Litigation funders and solicitors held to different standards in regards to opt-out class actions
14th Dec 2015
Ken Daly, a partner at Sidley Austin, writes in the Solicitors Journal that the introduction of “opt-out” collective actions by the CRA, “[p]otentially has wide ramifications for third-party litigation funding, since it might now be possible for funders to back claims on behalf of a large number of claimants who have not chosen to participate in proceedings (and indeed might not know about the proceedings being taken on their behalf).”
Daly cites the Justice not Profit market analysis on litigation funding, which outlines a 743% growth in assets under management since 2009 by 16 litigation funders in England and Wales, showing that the third party litigation funding industry is growing.
Daly states that, “This raises the interesting paradox that solicitors, who are subject to mandatory statutory regulation, fiduciary duties, and the DBA regulations, are excluded from acting in opt-out class actions in exchange for a percentage of damages because of the improper incentives this might create, but funders – which are not subject to any such regulation or duties – are free to support such actions without any limitations or caps.”
Read the full story here.