When people go to court, they deserve justice – not a financial system that rewards investors before victims. Yet that is too often what litigation has become.
The Post Office scandal exemplifies this. Hundreds of postmasters spent years fighting to clear their names after being wrongfully accused and convicted. When they finally secured a settlement, they discovered that the majority of the damages – roughly 80%, (£46 million) – went not to the victims, but to lawyers and litigation funders. Only a fraction reached the people whose lives had been ruined.
That is not justice. Nor was it an isolated, one-off incident.
In my constituency of Burnley, Padiham and Brierfield, many ordinary households were lured into cavity-wall insulation claims by legal vultures promising easy compensation. But when the funder and law firm behind those claims, SSB, collapsed, these families were left in thousands of pounds in debt, with no protection or restitution.
People lost savings, homes and trust in the very system meant to protect them. The Solicitors Regulation Authority and others still have questions to answer about SSB. That failure should shame us all and we must do more to ensure effective regulation of the market.
Litigation funding was meant to make justice accessible to those without deep pockets – a noble aim. But without proper safeguards, it has become a lucrative, speculation-driven industry.
Take the Merricks v Mastercard case – the first major opt-out class action under the Consumer Rights Act. What began as an attempt to secure compensation for 46 million UK consumers has turned into a multi-year legal saga, dominated by procedural battles over certification, disclosure and funder returns. Despite its promise to deliver mass justice, the case has so far generated far more work for lawyers and financiers than redress for claimants.
The UK’s largest ever class action, against Australian mining firm BHP, has also recently been in the news thanks to accusations of excessive personal spending by the law firm in charge Pogust Goodhead’s former CEO, Thomas Goodhead, as well as concerns about the level of control exercised over the case by the funder, US hedge fund Gramercy. This is all the more concerning given the victims caught in the middle of all this are Brazilians who suffered a tragic dam collapse ten years ago.
Today, more than 70 litigation funders operate across the UK, managing billions of pounds with minimal formal oversight. Some are ethical and responsible, but the lack of transparency means we simply cannot tell which are not. That gap leaves consumers exposed and confidence in our legal system weakened.
The Civil Justice Council’s recent report offers a sensible way forward. It calls for greater transparency and oversight, clearer limits on funding controls, the strengthening of the ombudsman and alternative dispute resolutions, as has been mentioned, and court scrutiny of the profits and sources of funding of those taking these legal cases through. I urge the Government to implement these recommendations with hast. It would go a long way to restore fairness and integrity to collective actions and make sure that outcomes serve the people involved in these cases and not the profit motive.
The UK has one of the most respected legal systems in the world. That reputation is worth defending. But access to justice cannot be based on who has the biggest pot of cash to fund an action. The time has come for Parliament and regulators to bring oversight of litigation funding into the 21st century – with clear rules, open books, and fairness at its heart.
Access to justice cannot be based on who has the biggest pot of cash to fund an action
