A further government review, in addition to the CJC’s analysis

The use of third party litigation funding to support collective opt out proceedings by consumers under the Competition Act 2015 has been recognised, both in the CJC report and by the Supreme Court – in its disruptive decision in PACCAR in 2023 – as being integral to access to justice in these types of claims (which must be pursued before the Competition Appeal Tribunal, more commonly referred to as the CAT).

On the government side, policy on competition matters is the responsibility of the Department for Business & Trade (DBT), whereas policy on third party litigation funding falls to the MoJ. It is worth repeating here that in 2024 it was the latter that commissioned the CJC review.

On 6 August 2025, DBT somewhat unexpectedly began a review of the use of collective proceedings under the 2015 Act. This is described as a 10-year post implementation review of the collective proceedings regime. The period for submitting responses to what DBT is styling as a “call for evidence” will close on 14 October 2025 (and which you can respond to here: Opt-out collective actions regime review: call for evidence - GOV.UK).

The introduction to the DBT review restates the high-level policy balance with regard to consumer claims, this being between (i) securing effective and efficient access to justice (including to non-judicial remedies) for consumers and (ii) limiting unnecessary burdens on businesses and/or the potential for abuses/excesses. As the call for evidence states:

"Finding the right balance between achieving redress for consumers and limiting the burden on business is essential."

That said, the first few questions from DBT deal specifically with third party litigation funding, asking for responses on matters such as the following:

• Are funding agreements fair and transparent for class members and clear for the court to understand?
• Are you aware of the cost of a claim having an impact on competition between litigation funders able to finance such a claim?
• Do you consider that the cost of a claim under the regime influences funders’ decision-making in relation to what cases to support?

It can be seen from these that there is overlap with the CJC review and, therefore, with any measures within it that MoJ might choose to adopt. This is expressly recognised by DBT, which explains it will take into account existing work relevant to the collective proceedings regime, such as the CJC report.

Recent decisions continue to shape the landscape for litigation funding

Two decisions from late July show how the collective proceedings regime and scrutiny of litigation funding agreements (LFAs) continue to be developed by the CAT. In cases heard together – Robert Hammond v Amazon.com, Inc. & Others and Professor Andreas Stephan v Amazon.com Inc. & Others [2025] CAT 42 – the tribunal’s decisions on certain aspects may turn out to have wider application.

As can be seen in the case names, both involved claims pursued by a class representative (CR, or proposed class representative, PCR), on an opt out basis, on behalf of consumers who claimed to have suffered detriment as a result of the actions of the well-known online retailer defendant. In both claims, the tribunal set down a further control of its own on the level of legal fees likely to be recovered by the class representative. This was that, as a condition of certifying the collective proceedings orders, the CAT would oblige each of the CRs to appoint specialist costs lawyers to review bills submitted to the funders by the CRs’ appointed law firms.

This new condition was in addition to clauses in the LFAs requiring the CRs to review the costs and providing the funders with the right to make reasonable requests to have fees assessed. The tribunal made it clear that the use of costs lawyers should now become the norm in these claims: “[we] recently observed that measures may need to be put in place to ensure that the PCR gets costs specialist advice on legal fees… we indicated that we would wish for [the PCR] to be assisted by a costs specialist, and we consider that should become the standard approach in collective proceedings.”

The second development in these cases relates to transparency around LFAs – which is a key theme of the CJC report – and the tribunal again indicated that what it required on this aspect should apply generally: “The LFAs, with only minimal redactions for confidentiality, were before the Tribunal. The Stephan LFA was already on the Stephan claim’s website and, at the Tribunal’s request, the Hammond LFA was posted on the Hammond claim’s website. We should make clear that this should be standard practice for all opt-out proceedings.”

An additional feature of the Hammond claim is how the tribunal examined the funder’s return. Although the CAT was reluctant, at the early stage of certification, to reach a definitive conclusion, it was nevertheless prepared to re-emphasise its inherent jurisdiction on the point and referred to its recent decision in Merricks v Mastercard as showing “the exercise of that discretion to allow the funder considerably less than had been provided under the LFA”. The tribunal also pointed out that:

1. not rejecting, at this stage, the funder’s return as set out in the LFA should not be understood as meaning that it approved the terms* of the LFA, and
2. “it should be standard practice for the PCR to address in their evidence the steps they took to secure an LFA on appropriate terms.”

[* Perhaps to underline this, the tribunal observed that “we do find that it [the LFA] could potentially result in an exceptionally high return.”]

Where might these developments take the debate on litigation funding?

It would seem realistic to suggest that it is likely that the DBT review will run its course before any legislation specifically on funding, or proposals to refine/revise the Competition Act's provisions on collective proceedings, might be taken forward. Should that prove to be so, then the outcome of the DBT’s new call for evidence - which is likely to be published no earlier than a couple of months after its 14 October deadline for responses - would look to be the next critical stage, at least as regards any new ‘black letter’ law and formal regulation.

In theory it may be conceivable that MoJ could bring forward its own Bill dealing with litigation funding before then. However, given the overlap between policy on regulation of litigation funding per se (MoJ lead) and policy on collective consumer redress (DBT lead), it looks more likely that both government departments would need to be aligned on overall future policy direction before any final proposals emerge. This would suggest that the way forward could be clearer in or around the end of the year.