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ARTICLE · 13 FEBRUARY 2024

Litigation Funding: A New Era?

K&L Gates
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The Supreme Court of the United Kingdom's (Supreme Court) ruling in R (on the application of PACCAR Inc and others) (Appellants) v Competition Appeal Tribunal and others (Respondents) [2023] UKSC 28...

United StatesLitigation, Mediation & Arbitration
Ian Meredith
Ian Meredith
Emma Lidström
Emma Lidström

THE PACCAR JUDGMENT

The Supreme Court of the United Kingdom's (Supreme Court) ruling in R (on the application of PACCAR Inc and others) (Appellants) v Competition Appeal Tribunal and others (Respondents) [2023] UKSC 28 (PACCAR), handed down on 26 July 2023, has been a subject of keen interest in the past six months by both litigation funders and their clients.

By a majority of 4-1, the Supreme Court held that litigation funding agreements (LFAs), which entitle funders to payment based on the amount of damages recovered, would be classified as damages-based agreements (DBAs). LFAs adopting this form of funding structure would therefore have to comply with the regulatory regime in place for DBAs (The Damages-Based Agreements Regulations 2013) or otherwise risk being deemed unenforceable. The practical effect of the ruling was that many LFAs could be unenforceable in their current form.

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