Justice and Home Affairs

Transparency overhaul proposed for UK litigation funding

Published

3 weeks ago

June 24, 2025

The Civil Justice Council, an arms-length body attached to the UK Justice Ministry, has recommended landmark transparency reforms for the litigation funding sector which would require full disclosure of ultimate funders.[1]

Litigation funding, a form of funding arrangement in which a third party provides financial resources to a claimant in exchange for a return if the case is successful, is on the rise in the UK. Advocates say the industry is an important tool to improve access to justice[2], but critics argue that the industry is in desperate need of reform to protect clients, businesses and the economy.[3]

Concerns were brought into focus in March 2024, when a Bloomberg Law investigation found that Russian oligarchs were funding litigation in the UK and the USA to avoid government sanctions.[4]

At present, litigation funding is not subject to the same transparency requirements as equivalent sectors like banking or finance[5] - but the Civil Justice Council proposals would overhaul the system by requiring ultimate funders of a case to be declared “at the earliest possible opportunity”.[6] In effect, it is combating the influence of dark money on litigation.

To date, litigation funding is self-regulated through voluntary membership of the Association of Litigation Funders.[7] But the CJC aren’t the only legal body in the UK with concerns over the industry marking its own homework.

In March 2025, the Legal Services Board, which oversees the regulation of lawyers in England and Wales, recommended that the self-regulation model should be abandoned in favour of formal regulation. They say a failure to act risks “undermining trust and confidence” in the whole legal services industry.[8]

The Civil Justice Council began investigating the industry in April 2024, in the first review of the industry since Lord Justice Jackson in 2009. In the intervening 15-year period, the funding industry has grown more than tenfold, to an estimated £2.2billion pound industry.[9][10]

The review was seen as a qualified win for litigation funders, with the CJC rejecting the prospect of caps on returns and recommending the immediate overturn of the controversial PACAAR Supreme Court ruling, which placed significant restrictions on many existing litigation funding agreements.

But the industry arguments against requirements for funding disclosures were dismissed by the CJC, which found that the fact of litigation funding, the name of the litigation funder and the ultimate source of the funding should be disclosed to the court and the other parties.[11]

The move could pose significant challenges for large litigation funders – many of whom are domiciled in low tax, low disclosure jurisdictions or owned by foreign hedge funds and billionaires.

Innsworth Capital, which made headlines recently for threatening to sue its own class representative in their legal action against Mastercard for accepting a £200m settlement[12], are a high-profile case in point.

Innsworth are owned and funded by New York based activist investor fund Elliott Management Corp, who are, in turn, backed by a range of institutional investors, high-net-worth individuals and employees. Whilst most remain undeclared, Elliott founder and billionaire Paul Singer has been accused of “vulture”[13] capitalism for his firm’s tactics of buying up distressed sovereign bonds for cheap, then pursuing countries for unpaid debts.[14]

Under the CJC’s proposals, Elliott’s investors could require a full declaration if they are funding lawsuits in the UK.

The CJC’s report took an even dimmer view of portfolio loans, where a funder backs a law firm in several cases, recommending full Financial Conduct Authority regulation [15] and a UK government investigation into the practice.

Evidence to the CJC claimed the practice could suffer from “systemic problems”, with law firms operating “high-risk and unstable business models that depend on unrealistically high levels of return.”[16]

In 2023, US-based Gramercy Funds Management made headlines for their record portfolio loan to British law firm Pogust Goodhead – dubbed the “largest litigation funding deal in legal history”.[17] The deal was intended to support Pogust Goodhead’s portfolio of environmental cases, including Dieselgate cases against car manufacturers and a case against Australian miners BHP.[18]

The proposals would put these portfolio loans under the control of FCA, which is currently on its own pro-transparency drive.[19]

Under this change, any investors, such as billionaires, sovereign wealth funds, and high net worth individuals linked to foreign states, who provide funding to law firms via third parties such as Gramercy, would need to be transparent with their funding.[20] [21] Pogust Goodhead have previously fought in the courts to prevent their funders from becoming public. [22]

The CJC also proposes portfolio-funded law firms like Pogust Goodhead become subject to co-regulation by the Solicitors Regulation Authority and the Financial Conduct Authority to mitigate the risk of collapse, a fate suffered by other portfolio loan-backed law firms in the UK.[23]

In 2025, auditors flagged “material uncertainty” about Pogust Goodhead’s ability to continue with the 2022 accounts, showing the company owed more than half a billion pounds within a year. [24] Their 2023 accounts are currently 8 months overdue.[25]

The CJC report also probes the issue of conflicts of interest with funders and the cases they pursue, recommending that new provisions be made to prohibit and resolve conflicts.[26]

The partnership between Gramercy and the cases of Pogust Goodhead serves to highlight the conflicts the CJC are trying to drive out of the industry.

Gramercy, who have previously deployed similar tactics to Elliott in their pursuit of debt payments from distressed sovereign nations[27] [28], are invested in oil and gas exploration and production in Venezuela[29] via Gage Venezuela Holdings.[30]

Gage is in direct competition with Spanish energy giant Repsol, who also develop and produces oil and gas in Venezuela.[31] In May 2025, Pogust Goodhead were approved to pursue a US$1bn claim against Repsol over an oil spill in Peru.[32]

Campaigners for regulation of the sector have welcomed the CJC’s proposals, praising the introduction of statutory regulation and pro transparency measures.

The UK government has previously stated it would await the results of the CJC report before it proceeds with changes to the litigation funding industry.[33]

[1] https://www.lawgazette.co.uk/news-focus/in-depth-civil-justice-council-review-is-a-qualified-victory-for-litigation-funders/5123532.article

[2] https://www.qmul.ac.uk/law/news/2024/items/new-research-shows-litigation-funding-improves-access-to-justice-for-some-but-is-difficult-to-scale-up.html

[3] https://fairciviljustice.org/news/fair-civil-justice-supports-lsb-call-for-mandatory-regulation-of-litigation-funding-in-consumer-claims/

[4] https://news.bloomberglaw.com/litigation-finance/putins-billionaires-sidestep-sanctions-by-financing-lawsuits

[5] https://www.stewartslaw.com/news/russian-oligarchs-a1-alleged-to-have-funded-litigation-to-avoid-sanctions/

[6] https://www.lawgazette.co.uk/news/reverse-paccar-judgment-now-says-cjc/5123449.article

[7] https://associationoflitigationfunders.com/code-of-conduct/

[8] https://legalservicesboard.org.uk/wp-content/uploads/2025/03/Legal-Services-Board-CJC-Review-of-Litigation-Funding.pdf

[9] https://communities.lawsociety.org.uk/news-and-features/civil-justice-council-review-of-litigation-funding/6003211.article

[10] https://www.dechert.com/knowledge/onpoint/2025/5/litigation-funding-in-england--legal-challenges-are-no-match-for.html

[11] https://www.lawgazette.co.uk/news-focus/in-depth-civil-justice-council-review-is-a-qualified-victory-for-litigation-funders/5123532.article

[12] https://www.legalfutures.co.uk/latest-news/solicitor-blasts-greedy-funder-for-mastercard-settlement-opposition