United Kingdom

The United Kingdom is a global center for litigation. A 2013 study by NERA Economic Consulting found that the UK has the highest liability costs (as a percentage of GDP) in Europe, and is trailed only by the United States and Canada globally among developed countries. In addition, liability costs in the UK have increased as much as 25% a year over the last five years – indicating a rapidly worsening litigation climate.

MasterCard succeeded in persuading the CAT to dismiss the case, based on the impossibility of determining similar damages for such a diverse class. The case is now in the appeals process.   

In dismissing the case, the judge released the £40 million funding agreement. The agreement showed that the funders stood to make at least 135 million pounds in return and as much as one billion pounds, with the size of their payment to increase, the lower the claimant take-up rate.  Basically, as written, the less the consumers benefitted, the more the funders did.

There is no real regulation of TPLF in the UK that would protect from consumers from such injustices. Certain TPLF providers, with the support of the Civil Justice Council, launched a voluntary code of conduct in November 2011, but the code is fundamentally flawed.

The code is voluntary and applies only to a few funders (there are 25 or so operating in the UK) who are members of the Association of Litigation Funders of England and Wales. The only consequence of breaching the funders’ code is potential expulsion from that association; the funder remains free to continue financing litigation. It also leaves funders free to influence settlement decisions and to choose whether to fund litigants' exposure to adverse costs orders. In short, the code fails to provide sufficient safeguards against the risks associated with third party litigation funding. 

Overall, the UK civil justice system lacks the necessary safeguards to protect both businesses and consumers from abuses of the civil justice system. The British government has previously refused to regulate TPLF, seeing it as a nascent industry. There is now ample evidence that the TPLF industry is a financial force of its own (the Financial Times reported that UK funders have over £10 billion in assets) and carries significant risks for the British justice system. 

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