Would third party litigation funding improve access to justice in Ireland?

Would third party litigation funding improve access to justice in Ireland?

By Frank Murphy, Solicitor. 

Would third party litigation funding improve access to justice in Ireland? The Law Reform Commission want your opinion now on this and all aspects of such funding arising out of their just published Consultation Paper available on their website www.lawreform.ie

It may seem a million miles away but it’s not. Across the water some have even got funding for divorce, usually high value asset cases, one worth £1000m! Akhmedova v Akhmedova (2020) EWHC 1526 (Fam)

Human rights actions have also benefited. In Australia, Litigation Lending Services funded the class action Pearson v State of Queensland (No 2) (2020) FCA 619 for the historical underpayment of wages to indigenous workers which settled for A$190 million to approximately 11,948 claimants.

Third-party funding, investment in dispute resolution, the LRC explains:

‘occurs when an entity (“the funder”), who is otherwise unconnected to a party to a legal dispute, finances the cost of resolving that dispute on behalf of that party. If the dispute is resolved in favour of the funded party, the funder is reimbursed the amount of their initial investment and receives additional remuneration as a return on that investment.’

The Commission identifies five arguments against legalised third-party funding:

(a) encourages vexatious and meritless disputes.

(b) causes funded parties to be under-compensated. This is because third-party funders may take from the funded party’s compensation to secure their return on investment.

(c) might cause legal costs to increase.

(d) could cause an increase in the price of insurance premiums.

(e) not appropriate for all types of disputes.

The Commission identifies four arguments in favour of legalising third-party funding:

(a) will help to expand access to justice in Ireland.

(b) will improve equality of arms between opposing parties. Where one party has vast financial resources, and the other does not, this can lead to power imbalances and force “weaker” parties to accept unsatisfactory settlements.

(c) can help to increase the pool of assets available to creditors in insolvency proceedings.

(d) will address an inconsistency in the law, whereby corporate entities can effectively engage in third-party funding under another name, by issuing shares or transferring ownership of the company to fund its participation in dispute resolution.

This is only a brief flavour of their 184-page report. Take a look at it and have your say. To assist you, the Commission, at the conclusion of each chapter, poses a series of questions which focus on the key issues. Click here for the details

The Law Reform Commission seeks your views by 3 November 2023

Responses can be submitted to the Law Reform Commission by email at ThirdPartyFunding@lawreform.ie, or by post to the Law Reform Commission, Styne House, Upper Hatch Street, Dublin 2 D02 DY27.