The government is being urged by consumer champions and truck hauliers to introduce urgent legislation to protect the funding mechanism that helped the campaigner Sir Alan Bates sue the Post Office.
In an open letter to the government, a number of those bringing mass-action-style lawsuits have pushed for ministers to protect the litigation funding sector and help safeguard people’s ability to bring cases against large companies.
Litigation funders give financial backing to legal cases they think will succeed in exchange for a share of the compensation. The system allows expensive class action-style cases to be launched by people who could not otherwise afford them.
Bates and 554 post office operators were backed by a litigation funder in their legal battle against the Post Office, which exposed the Horizon IT scandal. The case was the subject of the hit ITV drama Mr Bates vs the Post Office.
Bates wrote in the Guardian in May that there would have been no justice for post office operators without litigation funding given the “exorbitant costs” of the legal system in England and Wales.
High-profile legal cases that also relied on litigation funder backing in the UK included women who brought equal pay action against Sainsbury’s, rugby players suing for life-changing injuries, motorists who brought claims against Volkswagen over faked emissions and cases against the UK’s biggest mobile phone networks for overcharging loyal customers.
However, last year the litigation funding sector was thrown into chaos after the supreme court ruled in one case that the funding agreements were in effect unenforceable, sparking uncertainty about deals struck in similar lawsuits.
The previous government had promised new legislation to reverse the effects of the supreme court ruling and a bill won cross-party support earlier this year – but parliament was dissolved before it was passed into law.
In their open letter, consumer representatives and the Road Haulage Association accused the government of “dragging its heels on addressing the issue”. They wrote that that until “that fix is put in place, uncertainty for claimants will persist”.
The letter added: “We call on the prime minister – who spent his legal career securing justice for those who needed it – to urgently introduce a simple legal fix to ensure David can afford to take on Goliath and access to justice is preserved for those seeking to protect their basic rights.”
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They say the current uncertainty has led to a 75% slowdown in lawsuits funded in the second half of 2023, according to Exton Advisors, an independent specialist adviser. Defendants have also been mounting legal challenges in existing cases.
Signatories to the letter include Prof Carolyn Roberts, a water resource specialist who is spearheading a mass action against six UK suppliers for alleged customer overcharging, and Richard Smith, the chair of the Road Haulage Association, which has brought a mass action against truck manufacturers over an alleged price-fixing cartel. They also include Clare Spottiswoode, a former energy regulator who is the consumer representative for a collective action that claims cable manufacturers’ cartel activities led to higher domestic electricity prices.
The Ministry of Justice said: “The government is committed to ensuring access to justice in large-scale and expensive cases, while also making sure claimants are protected from unfair terms.
“A review by the civil justice council into third-party litigation funding is currently taking place. The government will take a comprehensive view of any legislation once that review is concluded.”