Government commits to reverse PACCAR in boost for litigation funding

The government has confirmed it will legislate to overturn the Supreme Court’s 2023 PACCAR ruling, a decision that upended the litigation funding market and left many collective and high-value claims struggling to secure funding.

Ministers say the change will help claimants bring complex cases by reopening funding routes that were effectively shut down after PACCAR reclassified certain third-party funding agreements as damages-based agreements.

Pressure for a fix

Since the ruling, funders and law firms have warned that claims have stalled or fallen away entirely. The Civil Justice Council (CJC) also called for the ruling to be urgently overturned, arguing instead for "light-touch regulation".

The Ministry of Justice argues that reversing PACCAR will widen access to justice, particularly in cases involving significant power imbalances.

Sarah Sackman, minister for courts and legal services, said that the uncertainty stemming from the Supreme Court ruling could "be preventing significant numbers of claimants from accessing justice."

In her official statement, she pointed to the 2019 Post Office Horizon case brought by Sir Alan Bates as an example of a claim that would not have been possible without third-party funding.

Not everyone is convinced. Critics from the business community have warned that easing restrictions could expose companies to a rise in costly class-action-style claims and leave defendants facing higher litigation costs.

David v Goliath

For those acting on the claimant side, the imbalance is exactly what the reforms are meant to address. David Greene, head of commercial disputes and class actions at Edwin Coe, said the move would restore certainty.

Greene said that "funding plays a critical role in complex, high-value claims, especially in cases where there is a clear imbalance of power. As the Legal Services Minister says these are ‘David v Goliath’ cases and having been involved in many of them, even David needs some ammunition to fight Goliath."

Safeguarding the legal market

Ministers have also framed the reform as a competitiveness issue for the legal sector. Sackman said the uncertainty created by PACCAR "risks undermining the competitiveness of England and Wales as a global hub for commercial litigation and arbitration, both of which bring significant benefit to the UK economy."

A welcome move

The Law Society welcomed the announcement but said more clarity is needed on timing.

President Mark Evans said: "Litigation funding can enable access to justice for individuals or groups who would otherwise not have the means to be able to bring a legal challenge. We are pleased the government is bringing clarity to this type of funding arrangement, but more information on the timeline for introducing this legislation is needed."

Detail pending

The MoJ said the new rules will ensure that the litigation funding sector works "fairly and efficiently for all". It also intends to accept some of the primary recommendations from the CJC’s review earlier this year and said it will introduce the new legislation "when parliamentary time allows".

While the pledge signals a clear shift from the post-PACCAR uncertainty, the market is now waiting to see how quickly legislation follows, and how tightly the new framework reins funders in.