Law firms urge action on PACCAR amid class action slowdown

20 law firms including Mishcon de Reya and Stewarts have written to justice secretary David Lammy urging the government to reverse the Supreme Court’s PACCAR decision, warning that inaction is driving investment away from the UK legal system.

In the letter, first reported by the Financial Times, the group accused the government of dragging its feet on legislation to fix the fallout from the 2023 ruling, which has upended the UK's fast-growing collective actions market.

PACCAR fallout

The PACCAR judgment sent shockwaves through the litigation funding industry by classifying percentage-based funding returns as damages-based agreements (DBAs) - casting doubt on the enforceability of many existing deals.

The FT cites data from litigation intelligence platform Solomonic showing the impact: just three collective proceedings have been filed at the Competition Appeal Tribunal this year, compared with 11 in 2024 and 17 the year before.

Litigation funders including Burford Capital have repeatedly warned of the damage. Earlier this year, Burford CEO Chris Bogart said the firm was "under allocating capital to the UK" and had begun shifting arbitral seats in its agreements from London to centres such as Paris and Singapore.

Pressure builds on the government

The Labour government inherited draft legislation designed to reverse PACCAR when it came to power but said it would wait for the Civil Justice Council’s review of the sector before acting. The CJC’s report - published in June - urged ministers to legislate "as soon as possible" and to introduce light-touch regulation of litigation funding.

Neil Purslow, chair of the International Legal Finance Association, said the slowdown showed "the stark reality" of the government’s inaction. "The Government must act before this small trickle of cases dries up altogether," he said.