We often advise on costs law and have two points of possible interest to report.
Interim statute bills
Whether an interim bill is merely on account or is a statute bill affects time limits for the client to have the bill assessed. In Ivanishvili v Signature Litigation LLP [2023] EWHC 2189 (SCCO) solicitors’ bills were held not to be statute bills.
The Supreme Court torpedoes litigation funding agreements
Conditional Fee Agreements have been described as ‘islands of legality in a sea of illegality’ (Ian Burnett QC’s submissions in Hollins v Russell). The point being made was that champerty (sharing in the spoils of the litigation) is still illegal. The same expression has been used of Damages-Based Agreements (DBAs), for example in Zuberi v Lexlaw [2021] EWCA Civ 16. DBAs might more accurately be described as near-uninhabitable islands in that sea of illegality, because the DBA Regulations 2013 are widely recognised as not being fit for purpose. However, with care it is possible to use a DBA successfully.
Until now, no-one has thought hard about where a litigation funding agreement stood vis-à-vis the sea of illegality, even where the funder’s remuneration was calculated by reference to a percentage of the damages recovered in the litigation. It was, perhaps, regarded as a ship sailing legitimately over the sea. If so, it is a ship which has now been sunk by the Supreme Court’s decision in R (on the application of PACCAR Inc) v Competition Appeal Tribunal [2023] UKSC 28.
The Supreme Court decided that litigation funding agreements are DBAs. The statutory definition of a DBA brings within the definition any agreement between a person providing ‘claims management services’ and the recipient of those services, if it provides that the amount of the provider’s payment is to be determined by reference to the amount of financial benefit received. The Court decided that the provision of litigation funding amounts to the provision of ‘claims management services’.
Most current litigation funding agreements do not comply with the DBA Regulations 2013. If the amount payable to the funder is referable to the financial benefit obtained in the litigation, then it is a DBA, and it will be unenforceable. We recommend that law firms which are relying on such funding agreements to finance their clients’ litigation should address this without delay.
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