The prospect of introducing a contingency legal aid fund (CLAF) has been a hot-topic ever since the so-called ‘Jackson reforms’ were implemented in 2013. These reforms provided a significant shake up of civil litigation and changed the way in which cases are allowed to be funded.
Lord Justice Jackson has been thrust back into the limelight recently, after giving his full support to a lottery funded CLAF system, highlighting it as something that ‘could and should succeed’.
This CLAF is backed by the government and is seen as a clear answer to critics who insist ‘access to justice’ has suffered as a result of legal aid reform and changes to conditional fees. Where once funding was available to cover or supplement litigation, now – particularly in the field of commercial litigation – third party funding has been expected to ‘plug the gaps’ and the demand for investors has soared.
Many of the headlines and commentary around the proposed CLAF has focused on plans to use funds from the National Lottery to provide an initial cash investment for the CLAF. Further investment would then come from private / business investors who could purchase ‘fixed interest coupons’ or ‘quasi-debentures’ in the CLAF, which would offer a varied rate of return on their investment.
The CLAF presents a number of advantages over the more common commercial funding options. One being that it would not have ‘owners or shareholders’ who would be taking a cut of the profits. The plan for the CLAF would be that it is - after the initial investment - self-financing. The fund would work in the same way as conventional litigation funding options and that it would pay the claimant’s, costs win or lose. If the claimant were to be successful, the CLAF would recover its costs from the other party, together with a share of the proceeds of the claim.
If the proposed model lives up to expectation, if could be good news for prospective litigants.
The key question is now whether the proposed CLAF will be implemented and become a genuine competitor to the more established private litigation funders. Alternatively, will the CLAF continue to be a political football while the finer details are analysed and critiqued?
Whilst the proposals are still in their infancy, Stephensons has access to some of the best litigation funding options. Litigation funding can take away the added financial pressures of pursuing your case and our specialist solicitors are placed to explore the various options and support you through this process.
If you need any further information regarding this process, or to speak to one of our commercial solicitors, call 01616 966 229.
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