The UK’s leading litigation funders have taken further steps to improve their PR and attack head on suggestions that they lack transparency by introducing a new complaints procedure and capital requirements, which could see funders given public warnings or struck off their voluntary quasi-regulatory body.
The Association of Litigation Funders’ (ALF’s) new procedure, which came into effect in January, will see complaints give rise to an initial investigation by the body’s general counsel, and referred to an independent legal counsel who must be a litigation partner or a Queen’s Counsel.
The complaint process, which was written by Wilberforce Chambers’ Joanna Smith QC, will ‘help ensure an equitable and efficient review of any and all complaints against members,’ an ALF statement said.
It further requires that funders maintain access to £2m in capital and disclose the source for that funding, including guaranteeing that they have access to funds immediately within their control including within a corporate parent or subsidiary.
However, the sanctions are potentially lacking in real teeth, and may include a private or public warning; publication of the opinion; suspension of membership of the ALF; expulsion from the body; and fines payable of up to £500. The process also allows for appeals against complaints decisions.
The ALF includes nine of the UK’s leading funders and is fronted by three of the industry’s most prominent names – Leslie Perrin (Calunius Capital), Susan Dunn (Harbour Litigation Funding), and Timothy Mayer (Woodsford Litigation Funding).
Matthew Reach, head of legal at Argentum Litigation Services (an ALF member) told Legal Business that the ‘overall purpose is to bring some control, more quasi-regulation and credibility to the funding industry,’ adding, ‘having a complaints procedure is key to doing that.’
Membership of the ALF is voluntary but it is hoped that the level of business and trust gained by members will encourage more third party funders to sign up.
‘It gives funders a competitive advantage. If funders realise that, they’re more inclined to sign up and thus be subject to the code and complaints procedure. It’s the nature of business meetings that it almost has the effect of being compulsory if you want to have credibility and traction in the market, you have to join up,’ adds Reach.
The ALF has previously been criticised for its lack of real control and the inclusion of a ‘private sanction’ and low-level fines may not be enough to convince the industry it has gone far enough to combat those criticisms.
However, the move was welcomed this week (11 February) by the Civil Justice Council and Reach says: ‘It’ll add teeth to it.
‘It’s something we take really seriously. You want to protect your brand anyway, you don’t want to upset the people you deal with. Now there’s a complaints procedure, it’s something to be mindful of and have a process for internally.’
For further detailed analysis of third-party litigation funding see How to win cases and influence people – litigation funding strives to go mainstream