Three years on from PACCAR judgment

As we approach three years since the PACCAR judgment on 26 July 2023, the legal funding sector remains in a state of uncertainty. The ruling has raised critical questions regarding third-party funding for claimants facing well-resourced opponents, leading to a lack of clarity and confidence throughout the industry. Despite the passage of time—which has seen four Justice Secretaries and multiple ministerial pledges—no viable solution has been implemented to address the issues stemming from the judgment. The International Legal Finance Association, alongside Burford Capital, has called on the new Government to fulfil its long-standing promise of a legislative fix aimed at restoring timely access to justice for many claimants.

Recent findings from a report indicate that the UK is falling behind international competitors due to the implications of the PACCAR ruling. Claimant-side lawyers highlighted difficulty in securing funding for cases, emphasising that this uncertainty is a deterrent for potential investors. The CEO of LionFish Capital remarked that his firm is considering opportunities in Australia, saying “the level of institutional capital coming into this market is diminishing because there's a lot of uncertainty, certainly in the U.K.”

Neil Purslow, Chair of the Executive Committee at the International Legal Finance Association, expressed frustration over the lack of progress, stating “Four Justice Secretaries, three years after the PACCAR judgment, two ministerial pledges, and one failed government bill later, and we still have no real movement on a fix for the sector.” He highlighted broad support for reform from various political parties and legal experts, stressing the urgent need for the Government to act. Purslow added, “I hope this Government finally delivers on what has long been promised,” outlining the real-world impact on individuals and industries reliant on fair funding mechanisms.

Christopher Bogart, CEO of Burford Capital, echoed these sentiments, noting that “three years of uncertainty following PACCAR has had real consequences for businesses, claimants and the UK's position as a leading market for commercial dispute resolution." He underscored that capital is attracted to certainty, and prolonged delays are hindering the ability to support legitimate claims. He advised that restoring clarity through effective legislation would bolster access to justice and reaffirm the UK’s status as a competitive legal market.

As the anniversary of the PACCAR ruling approaches, all eyes are on the Government to initiate meaningful reforms. The continued struggle for funding amidst a backdrop of legal complexities illustrates a pressing need for enhanced regulatory frameworks that assure both investors and claimants of a more equitable and efficient justice system.