Litigation Funding History
May 1, 2024

Litigation Finance a brief history of legal funding

Litigating funding history



On the 4th of March 2024 The Lord Chancellor and Secretary of State for Justice, Alex Chalk, announced the introduction of a new law allowing people to access the financial backing of third parties to allow them to launch complex legal claims against larger and better resourced corporations which they could not otherwise afford.


  Historically, third parties were prohibited from funding an unconnected party’s litigation under the doctrines of maintenance and champerty. 

  The rules prohibiting maintenance and champerty were first introduced in medieval England. The intention was to prevent the abuse of justice by corrupt nobles and royal officials who associated themselves with fraudulent and vexatious claims, strengthening the credibility of the claims in return for a share of the profits.


In more modern times,  there was a fear that a third-party could manipulate the litigation process and, as Lord Denning put it, “be tempted, for his own personal gain, to inflame the damages, to suppress evidence, or even to suborn witnesses” (Re Trepca Mines (No 2) : CA 1962)


In 1967 The Criminal Law Act raised the possibility that litigation finance was suitable in certain contexts. A lack of clarity regarding the exact nature of those contexts led to a delay in the development of Litigation Finance Products.


In the 1990’s legislation was passed which aimed specifically at improving access to justice and the UK started to see Litigation Finance becoming more mainstream. By the early 2000s UK Courts had generally accepted that litigation funding agreements were not in conflict with public policy. 


The final report on Lord Justice Jackson’s review of Civil Litigation Costs was presented to the Lord Chancellor in January 2010. Whilst this report was primarily concerned with personal injury litigation it has an impact on commercial litigation. Lord Justice Jackson approved of Litigation Finance as an option for funding cases.


The growth of litigation finance is encouraged in order to enable individuals, corporations and law firms access to enter into litigation or arbitration by providing the financial resources required.


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