The Global Litigator | Life After PACCAR: The Future of Litigation Funding in the UK

The Civil Justice Council’s 2025 Final Report, published in June 2025, offers a way forward after a landmark Supreme Court decision disrupted third-party funding. We highlight what’s changing, and why it matters.

Why PACCAR turned litigation funding on its head

In July 2023, the UK Supreme Court sent shockwaves through the legal and funding industries with its decision in PACCAR Inc v Competition Appeal Tribunal [2023] UKSC 28.

The court held that litigation funding agreements (LFAs), where funders receive a percentage of damages recovered, count as damages-based agreements (DBAs) under the Courts and Legal Services Act 1990.

Although this sounds technical, the impact was massive and brutal:

• Most LFAs became unenforceable, as they hadn’t been drafted to meet the strict rules governing DBAs.
• Funders had to freeze or repaper deals, leaving claimants – and even big corporates – scrambling for cash to keep cases alive.
• Access to justice took a hit, as without third party money, plenty of good claims suddenly looked too expensive to run.

In one judgment, a well-established funding model was thrown into legal uncertainty, with serious consequences for individuals, businesses, and funders alike. In short, PACCAR turned a well oiled funding market into a legal quagmire.

Has the Civil Justice Council provided a lifeline?

The Civil Justice Council (CJC) has now stepped in with its Final Report on the Review of Litigation Funding. Commissioned in the wake of PACCAR, the report recommends concrete legislative changes to stabilise the market and safeguard access to justice.

Here are the key takeaways of the report:

Reverse the effect of PACCAR

The CJC’s headline recommendation is clear – legislatively overturn the PACCAR ruling. This would restore the pre-2023 position where LFAs aren’t treated as DBAs unless explicitly structured that way. – making thousands of agreements enforceable again.

‘Light-touch’ regulation

Rather than heavy-handed oversight, the CJC proposes a light-touch regulatory regime for litigation funding. The goal is to maintain transparency and fairness without making funding too complex or unattractive for investors.

Reform CFAs and DBAs

The report also calls for practical reforms to conditional fee agreements (CFAs) and damages-based agreements (DBAs) to make them simpler and more commercially viable.

Preserve access to Justice

At its core, the report emphasises the importance of funding as a tool for justice. Whether it’s individuals, SMEs, or even large corporates facing high legal costs, the ability to finance claims or defences should not hinge on technical drafting risks.

Why does this matter to UK and international businesses?

For UK-based businesses, this is about certainty. Funding is no longer niche – it’s a core part of legal strategy. Without reform, businesses may be forced to seat disputes outside England and Wales simply to access funding under more predictable regimes.

For international parties, the concern is reputational. England and Wales have long been attractive for commercial litigation because of their legal infrastructure, including a mature funding market. If the current uncertainty continues, global litigants may look elsewhere.

What does the future look like?

The CJC’s Final Report offers a credible, measured response to the damage done by PACCAR. It’s not just about fixing a technical issue, it’s about ensuring that litigation remains accessible, fair, and commercially realistic.

All eyes are now on the UK government to act.

Whether you’re a funder, a claimant, a law firm, or an international business watching where to seat your next dispute, this is one to follow closely.