Litigation

The UK litigation market is undergoing a wave of structural changes driven by three interconnected developments:

Evolving litigation funding models
Rapid expansion of group action
Overseas extension of UK court jurisdiction

Evolving litigation funding models

While litigation funding has been a feature of the UK landscape for years, there have recently been fundamental shifts in how the market operates.

The PACCAR Inc Supreme Court judgment created significant uncertainty by determining that certain litigation funding arrangements constitute damages-based agreements, raising questions about the enforceability of many existing funding arrangements. Although a subsequent Court of Appeal decision confirmed that major funded cases (including the Google and Visa proceedings) could continue, the uncertainty has reshaped funder behaviour.

Rising interest rates have also made litigation funding as an asset class less attractive to traditional funders. Funders have responded by bundling multiple cases together and, more significantly, taking direct ownership stakes in law firms or providing major loans. This raises substantial conflict of interest questions when funder returns might not align with client interests.

One headline-grabbing illustration is the lawsuit against BHP Group following the collapse of the Fundão dam in Brazil. Brought by SPG Law (now Pogust Goodhead), proceedings have been beset by disputes over funder involvement and control. Defending counsel questioned the funding arrangements from the beginning and key lawyers departed due to conflicts with funders.

Rapid Expansion of Group Action

The UK is experiencing unprecedented growth in group action litigation.

This would not be possible without litigation funding enabling claimants to take on major corporations for claims worth hundreds of millions or billions. Firms like Slaughter and May and Travers Smith are key players in this arena.

A significant proportion of class actions are brought before the Competition Appeal Tribunal (CAT), which permits opt-out class certification, creating larger claimant pools. However, a brake was applied during Christine Riefa Class Representative Limited v Apple Inc & Ors. The judge refused certification, reasoning that the class representative must be genuinely involved in proceedings.

Linking back to our first theme above, the judge was concerned that complex funding arrangements meant the class representative did not adequately understand how the case was being financed and controlled.

Overseas Extension of UK Court Jurisdiction

UK courts increasingly hear cases involving overseas harms where the defendant has sufficient connection to the UK through parent company or supply chain relationships.

The class action pitting a group of more than 7,000 Malawian farmers against British American Tobacco is a perfect case in point. A motion to strike it out was rejected by the high court. More entities that may act wrongfully overseas now face potential litigation risk in London.

Chambers Ranking Changes

We have grown several tables and made adjustments this year in response to the changing litigation market:

Expanded our list of Dispute Resolution Specialist Firms
Expanded our list of firms ranked for Group Litigation: Claimant
The scope of our Commercial and Corporate Litigation research has been expanded to include defence-side Group Litigation.

In your opinion, which factor is driving the most change in the UK litigation market?

Evolving litigation funding models
Rapid expansion of group action
Overseas extension of UK court jurisdiction