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Neil McLeod

Divisional MD of Corporate, The PHA Group

Quotation Marks
There is still more to be done to educate the legal and non-legal market on how funding has evolved beyond single case financing

Litigation funding after PACCAR, what is the next chapter?

Litigation funding after PACCAR, what is the next chapter?


Neil McLeod shares his thoughts on the impact of the ruling in R (on the application of PACCAR Inc and others) (Appellants) v Competition Appeal Tribunal and others (Respondents) [2023] UKSC 28

It was the moment litigation finance firms secretly dreaded, but left legal commentators and industry critics rubbing their hands with glee.

There were few surprises when the Supreme Court finally handed down its judgment in PACCAR with a ruling that most would say was a blow to litigation finance firms in the UK. To describe the decision as disruptive for the industry would be putting it mildly.

On the morning of the judgment, the Financial Times ran the headline ‘UK Supreme Court deals blow to litigation funding industry’. Interested parties could be forgiven for wondering, as others have asked: is this the end of the road for the industry?

What now?

Since the decision, both the International Legal Finance Association (ILFA) and the Association of Litigation Funders (ALF) have been quick to reassure the market, as have several funders, ranging from describing the result as ‘unsurprising’ to being ‘confident’ around business models. One Australian funder went as far to say it might even help them grow their market share.

Yet, it is impossible to ignore the fact that the decision has created a great deal of uncertainty and concern for the industry. All litigation funding agreements (LFAs) are now under review, and it is accepted that not all funders will survive this upheaval, with market shifts already underway. There have been further twist and turns, including the first known challenge in court to an LFA involving one major funder and a former client, and calls on the government to step in to provide clarification over the future of funding and over the statutory position of one key point in the ruling (damages-based agreements, DBAs).

The biggest impact is undoubtedly expected to be on 20 or so class action-style collective proceedings lodged with the Competition Appeal Tribunal (CAT), which have been brought by consumer groups backed by litigation funding, but the impact will be more far reaching than this and far more widespread.


Modern-day litigation funding emerged from the ashes of the 2008 financial crash. That litigation was inherently expensive, entrepreneurial lawyers, and some non-lawyers, spotted an opportunity.

Even now, the industry is still perhaps best known for its original business model, funders financially back a claimant case, usually against a much larger entity, and receive a share of the damages if that single case is successful.

But necessity, smart minds in the industry (and there are many), has meant industry evolution. Funding is far more sophisticated today; some would say it has grown beyond litigation finance and is more a form of corporate finance with a legal edge.

The funding of portfolios of cases, credit facilities to fuel law firm growth and grow new business, the move to funding not just smaller entities which need help but FTSE and Dow Jones-listed corporates, fresh funding platforms and jurisdictions emerging internationally, funded justice enforcement, are just some of the pillars of this evolution.

Looking forward

Indeed, one of the industry’s next chapters is the important matter of environmental justice litigation and how funding is driving progress in regard to the environment, social and governance (ESG) agenda, holding bad actors to account in complex matters involving large numbers of claimants who otherwise could not go to court. It is another take on the David versus Goliath narrative which spurred initial funding messaging, and it could yet be the litigation funding market’s most impactful play yet.

Moreover, it remains the case that the legal industry is facing cost pressures from high inflation and concerns around passing the burden on to clients through pricing. Billable hours have stayed flat or have fallen, at most levels across most law firms. After the boom of the covid-19 period, cost control is now a central and pressing issue in the legal industry.

There is still more to be done to educate the legal and non-legal market on how funding has evolved beyond single case financing, and to establish with more certainty the legal outcomes of this case.

As for the future of litigation funding, back in 2008, necessity was the author of change. Today, and looking ahead to 2024, can we say things are so different? And that likely means its story is far from over.

Neil McLeod is divisional MD of corporate at The PHA Group