PRESS RELEASE – Public concerned about compensation culture and calls for action

17th Sep 2015

  • Independent polling shows that 84% of the public wants to see independent regulation of the third party litigation funding (TPLF) market
  • New market analysis reveals that UK TPLF industry has ballooned by more than 700% in five years
  • Worryingly, polling also shows British public believes the English justice system is “moving in the wrong direction” and becoming increasingly “Americanised”

The unregulated funding of litigation by financial speculators must come to an immediate end and instead be governed by an independent watchdog, according to an overwhelming majority of the British public.

The poll of 1,200 people, conducted by BritainThinks, a leading polling firm, shows 63% of people surveyed are either quite or very concerned about the increased use of for-profit litigation funding in the English and Welsh justice system.

The opinion research also comes as Justice not Profit – a campaign against lawsuit abuse – unveils its new report on the controversial industry, which is currently unregulated and self-governed by the Association of Litigation Funders. Following an investigation into 16 litigation funders active in the UK, the campaign’s analysis found that global assets under management are over £1.5 bn – up 743% from 2009 (£180 m) when Lord Justice Jackson published his review.

Six years ago, Lord Justice Jackson stated that if the use of TPLF grows more significant, a voluntary code of conduct may no longer suffice for industry oversight, and “full statutory regulation” may be required.

Supporters of TPLF often argue that their industry provides a private sector solution to a shortfall in Legal Aid funding and widens access to justice.

However, research by the Justice not Profit campaign reveals that cases receiving investment funding are those typically with a potential for a high return on investment. Over the last five years, the values of cases receiving funding have continued to increase, with minimum claim values set out by funding firms rising to between £3 m and £5 m.

Ben Shimshon, a founding partner at BritainThinks, said the public’s views on litigation funding are solid. He said: “Across the spectrum, people are not in favour of this industry operating without some independent oversight of their practices.”

Arundel McDougall, Executive Director of the European Justice Forum said: “We share the public anxiety expressed by this poll about third party financing of litigation remaining unregulated.  TPLF is a derivatives market and the underlying asset is litigation.  Bundles of rights are speculated as a commodity for profit by those whose attachment to the issues at stake is limited to generating a sufficient return on their investment.  Lawyers conducting such litigation may see it as a commercial proposition but are heavily regulated to ensure compliance with highest standards.  Third party funders should not object to some common sense regulation if that helps to address public concern.”

Malgosia Fitzmaurice, Professor of Public International Law at Queen Mary University of London, said: “Given the huge public concerns about casino justice and the US-style justice system, the government and other key decision-makers must act now before trust in the system is further eroded.”

ENDS

 

Please see the market analysis here, the results of the polling here, and an infographic of the poll here.