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.