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Consumers left out of third party litigation funds

3 June 2010

Third party litigation funding will not plug any gaps in access to justice, according to the first academic study on the issue.

Preliminary research conducted jointly by Oxford and Lincoln universities claims the emerging funding model remains a bespoke service only available to corporations, with the ‘ordinary person in the street’ unlikely to benefit.

Dr Angus Nurse, co-author of the report and member of the University of Lincoln’s centre for dispute resolution, said: “Much has been said about access to justice over the last decade. There is a principle in this country that everyone should have equal access to the courts but in reality that is just not the case. In reality, you have more chance of getting justice if you have money.”

The researchers’ view is that a new model of litigation funding needs to be devised before individuals can benefit.

Dr Nurse continued: “In this research we are considering whether third party litigation funding can provide a solution to problems with access to justice in cases where people want to take legal action but cannot get legal aid and do not have the money to fund the case themselves.”

The findings, unveiled at a recent conference on litigation funding at the University of Oxford, suggest individuals will not benefit from the new funding opportunities.

Researchers found most third party litigation funders only bankrolled cases with claims in excess of £100,000, stating that this suggested ordinary consumers would be unlikely to use the model.

Although predicting third party funding would remain the reserve of the resourced classes, the study does raise concerns that the model could be detrimental to people who are unclear of their rights.

Both funders and consumer groups interviewed for the study backed better regulation of the area to prevent rogue traders making use of the grey area between funding and participating in a case.

Principle investigator Dr Christopher Hodges, from the University of Oxford’s centre for socio-legal studies, remains optimistic that the new model is not solely for big-business litigators.

Dr Hodges added: “Our research shows that litigation funding currently benefits SME companies in accessing justice. This new form of funding has revealed an unknown area of demand for enforcement of civil law, which is of considerable potential benefit to the economy. Ensuring that small companies are able to claim when they are commercially disadvantaged, such as where contracts or licensing agreements are breached, is important for maintaining a healthy economy.”

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