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Pinsent Masons has warned that a new opt-out consumer class action regime in England and Wales could end up serving claimant law firms and litigation funders more than the consumers it is meant to compensate.

As reported by Out-Law, the firm has submitted its response to the Law Commission's scoping questionnaire on consumer class actions ahead of the 30 October deadline. The Law Commission is examining, at the UK government's request, whether a dedicated collective regime would strengthen consumer law enforcement; unlike competition claims, consumer law claims currently have no bespoke mass claims mechanism.

In its submission, the firm questioned whether such a regime would address a genuine unmet need. "Far from enabling access to justice, prioritising litigation over more appropriate mechanisms of redress could result in an explosion of speculative consumer law claims being brought for-profit with little to no benefits for those represented," it said. "This approach provides little in the way of justice, but large rewards for funders and lawyers."

The firm also argued that creating any new opt-out regime now would be premature, given that substantive consumer law enforcement reforms only took effect last year and that a separate consultation on the competition opt-out regime remains ongoing. On the existing regime's record, it said damages are "accessed by only a small number, and these damages are dwarfed by the returns for funders and lawyers," cautioning against "conflating 'access to justice' with 'access to litigation'."

If a regime does proceed, Pinsent Masons proposed guardrails including stricter regulation of third-party litigation funding, robust certification rules, an early strike out mechanism for abusive claims, and costs controls.

A Welsh law firm specialising in motor finance redress claims has been placed into administration while carrying an outstanding charge in favour of Woodville Consultants Limited, the litigation funder that itself collapsed in July.

As reported by The Law Society Gazette, Swansea-based Fairplane Solicitors Limited, which also traded as The Refund Lawyer, began insolvency proceedings with administrators from Kroll Advisory Ltd appointed on 1 October. The firm is understood to be undergoing an orderly closure, with clients protected under its succession plan. The Refund Lawyer brand was set up exclusively to pursue claims for mis-sold commissions and excessive interest charges on vehicle finance, and Fairplane had worked on mis-sold finance claims on a no-win, no-fee basis for a decade.

Abridged accounts for the year to March 2025 showed total net liabilities exceeding £900,000. Assets were assessed at more than £23 million, but cash reserves stood at just £35,000 and longer-term debts had risen 23% over twelve months. Headcount grew from 21 to 28 across the same period. The Solicitors Regulation Authority said it is liaising with the firm and would consider action only if client interests were at risk.

Woodville, also based in south Wales, was placed into administration in July, with Kroll likewise appointed. Its administrators have expressed "significant concerns as to the realisable value of the loan book," reporting last month that the funder concentrated lending on 10 law firms and associated entities, primarily in Wales and northwest England, and that loans to only one firm appeared to be secured. Funding may in some cases have supported general working capital rather than case costs.

An inventor rights advocacy group has told the federal rules committee that a mandatory third-party litigation funding disclosure rule would hand well-capitalised defendants a tactical advantage over independent inventors trying to enforce their patents.

In a letter filed as Rules Suggestion 26-CV-40 with the Committee on Rules of Practice and Procedure, dated 7 October, the Inventors Defense Alliance reaffirmed its opposition to disclosure requirements of the kind urged on the Committee last month by 214 companies and organisations. That proposal would require parties in federal civil litigation to disclose the name, address and telephone number of any nonparty, other than counsel of record, that directly or indirectly provides funding for the action and holds a financial interest in it.

The group's chief policy counselor, Kristen Osenga, argued that patent litigation costs make outside financing a practical necessity for smaller claimants, citing AIPLA data putting median costs for high-stakes patent cases at roughly $3 million to $5 million, with sophisticated multi-patent disputes exceeding $10 million per side. Disclosure of funding terms, the letter said, would give defendants "a roadmap for pursuing a war of attrition against smaller plaintiffs."

The submission also attacked the proposal's scope as unworkable. Read broadly, it argued, "directly or indirectly" could capture a teacher whose pension fund invests in an SEC-registered fund that finances a startup's infringement suit — someone who may not know the lawsuit exists. The Alliance urged that any rule adopted be "surgically precise."

The Advisory Committee on Civil Rules is scheduled to consider the funding disclosure proposals at its meeting later this month.

Treasury Secretary Scott Bessent has lent his support to a Republican effort to change the tax treatment of third-party litigation funding, telling a congressional committee that he regards the industry as a structural problem rather than a legitimate asset class.

As reported by Transport Topics, Bessent told the House Financial Services Committee on 15 September that "I have long believed that [third-party litigation financing] is a malignancy within our legal and financial system," responding to questions from Rep. Mike Flood (R-Neb.). Flood pressed Treasury and the Internal Revenue Service to examine how income from litigation finance investments is taxed, including arrangements involving foreign investors, arguing that "these transactions allow investors to take ordinary income from litigation recoveries and convert it into capital gains income through financial fiscal engineering." Bessent said he looked forward to working with lawmakers on the issues raised.

The underlying legislation is the Tackling Predatory Litigation Funding Act (H.R. 3512), sponsored by Rep. Kevin Hern (R-Okla.), with an identical Senate companion from Sen. Thom Tillis (R-N.C.). Both are backed exclusively by Republicans; the Senate bill has eight co-sponsors across six states, while House co-sponsors represent 20 states. Under the proposal, any person who controls, receives or holds proceeds from a covered civil lawsuit would have to withhold tax equal to 50% of the applicable percentage of payments owed to a funder. Covered agreements include options, forward contracts, futures, short positions and swaps. Agreements providing less than $10,000 for an individual lawsuit would be exempt.

The National Association of Mutual Insurance Companies has urged the administration and Congress to close what its senior vice president of federal and political affairs, Jimi Grande, characterised as a loophole.

Pre-settlement funder Legal-Bay has welcomed the proposed $800 million abuse settlement involving the Archdiocese of New York while warning claimants that the plan's fast-track payment option may undervalue their claims.

As reported by The Mountaineer, the proposal would be paid in two installments — roughly $615 million up front and a further $185 million within about 15 months — covering an estimated 1,300 claims brought under New York's Child Victims Act. Claimants would be able to accept a flat quick-pay amount of $250,000 or submit to an individual evaluation under a points-based matrix that has not yet been released publicly.

Legal-Bay chief executive Chris Janish said the figure represents meaningful progress. "For survivors who have waited years to be heard, an $800 million proposal is an important step toward resolution," he said. He cautioned, however, that the quick-pay election may not deliver fair value for claimants whose circumstances would score higher under individual review, and noted that the matrix remains unpublished, leaving claimants to weigh a certain sum against an unknown alternative.

Janish added that non-recourse funding advances can help plaintiffs avoid accepting an early payment for liquidity reasons alone. Legal-Bay provides pre-settlement advances that are repaid only if the underlying claim resolves successfully.

The company has tracked the Archdiocese proceedings closely, having flagged in April that the case had reached what it described as a critical crossroads for claimants awaiting resolution.

Litigation finance is moving from a niche alternative allocation to a recognised corner of specialty private credit, according to Luke Darkow, a portfolio manager at Aperture Investors.

As reported by ABF Journal, Darkow argues that institutional investors are no longer treating legal assets as an exotic curiosity but as a potential source of returns uncorrelated with public markets. "Litigation finance is no longer merely an alternative curiosity," he writes. "It is increasingly viewed as a potential diversifier within their current portfolios."

The case rests partly on the sheer size of the underlying market. U.S. legal services generated roughly $375.7 billion in revenue in 2024 and are projected to reach $427.9 billion by 2029, a compound annual growth rate of 2.64%. Darkow, who says he has personally deployed more than $1.25 billion into litigation finance over his career, frames that spend as a large and persistent financing need rather than a cyclical opportunity.

Aperture's own approach is built around lending to law firms rather than backing individual cases. The firm structures direct loans secured by diversified pools of legal fee receivables, blending post-settlement receivables with near-settlement matters. Darkow contends that this structure reduces the binary outcome risk that has historically made single-case investments difficult for institutional allocators to underwrite, because repayment depends on the performance of a portfolio of claims rather than one verdict.

Aperture, which reported roughly $600 million in litigation finance assets under management earlier this year, is among a group of credit managers positioning law firm lending as a distinct private credit strategy.

New York's new consumer litigation funding statute has not removed the risk that a funding agreement will be recharacterised as a usurious loan, according to a commentary published this week by three lawyers at Glenn Agre Bergman & Fuentes.

As reported by Bloomberg Law, partners Reid Skibell and Joseph Gallagher, with associate Colleen Piasenti, argue that the Consumer Litigation Funding Act — effective 17 June 2026 — gives funders a statutory framework but not a safe harbour. The Act defines consumer litigation funding as non-recourse and caps the funder's total recovery at 25% of the claimant's proceeds. Non-recourse treatment is what keeps a funding agreement outside New York's 16% civil usury ceiling, and the authors contend that courts will look past the label to the economics of the deal.

They point to the July 2026 decision in *Denemark v. New Chapter Capital, Inc.* as the cautionary example. There, a funder advanced legal fees to a party in a matrimonial dispute at a stated 12% interest rate, secured by a UCC-1 lien on marital property and supported by a guaranty that triggered repayment if the spouses reconciled or if either spouse died. The court concluded the structure left the funder recovering in virtually every realistic scenario, making the arrangement a loan in substance at an effective rate of roughly 19%, and voided it.

The practical lesson, the authors suggest, is that risk-reduction devices meant to protect a funder's downside can be the very features that strip away non-recourse status.

Litigation Capital Management has disclosed that an Australian court delivered judgment against a funded insolvency claim in which the company had invested A$2.9 million of shareholder capital directly from its own balance sheet.

As reported by Investegate, the AIM-listed funder confirmed on Wednesday that the claim was unsuccessful. LCM said the matter was funded entirely on balance sheet rather than through one of its third-party investment vehicles, meaning the full A$2.9 million exposure sits with shareholders rather than fund investors.

The company said a policy of after-the-event insurance is in place to mitigate its adverse costs risk arising from the judgment. ATE cover typically responds to a successful defendant's costs order, which in Australian proceedings can represent a material liability on top of the funder's own sunk investment. LCM added that it is reviewing the judgment and assessing potential next steps alongside its legal representatives, language that leaves open the possibility of an appeal.

The disclosure arrives at a difficult moment for the funder. LCM announced in September that it would enter an orderly run-off following a full-year loss of A$165.7 million, and has since been working through its existing book rather than writing new business. Adverse outcomes on balance-sheet positions carry more weight in that context, since realisations from the legacy portfolio are the primary source of value available to shareholders.

The announcement was made by chief executive Patrick Moloney and chief financial officer David Collins. Cavendish acts as the company's nominated adviser and broker.

Insolvency litigation funder Manolete Partners has reported record realised revenue for the six months to 30 September 2026, alongside a record pipeline of signed but unresolved cases, in a trading update issued on Tuesday.

As reported by Investegate, realised revenue for the first half of the 2027 financial year came in at £17.4 million, up 23% from £14.1 million a year earlier. The company's forward book — the estimated future revenue from cases already signed — rose to a record £69 million at 30 September, against £67 million at the March year-end and £56 million twelve months ago. New cases signed in the half carried a forecast revenue value of £17.3 million, a 26% increase on the prior year.

The AIM-listed funder completed 161 cases in the period, up from 146. Cash collection moved the other way: gross cash receipts fell £1.7 million to £12.8 million, and net debt rose £2.1 million to £13.6 million from £11.5 million at the end of March. Manolete separately announced a £3 million settlement in a large insolvency claim on 2 October, after the half-year closed.

Chief executive Mena Halton said the company had performed strongly in the first half, pointing to the record revenue and the continued growth in the forward book.

Market expectations for the full year sit at £30.6 million of revenue and £1.5 million of adjusted realised profit before tax. Manolete will publish full half-year results on 19 November, with an investor presentation the following day.