Litigation funder Innsworth loses challenge over £200m Mastercard settlement

Litigation funder Innsworth has lost its judicial review challenge over how the £200 million settlement in the landmark Merricks v Mastercard class action should be distributed.

In a judgment handed down on Wednesday (10 June), the High Court backed the Competition Appeal Tribunal's approach to dividing the settlement proceeds of one of the UK's most closely watched collective actions.

Innsworth funded the long-running opt-out claim brought by class representative Walter Merricks against Mastercard, spending more than £41 million on legal fees and experts.

But after the case settled last year for £200 million - far below the original £14 billion headline claim value - the funder objected to how the CAT decided the money should be split.

Funder return

The CAT split the settlement into three pots. £100 million was allocated to class members, while a separate pot was reserved to reimburse Innsworth's litigation costs, estimated at up to £46 million.

A further £54 million was earmarked first for Innsworth's profit and certain other costs, then to top up payments to class members if claims exceeded expectations. Any residual money would go to the Access to Justice Foundation charity.

Innsworth argued it should receive up to £179 million and that any residual funds should go to the funder rather than the charity, arguing that it was only because of its investment in the litigation that there were settlement proceeds to distribute.

The High Court rejected those arguments and endorsed the CAT's view that the collective proceedings regime should operate "for the benefit of class members and not primarily for the benefit of lawyers and funders".

The judges said the tribunal was entitled to conclude that Innsworth should recover its expenditure plus a 50% profit, and that any greater return would have been excessive.

“These were conclusions which it was entitled to reach and which were well within the wide powers conferred upon it as an expert and specialist tribunal,” the court said.

What they said

Merricks described the judgment as a "complete vindication" of the position he had taken before both the CAT and the Divisional Court.

"It delivers a total rejection of all of Innsworth's grounds of challenge, and they will now need to pay my costs of the judicial review," he said.

He added that Innsworth had sought to "elevate its grab for profits over and above all other considerations", but said he did not believe the judgment would deter responsible funders from backing collective actions.

Innsworth did not immediately respond to a request for comment.

Law firms involved

Akin represented Innsworth in the judicial review. Willkie acted for Merricks, with a team led by London partner Boris Bronfentrinker.

Hogan Lovells acted pro bono for the Access to Justice Foundation, while Freshfields acted for Mastercard.