Should litigation funding be regulated?

Litigation funding gives claimants the chance to pursue cases through the court where grievances progress beyond arbitration and move to legal claims. Sometimes also called third-party legal funding, it lets people and businesses gain the financial means needed to cover their legal costs. Funders offer this finance in return for a share of the award or settlement.

What are the views on litigation finance

Supporters of litigation finance say it improves access to justice. Critics say regulation is needed to provide transparency and fairness in a growing industry. Many people on both sides of the fence agree that the right regulation could help to ensure litigation funding is used in the way intended, for the benefit of claimants and offered only by quality providers such as https://www.novo-modo.co.uk/litigation-funding.

The arguments for regulation

The need to protect claimants is perhaps the biggest argument for regulating the litigation finance industry. Some funding agreements have high fees and can be complex, with repayment terms that are unclear, or that may leave claimants more out of pocket than they expected, even after being awarded damages. With regulation, contracts would be assuredly clear and transparent, and there would be no scope for unethical practices or pressure from funders to make certain legal decisions.

Critics fear that regulation could make litigation funding more expensive, slow and difficult to access, while supporters say it would remove bad agents and shady practices in a broader financial services industry that is otherwise heavily regulated.

As the debate continues, the prospect of some level of regulation does seem increasingly likely.