Community Spotlight: Kishore Jaichandani, Founder and Managing Director, CAVEAT CAPITAL

Following the closure of the deadline for the consultation period in the Civil Justice Council’s (CJC) review of litigation funding, we are beginning to gain a clearer picture of where different parts of the country’s legal industry stand on the issue of regulation.

Two articles from Solicitors Journal provide insight into the positions of leading UK legal industry bodies in response to the CJC review, as the ACL (Association of Cost Lawyers) and CILEX (Chartered Institute of Legal Executives) expressed their support for increased regulation governing litigation funding.

The ACL voiced its overall positive view of the funding of meritorious claims, describing it as a “net positive” for the legal system and rejecting the idea that third-party funding increases litigation costs, but equally noted its concern that “the significant volume of funding coming into the market could have a negative impact”. In terms of the extent of independent regulation the ACL would like to see, proposed measures include a cap on funder’s fees, protections from excessive funder control of litigation, and increased transparency around the sources of outside funding.

However, the ACL also recognised legitimate concerns about some of these measures, noting that a funder’s return should reflect the significant risk being taken. If a suitable framework for a cap cannot be found, the ACL suggested that court of approval of funding agreements could provide an acceptable safeguard for clients. Jack Ridgway, chair of the ACL, emphasised that “Even opponents of third-party funding have to agree that it has increased access to justice and that ultimately is the litmus test.”

CILEX put forward its support for an improved regulatory framework for litigation funding, but suggested that the best approach may be through an expansion and improvement of the Association of Litigation Funders’ existing code of conduct. Like the ACL, CILEX advocated for greater transparency around litigation funding, and even went a step further, arguing for the mandatory disclosure of funding agreements. 

Simon Garrod, Director of Policy & Public Affairs at CILEX, acknowledged that litigation funding aims to “improve access to justice and it has achieved that in many cases”, but its impact on the legal system is significant enough to warrant “a more robust regulatory regime” to protect clients. 

The full article detailing the ACL’s position can be read here, and the article on CILEX’s view can be read here.

A decision handed down in the High Court earlier this week has demonstrated the potential value for funders in securing the assignment of a claim, providing the funder with more control over the litigation, and when a claim is successful, a direct return on investment through any eventual damages.

An article in Legal Futures covers the ruling from the High Court, where litigation funder Henderson & Jones has been awarded £2.15 million in damages in the case of Henderson & Jones Ltd v Salica Investments Ltd & Ors. Henderson & Jones took assignment of a claim by Tony Gifford in December 2021, a software inventor who had accused his early-stage investors of misusing confidential information shared in private meetings to develop their own software application. 

As a result of this breach of confidence, Mr Gifford claimed that he had been unable to secure funding from other investors, as Salica Investments and Dominic Perks had created competition through their own business. Mr Justice Calver’s ruling found in favour of Gifford’s claim, stating that it was “clear that Mr Perks stood to benefit personally financially from the misuse of the confidential information.”  Notably, the size of the eventual £2.15m award was made by the judge without any input from expert witnesses for the defendants, as they had failed to deliver expert reports prior to the deadline. 

Henderson & Jones’ managing director, Piers Elliott, provided the following comment on the judgment: “We’re very happy with the outcome and are delighted to have been able to assist Mr Gifford, who has been fighting for justice for many years.”

Hugh Sims KC and Jay Jagasia from Guildhall Chambers represented Henderson & Jones, instructed by Cardium Law Limited.

The full ruling from Mr Justice Calver can be read here.