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In a striking outcome for funded collective actions, the UK's Competition Appeal Tribunal has signed off on the discontinuation of a £480 million claim against Qualcomm that delivers no compensation to the millions of consumers it was meant to benefit.

As reported by CDR News, the Tribunal approved a "drop-hands" settlement on June 10 under which all parties discontinue proceedings and bear their own costs. The claim, brought by the Consumers' Association (Which?) as class representative, had alleged that Qualcomm abused its market dominance to overcharge for smartphone chips, inflating handset prices.

The Tribunal assessed the claim's prospects at just 10% to 15%, concluding that the class representative "no longer had a realistic prospect of success." The result is believed to be the first CAT settlement resolved on a drop-hands basis, with neither the class nor the funder receiving any payment despite the claim's headline valuation.

The action had been backed by litigation funder Augusta Ventures alongside law firm Hausfeld. For the funder, the outcome represents a total loss on its investment in the case—a pointed illustration of the downside risk inherent in the opt-out regime.

The decision lands amid intensifying scrutiny of funded class actions in the UK, where the Tribunal has shown a growing willingness to test the merits, economics, and consumer benefit of collective proceedings before allowing them to advance or settle.

As private equity firms extend their reach into the legal industry, a new commentary argues that the tax code has failed to keep pace with how litigation funders actually earn their returns.

Writing for RealClearMarkets, Michael Toth contends that third-party litigation funders routinely claim favorable capital gains treatment on their returns when that income should be taxed as ordinary income. He notes that the Treasury Department "has never bothered to clarify the proper tax treatment of TPLF returns," leaving a roughly $20 billion industry to structure deals as "derivative contracts" despite funders performing work that closely mirrors that of plaintiffs' attorneys—vetting cases, advising on strategy, and managing litigation budgets.

The piece opens with Fortress's recent $125 million investment in an Arizona personal injury firm, which Toth frames as evidence that funders are shifting from wagering on individual case outcomes toward financing law firms' back-office operations and steadier revenue streams. He argues that the disclosure bills congressional Republicans have introduced since 2019 are "focused on yesterday's market," addressing single-case funding even as investors move toward portfolio and operational models. He also flags that nonresident foreign funders can often avoid federal tax on U.S. litigation gains altogether.

Toth's proposed fix relies on existing authority: he urges Treasury to apply the substance-over-form doctrine and tax funding returns as ordinary business income, while noting that Congress could amend the definition of capital assets to exclude legal claims.

The credibility of the UK's opt-out collective action regime increasingly depends on a stubborn problem: persuading class members to actually claim the damages won on their behalf.

As reported by The Law Society Gazette, Rachel Rothwell, editor of Litigation Funding, examines how little of the money awarded in landmark cases is reaching the consumers it is meant to compensate. In Gutmann v South Western Trains, the boundary fares case, roughly £25 million was awarded—yet take-up was less than 1%, with only about £200,000 distributed to class members and £3.8 million directed to the Access to Justice Foundation. Many passengers, she notes, abandoned their claims once asked to supply bank details, wary of fraud.

The forthcoming Merricks v Mastercard payout will test the regime on a far larger scale. With £100 million of the £200 million settlement ringfenced for as many as 44 million potential claimants—roughly £45 to £70 each—the case has become a referendum on whether opt-out actions can deliver for the public rather than primarily for lawyers and funders.

Rothwell canvasses several proposed fixes: a central public register of claims endorsed by government or the courts; compelling defendants, particularly in the tech and utility sectors, to assist with distribution; and building trust through charities and consumer groups while offering vouchers in place of direct bank transfers. Legitimacy, she argues, hinges on a meaningful share of damages reaching those actually harmed.

The High Court has rejected litigation funder Innsworth's judicial review challenge to the Competition Appeal Tribunal's distribution of the £200M Merricks v Mastercard settlement, ending the first substantive test of a CAT settlement decision and handing class representative Walter Merricks what he called "a total victory."

As reported by Legal Futures, the CAT's January ruling allocated the first £100M to consumers, repaid Innsworth its estimated £46M outlay, and capped the funder's profit at 50% — roughly £23M — for a guaranteed total return of about £68M. In setting a 1.5x return, the tribunal noted that the settlement of a claim originally valued at £14bn was "very far from a success" for the 44M-member class.

Lord Justice Males rejected all three grounds of review, observing that a 50% profit "was not a bad result" for a funder that would likely have lost its entire investment had the case gone to another trial. Merricks accused Innsworth of seeking "to elevate its grab for profits over and above all other considerations," and said distribution to consumers can now begin. Innsworth, which is separately pursuing arbitration against Merricks, warned that inadequate funder returns will drive "a reallocation of capital towards lower-risk claims," and accused the CAT of acting as "a de facto regulator of the litigation funding market" while offering no clear guidance on permissible returns.

Winward Litigation Finance CIO Jeremy Marshall predicted the ruling "will certainly put the brakes on funders' appetites" for CAT claims.

While most state legislatures have pursued disclosure and registration regimes for litigation finance, North Carolina is advancing something far more drastic: an outright ban.

As reported by Bloomberg Law, North Carolina senators have approved legislation that bans litigation finance in the state, sending the measure to the state House.

The vehicle is House Bill 315, which began life as a "Gift Card Theft & Unlawful Business Entry" bill before being rewritten in the Senate as "an act to prohibit litigation investments in the civil justice system, to prevent the civil justice system from becoming a financial investment market." The amended bill makes it unlawful "to engage in litigation investment" in North Carolina or to furnish litigation investment to a party or counsel of record in a civil proceeding — defining litigation investment broadly as any provision of money for litigation fees, costs, or expenses in exchange for repayment contingent on the outcome.

The bill carves out narrow exceptions for contingency-fee arrangements, insurer obligations, nonprofit legal aid, non-contingent loans, and funding from family members. Its legislative findings lean heavily on national security concerns, citing the risk of undisclosed foreign persons and entities investing in domestic litigation.

The measure stands in sharp contrast to recent state activity elsewhere — Kansas, Michigan, and New Jersey have all advanced transparency-focused frameworks this year that regulate rather than prohibit the industry. If enacted, North Carolina would become one of the most restrictive litigation finance jurisdictions in the country, and industry critics have already characterized the gut-and-replace maneuver as a legislative bait-and-switch.

A proposed UK collective action against major musical instrument manufacturers is collapsing for want of litigation funding — a concrete illustration of the financing squeeze facing claims in the Competition Appeal Tribunal.

As reported by Law360, consumer rights advocate Elisabetta Sciallis applied on Wednesday to withdraw her proposed class action against Fender, Yamaha, and other musical instrument manufacturers, saying she had been unable to secure litigation funding despite years of effort.

Sciallis, a principal policy adviser at consumer group Which?, filed a series of proposed opt-out collective actions in 2022 on behalf of consumers who purchased musical instruments, following on from Competition and Markets Authority decisions fining several manufacturers for resale price maintenance. The claims had been stalled at the certification stage for years, and the tribunal had grown increasingly impatient: a March 2026 case management order listed a preliminary hearing for after June 5 specifically to determine the adequacy of the proposed class representative's funding and insurance arrangements.

The withdrawal underscores a broader theme in the UK collective actions regime. With the CAT tightening its scrutiny of certification and funder returns — and with the Innsworth-Mastercard distribution fight casting doubt on the economics of opt-out claims — funders have become increasingly selective about which collective proceedings they will back. For proposed class representatives unable to assemble a viable funding package, even claims that follow on from regulatory infringement findings may prove impossible to sustain.

More than £3.7M left unclaimed from a funded rail passenger class action is being redeployed to support free legal advice services across the UK, offering a window into what happens to undistributed damages in the Competition Appeal Tribunal's collective actions regime.

As reported by Consumer Voice, the money comes from the Boundary Fares class action involving South Western Trains, brought on behalf of passengers allegedly overcharged for journeys extending beyond their London Travelcard zones. While thousands of class members came forward, millions of pounds remained unclaimed when the settlement distribution closed, and the CAT awarded the residue to the Access to Justice Foundation.

The foundation has now announced the recipients of its Improving Lives Through Advice 2026 programme, a three-year grants initiative funded by the unclaimed damages that will support 16 organizations providing free legal advice on housing, employment, debt, and consumer issues. In approving the award, the tribunal said the money "could make a huge difference in facilitating access to justice for the needy and vulnerable."

The scale of demand was striking: the grant programme received 315 applications requesting more than £70M. Foundation chief executive Clare Carter noted that while the £3.7M will have real impact, it "will not be sufficient to meet the sheer scale of unmet need," with more than 11M people each year failing to get help with legal problems.

The award also highlights the persistent take-up challenge in opt-out collective proceedings, where low claim rates routinely leave substantial settlement funds undistributed.

Consumer legal funder Legal-Bay LLC is expanding its summer funding initiatives to help plaintiffs manage rising seasonal expenses while their cases work through the courts.

According to PR Newswire, the New Jersey-based company is positioning its non-recourse cash advances as an alternative to credit cards, personal loans, or premature settlement offers for plaintiffs facing summer costs such as travel, childcare, camps, and higher utility bills. Because the advances are non-recourse, clients repay only if their case resolves successfully; if there is no recovery, there is no repayment obligation.

"Summer should be a time for families to relax and enjoy themselves, not worry about how they're going to pay bills while waiting for a lawsuit to settle," said CEO Chris Janish. "Our mission is to provide fast, transparent legal funding that helps plaintiffs maintain financial stability throughout the litigation process."

Legal-Bay reports increased demand for lawsuit funding during the summer months, and says it works directly with attorneys and plaintiffs nationwide to expedite approvals — often delivering funding decisions within 24 to 48 hours of receiving required documentation. The company funds a wide range of case types, including personal injury, motor vehicle accidents, slip and falls, wrongful termination, workplace discrimination, medical malpractice, and mass tort litigation.

The seasonal push reflects a familiar pattern in the consumer legal funding market, where demand tends to track household cash-flow pressures as much as litigation timelines — and where funders increasingly market liquidity as a tool for plaintiffs to avoid settling early at a discount.

A new entrant has arrived in the European litigation funding market, with Felix von Zwehl announcing that MOMENTUM Legal Finance, a German funder he has spent recent months building, is now operational. Von Zwehl brings more than 15 years in dispute resolution and a decade in litigation finance to the venture, which is positioned around the enforcement of high-value commercial claims.

According to MOMENTUM Legal Finance, the firm is built on the conviction that markets create sustainable value only when their rules are respected, and that conduct such as cartels, abuse of dominant position, market manipulation, and intellectual property infringement harms not only individual claimants but trust, competition, and market integrity more broadly. The funder frames its mission as making private enforcement accessible, disciplined, and economically rational for those who have suffered harm.

MOMENTUM's model centers on financing the enforcement of claims and participating in the recovery upon success, with a deliberate focus on a select number of high-value commercial disputes. The firm also offers a claim-purchase option, acquiring claims outright to provide immediate liquidity. It says it combines legal-AI tools with the experience of senior industry figures on its advisory board to strengthen legal analysis, while stressing that technology is meant to support rather than replace human judgment.

Von Zwehl emphasized a client-centric approach, pledging to work directly with claimants as decision-makers rather than through layers of committees and to remain committed to cases through resolution. The launch adds further depth to Germany's increasingly competitive litigation funding landscape.