CJC report demands costs budgeting, certification by funders, and regulation of crowdfunding
The Civil Justice Council (CJC) has called for mandatory costs budgeting and management in all funded group claims, marking a significant development in litigation funding regulation. This recommendation forms part of the CJC’s comprehensive review of litigation funding, published this week.
The report proposes that group claims—including collective proceedings, representative actions, and group actions—should be subject to strict costs control from the outset. In addition, the CJC urges parties to consider non-court forms of dispute resolution before embarking on litigation, emphasising the need to manage costs carefully to maintain public confidence.
A notable new requirement is that lawyers and litigation funders must certify to the court that they have not approached clients, either directly or indirectly, to encourage issuing proceedings. This aims to ensure ethical standards in the funding process and prevent improper client solicitation.
The report tackles a wide range of costs-related issues, including the possible reversal of the Supreme Court’s PACCAR judgment. This ruling currently limits courts’ powers to intervene when litigation funders underwrite claims. The CJC suggests that clarifying the courts’ powers to manage funded litigation costs is necessary to prevent spiralling expenses.
Group litigation has surged in recent years, particularly for consumer claims involving competition law breaches, data privacy violations, and financial mis-selling. While some respondents to the CJC working party criticised collective actions as benefiting lawyers and funders rather than consumers, others defended group claims as essential to securing access to justice for individuals who might otherwise lack resources to sue.
Embed from Getty ImagesThe report stresses the “self-evident” advantages of a consistent, expert approach to costs budgeting, but highlights the need for judges to receive specific training on managing complex, multi-party, and collective proceedings. This would enable courts to impose robust cost controls earlier in the litigation process.
David Bailey-Vella, chair of the Association of Costs Lawyers, welcomed the recommendations. He noted that the proposed statutory powers for courts and the Competition Appeal Tribunal to manage costs before proceedings begin suggest that funders alone may not exert enough financial discipline over lawyers.
Bailey-Vella said: “The recommendation for mandatory and enhanced costs management for funded group actions—and that it should start as early as possible—recognises how costs can quickly escalate in cases like this and that lawyers need to have much more focus on them from the start. Every lawyer needs to recognise the danger of getting caught up in the excitement of launching a case without keeping track of how much it is costing.”
He added that while costs budgeting has not been perfect over the past 12 years, the CJC’s 2023 costs review found it had a positive impact and required a more bespoke approach. Three pilot schemes for different case types began in April, and these new recommendations represent the next step in that process.
The CJC also called for crowdfunding to be regulated as litigation funding where investors expect a financial return. However, crowdfunding based on donations with no financial gain should be subject to minimum regulatory requirements.
The report’s wide-ranging proposals aim to increase transparency, cost control, and ethical conduct in group litigation, reinforcing the legal system’s commitment to delivering access to justice without undue expense.
