The Dekagram: 23rd June 2025

This week Megan Bithel-Vaughan reports back on the Civil Justice Council report on litigation funding – an important document some 150 pages long (the report, not Megan’s article). Having read Megan’s summary you will be armed with the latest news on CFAs and DBAs and even CATs. Meanwhile the clock is ticking on the consultation on updating the legal framework around package travel – with only a week to go until the deadline for responses, we’re sure our readers are working day and night, as we are, on their submissions.

The Civil Justice Council Report on Litigation Funding

The Civil Justice Council has published its much anticipated Review of Litigation Funding Final Report [Review of Litigation Funding – Final Report].  The report, made up of 12 parts and 150 pages, provides 58 recommendations.  The overarching message of the report is that “light touch” regulation is necessary to provide both consumers and practitioners with clarity, given the lack in certainty that has arisen, especially since the Supreme Court decision of R (PACCAR) v Competition Appeal Tribunal [2023] UKSC 28.

This article does not intend to provide a detailed analysis of the entire report, it instead  proposes to focus on Part Nine of the Report, which proposes reform to the current system of Conditional Fee Agreements (CFAs) and Damages-Based Agreements (DBAs).

The Civil Justice Council recommends that the dual system of CFAs and DBAs be replaced by a singular, simplified and codified legislative contingency fee scheme.  This system should replace both CFAs and DBAs, but should not include the provision of claims management services which should be separately regulated.

The aim of any new legislative contingency scheme should be simplicity, aiming both to reduce the necessity and extent of satellite litigation on enforceability of agreements, but also improve access to justice by ensuring that lay clients fully understand the risks and benefits of the contingency scheme they are agreeing to use to fund their claims.

In considering DBAs, the Civil Justice Council notes that regulations governing them are poorly drafted, overly complex and restrictive, making them difficult to both understand and enforce, especially post the decision in PACCAR. The Civil Justice Council criticise the fact that the Mulheron-Bacon 2019 reform proposals remain unimplemented, and encourages their implementation (where they do not contradict other proposals within the remainder of the report) as a matter of urgency.  It is further recommended that DBAs should be permitted in opt-out collective proceedings in the Competition Appeal Tribunal.

Further recommendations are made with regards to re-evaluating the cap on success fees, ensuring that it is increased with inflation, especially with regards to mesothelioma claims. The consideration of a staged system of success fees, or increased discretion to lift the cap on cases where the risk justifies it, is also recommended.  Further, the Civil Justice Council recommends that there should be a distinction made between lay consumer clients and commercial parties, and that there should not be a cap on the return of legal representatives in the case of commercial parties.

To further the efficiency of increasing the cap in line with inflation, it is recommended that the responsibility for CFAs, DBAs and/or any new single contingency fee regime should be transferred from the Ministry of Justice to the Civil Procedure Rules Committee.  It is however noted that the Lord Chancellor should retain the discretion to direct the Rule Committee to make regulation for a specified purpose.

The Civil Justice Council also recommends passing legislation to clarify and/or correct what they describe as ‘unintended consequences’.  These include:

• Abrogating the indemnity principle (that a party cannot recover their costs from another party if it lacks the necessary enforceable liability to pay those costs to its own solicitors).
• Confirming that hybrid funding arrangements (including both Sequential Hybrid Damages Based Agreements and Concurrent Hybrid Damages Based Agreements) are lawful.
• Providing the Court with the discretion to make a non-compliant contingency scheme enforceable, preventing findings of unenforceability leading to legal representatives going unpaid for work that has been concluded to the benefit and in accordance with the understanding of the Claimant.

About the Author

Megan Bithel-Vaughan gained tenancy having completed pupillage at Deka Chambers. She has already been led by Sarah Prager KC in a case of significant value involving complex issues around the interpretation of the Montreal Convention, and in particular the interplay between the operation of the partial compensation cap and contributory negligence.