The UK's opt-out collective action regime is facing increasing uncertainty due to the Competition Appeal Tribunal's (CAT) developing approach to litigation funding agreements, according to Leslie Perrin, chairman of Calunius Capital. This uncertainty is reportedly worsening the already risky nature of litigation funding.
Perrin states that funders invest significant capital into investigating, certifying, and pursuing claims that can take years to resolve. In return, they receive an agreed share if the claim succeeds, but lose their entire investment if it fails. Recent signals from the CAT, which appear to show a willingness to revisit funding arrangements and priority agreements when determining distributions, are causing concern.
The government's recent light-touch proposals for the opt-out regime, which include recommendations for faster distributions in successful class actions, better management of legal costs, and procedural reforms, have been welcomed. However, the industry still awaits the implementation of key recommendations from the Civil Justice Council and promised government legislation to reverse the 2023 Supreme Court PACCAR judgment.