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Director Mohsin Patel comments on the Supreme Court’s shock ruling concerning litigation funding agreements

Following the UKSC’s unexpected ruling that Litigation Funding Agreements that take the form of a damages-based agreement are unenforceable, Director Mohsin Patel comments on the wide-reaching implications of the judgment for the UK litigation funding industry and for access to justice.

Mohsin’s comments were published in Law.com, Bloomberg Law, New Law Journal, Law360, Legal Futures, Litigation Finance Journal, The Legal Diary and  London South East.

“Today’s judgment will have a significant and immediate negative impact on the funders in this case and more generally, as they find that their agreements are now potentially unlawful. This will have serious repercussions, particularly for claims that have been brought on an ‘opt-out’ basis which now face the double whammy of their funding agreements not only being in breach of the DBA regulations but also being unable to cure any breach through renegotiation as DBAs are not permitted in opt-out claims.

“Whilst many litigation funders will be reviewing their LFAs and considering their next steps in light of this judgment, the consequences may well not be as widespread as expected. Given that funder returns in many LFAs are structured as multiples of funds invested as opposed to a fixed share of damages, these should therefore fall outside of the DBA regulations.

“Needless to say, the fallout from the issues raised and uncertainty caused by this judgment will have a far-reaching impact on the industry as a whole, and serve to be a retrogressive step for an industry still in its infancy. Overall, a bad day for consumers, funders and lawyers as a whole.”