Hi this is ZipLaw! Hope you had a lovely Christmas. Today we look at the top UK Supreme Court decisions of 2023 and how they will impact Law Firms and their clients in 2024.
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The Top Decisions of 2024:
- 💸 Litigation Funding trouble
- 🏦 Quinecare duty
- 📝 PPI time limit
- 🇲🇿 Mozambique U-Turn
- 🇷🇼 Rwanda Policy
Out of Funding
In Short: The Supreme Court ruled that litigation funding agreements, vital in class actions, are damages-based-agreements (DBAs). The decision had a huge impact on the litigation-funding industry.
What was the decision?
The UK Supreme Court determined that "litigation funding agreements" are essentially the same as "damages-based agreements" (DBAs). DBAs are a type of arrangement where the payment to a lawyer or a funder is contingent upon the success of a case, typically a percentage of the damages awarded.
Before this ruling, it was generally assumed by litigation funders that their funding agreements weren't the same as DBAs and therefore didn't fall under the same regulatory requirements. This assumption allowed funders to invest in legal cases (especially large class actions) in return for a share of any damages awarded.
Why does it matter?
- Regulations: The Supreme Court's ruling effectively changes the game. By classifying litigation funding agreements as DBAs, these agreements are now subject to specific regulations and restrictions. Plus, these types of agreements are not permitted in the context of opt-out class action proceedings. This means many existing funding agreements that were in place to finance class action lawsuits are now considered unenforceable.
- Financing: Litigation funding is a major mechanism for financing large-scale legal actions, especially against big companies accused of market abuses. With the court's ruling, the structure of funding these lawsuits has to change, which might make it harder for such cases to be brought forward or continue. This affects the ability of groups of claimants (like consumers or small businesses) to challenge larger entities, as the financial backing for their legal challenges is now uncertain.