Consultation on litigation funding

In the well-known decision of the Supreme Court in the
PACCAR case ([2023] UKSC 28), it was decided that litigation
funding agreements which entitle the funder to recover a percentage
of damages awarded are Damages Based Agreements and are accordingly
unenforceable unless compliant with the DBA Regulations
2013.

In response to this, the Conservative Government introduced the
Litigation Funding Agreements (Enforceability) Bill, which was
intended to have the effect of reversing the decision. In short,
the proposal was to add a carve out for litigating funding
agreements in existing legislation as follows: “an
agreement is not a damages-based agreement if or to the extent that
it is a litigation funding agreement”. (You can read more
about the background in our article.)

However, the Bill did not make it into law before the end of the
Parliamentary session in May 2024.

The incoming Labour Government did not introduce the Bill again
in the new parliamentary session. The Lord Chancellor instead
invited the Civil Justice Council (CJC) to establish a review of
litigation funding and the new Government will be waiting for the
outcome of this before taking action. The CJC’s Litigation
Funding Working Group published an interim report and consultation
on 31 October 2024, which is open until Friday 31 January 2025.

The review will consider the background to the development of
third party funding, the current position regarding
self-regulation, approaches to third party funding in other
jurisdictions and how third party funding sits within the broader
context of funding options. Points of consideration for potential
recommendations for reform have also been set out by the CJC,
including whether third party funding should be subject to
regulation.

The Working Group’s final report is expected in summer 2025,
which will provide advice to the Lord Chancellor and will make
recommendations for change.

New and updated PreAction Protocols (PAPs)

Phase Two of the CJC’s final report following its review of
PAPs was published in November 2024. This follows on
from the first part of the report, which recommended
that (amongst other things) a new, General PAP should be
introduced.

Shortly before the second part of the report was published,
amendments were made to the Civil Procedure Rules (CPR rules 1, 3,
28, 29 and 44) to put greater emphasis on Alternative Dispute
Resolution and the power of the court to require parties to engage
in ADR, following the decision in Churchill in 2023. (Read the
background in our article.)

In line with this, the executive summary of the report
emphasises that “pre-action protocols play a crucial role
in facilitating proportionate dispute resolution in a justice
system where very few cases ever require judicial adjudication on
the merits”. Accordingly, recommendations are made with this
function in mind, helping to ensure that the PAPs “contribute
towards a fair settlement of the dispute, or a narrowing of the
issues and more proportionate litigation where settlement is not
possible”.

The report recommends that all PAPs which include a dispute
resolution obligation be amended to reflect the above developments,
but that if parties engage in a formal ADR process with the
assistance of a third party at pre-action stage, then those parties
should be exempt from any automatic requirement to engage in
mediation after issuing proceedings. This would be to avoid
duplication, although it would be subject to the court’s
discretion.

Also worth mentioning is the recommendation that the PAP for
Judicial Review should prompt the parties to judicial review (the
process of which does not typically involve or lend itself to ADR)
to confirm in pre-action correspondence whether or not they have
considered and are willing to engage in ADR. If ADR is appropriate,
the PAP should encourage this.

The report makes a number of other recommendations for reform of
some litigation specific PAPs and recommends the creation of two
new PAPs.

One of the new PAPs recommended is for claims on the multi-track
in the Business and Property Courts (B&PCs). This follows
concern from practitioners that a General PAP would not be suitable
for high value commercial litigation typically seen in the
B&PCs, and a subsequent consultation.

A draft PAP has been appended to the report. It is proposed that
this PAP would be mandatory, but with some exceptions such as
urgent cases, where parties have already engaged in a process to
seek to resolve their dispute or if the parties agree in writing to
opt out. Continuing the ADR theme, when the PAP applies, the
current draft would require parties to engage in a pre-action
dispute resolution process, either between the parties directly or
using a third party. There is also a proposed ‘stocktake’
procedure, whereby parties which are unable to resolve their
dispute are encouraged to review their positions and continue to
consider how to narrow the issues.

As set out in the report, it is now for the Civil Procedure Rule
Committee, and in some cases, the Online Procedure Rule Committee,
to consider how to take forward the recommendations made by the CJC
in both phases of their report. Sir Geoffrey Vos, Master of the
Rolls, Head of Civil Justice and the Chair of the CJC has expressed
his hope that the implementation of the recommendations will be
prioritised.

Litigation reforms in the pipeline

There are important developments in the pipeline
following work by the CJC and CPRC in relation to costs,
enforcement, interim remedies and security for costs, and non-party
access to court documents.

CJC

The primary role of the CJC is to advise the Lord Chancellor,
the judiciary and the Civil Procedure Rule Committee on civil
matters. It keeps the civil justice system under review and
considers how to make it more accessible, fair and efficient. Aside
from its work on litigation funding and pre-action protocols (see
above), the current work of the CJC which should be on your radar
for 2025 includes the following:


Enforcement – The Enforcement Working
Group is reviewing the policy landscape for enforcement of domestic
judgments and is looking to identify and recommend any areas of
further enquiry. A call for evidence has closed, which included
questions regarding barriers to enforcement, the most and least
effective methods, proposed amendments to the enforcement process
that should be considered and the ease of obtaining information
about potential judgment debtors. A wide-ranging report is expected
evaluating enforcement and how to improve the processes.

Costs – Following on from a previous
costs review and report, the costs Working Group is currently
focussing on issuing guidelines in relation to counsel’s fees
(looking at how to bring them into the costs framework which
applies to solicitors) and introducing a new top rate for complex
commercial work in the guideline hourly rates. A report containing
recommendations will be made to the Master of the Rolls who issues
the cost guidelines.

Civil Procedure Rules Committee (CPRC)

The CPRC is responsible for making and amending the Civil
Procedure Rules. The CPRC seeks to make the civil justice system
accessible, fair and efficient and ensure that the rules are simple
and easy to understand.


Access to court documents by non-parties
– There was a consultation in 2024 on proposed revisions to
CPR 5.4C which would widen the scope of documents which could be
made available publicly at an earlier stage. A large number of
consultation responses were submitted, which expressed concern as
to: (i) whether the proposed drafting of the new
rule was intended to give such wide access as it would do;
(ii) the timing of the provision of documents;
(iii) the proposed use of the documents obtained;
(iv) the apparent retrospective application of the
new rule; and (v) the mechanics of the provision
of the documents. The plans have been paused to enable the
Transparency and Open Justice Board, established in 2024, to
conduct the first phase of its work. On 6 December 2024, the Board
published a message detailing their proposed key objectives and
inviting engagement. One of the proposed objectives is “timely
and effective access to the core documents relating to the
proceedings held by the Court or Tribunal”, the proposed
extent of which appears to be narrower than that proposed in the
original consultation. There will be more to come on this in 2025.
In the meantime, the Court of Appeal in Moss v The Upper Tribunal & ors [2024] EWCA Civ
1414 has considered the principle of open justice and non-party
access to court documents

Interim remedies and security for costs
– Reforms to CPR Part 25 are to be incorporated into the next
mainstream CPR update. Subject to final drafting, Part 25 will be
restructured into a more logical order, the two Practice Directions
will be dispensed with and revised model search and imaging order
will be provided. Parties seeking urgent relief, such as
injunctions and freezing orders should be aware of these
changes.

Costs budgeting light – An earlier
report identified areas in which a “costs budgeting
light” approach may be appropriate. Drafts of two new costs
budgeting pilots have been prepared, one for cases within the
B&PCs and one for certain other cases valued at less than
£1m (both subject to exclusions). A new Precedent costs form
has also been proposed (modelled on Precedent H). It is understood
that the pilots should start early in 2025.

New Supreme Court and Privy Council rules came
into force on 2 December 2024 plus new websites have been created
for both courts in order to make access to their resources and
rules a better user experience

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