Civil Justice Council Publishes Final Report on Litigation Funding in June 2025

The Civil Justice Council (“CJC”) has released its Final Report after completing its Review of Litigation Funding. The report includes 58 recommendations, including a call for the reversal of the PACCAR decision through legislation that applies both retroactively and prospectively. It also suggests a "light-touch" statutory regulation for litigation funding and proposes a unified regulatory regime for Contingency Fee Agreements (“CFAs”) and Damages-Based Agreements (“DBAs”), implementing the 2019 Mulheron-Bacon reforms where consistent with the CJC’s broader recommendations.

Background on PACCAR

In R v PACCAR Inc and others [2023] UKSC 28, the Supreme Court ruled that litigation funding agreements (“LFAs”) linked to DBAs must comply with the DBA regulatory regime, causing many LFAs, including those in collective proceedings, to be potentially unenforceable. The government's response involved drafting the Litigation Funding Agreements (Enforceability) Bill to reverse the impact of PACCAR, which had its first reading in March 2024. However, the Bill was delayed until the CJC completed its review.

CJC Review Scope

The CJC’s review examined third-party funding (“TPF”) in the UK, looking at TPF’s role, effectiveness in promoting access to justice and regulatory options. It included a detailed analysis of how TPF interacts with other funding sources and whether the current arrangements provide adequate access to justice.

Key Recommendations in the Final Report

The CJC’s Final Report, published on 2 June 2025, advocates for several reforms, including:

Reversing the PACCAR decision: The CJC recommends legislative changes to reverse PACCAR's impact and to clearly distinguish between contingency fee funding and litigation funding, applying separate regulatory regimes for each.
Light-touch regulation: A call for light-touch statutory regulation of litigation funding, avoiding Financial Conduct Authority (“FCA”) oversight but allowing for future review of this approach after five years.
Single regulatory framework for CFAs and DBAs: The CJC proposes a unified contingency fee regime, implementing the 2019 Mulheron-Bacon reforms, with provisions for hybrid arrangements and DBAs in collective proceedings.
“Twin-track” approach to reform: Immediate legislation to reverse PACCAR, with broader reforms requiring separate primary legislation and secondary legislation, such as new regulations for CFAs and LFAs.

Other Proposals

The report also highlights additional proposals for the regulation of TPF, including differential regulation for commercial and consumer parties, the introduction of a Consumer Duty for TPF and enhanced rules for pre-action costs and the management of funded claims. The CJC also recommends promoting Legal Expenses Insurance and establishing an Access to Justice Fund. The report further suggests establishing a Standing Committee on Litigation Funding to collect data and monitor ongoing funding practices.

Legal Updates In The UK

Civil Justice Council Publishes Final Report on Litigation Funding in June 2025

Background on PACCAR

CJC Review Scope

Key Recommendations in the Final Report

Other Proposals