Litigation Funding Agreements (Enforceability) Bill Clears Another Hurdle

The Litigation Funding Agreements (Enforceability) Bill continued its journey through the Lords on Tuesday with its Second Reading. The Bill aims to address the impact of the Supreme Court judgment in R (PACCAR) v Competition Appeal Tribunal [2023] UKSC 28 (PACCAR) which held that litigation funding agreements (LFAs) that remunerate the litigation funder by reference to a proportion of the damages ultimately recovered constitute damages-based agreements (DBAs). The effect of that decision is that many LFAs currently in existence are likely to be unenforceable unless they satisfy additional stringent conditions in subsidiary legislation. The Bill will restore the position to that which prevailed before the decision of the Supreme Court (that LFAs are not DBAs and hence are enforceable) by amending the definition of a DBA in section 58AA(3)(a) of the Courts and Legal Service Act 1990 (CLSA).