2025: A Key Year for the Litigation Funding Market
This summer is already shaping up to be an important one for the litigation funding market, with a number of important decisions having already been handed down and with more to come later in the year.
In this post, we briefly round-up what we see as key news stories to date and flag the issues to keep an eye on in the coming months.
Starting with the UK, in terms of recent developments, the first to note is the approval by the CAT of the £200m settlement in the Merricks v Mastercard claim. Although the conclusion of this long-running matter has been viewed in a broadly positive light, in that substantial settlement proceeds will be distributed to affected consumers, the subsequent (and ongoing) fall-out between the class representative and the funder is perhaps less welcome.
Next up is the recent (April 2025) decision in Gutman v Apple, in which the Court of Appeal, in a positive development for litigation funders, confirmed that it is permissible for funding agreements in relation to claims in the CAT to provide for the payment of funder's and lawyer's fees from damages prior to payment to the claimants in the class.
On a similarly positive note from the funding perspective, the recently published Civil Justice Council Review of Litigation Funding makes a number of recommendations, including the reversal of PACCAR and the introduction for mandatory costs budgeting for all funded collective proceedings.
However, there have also been some less favourable developments for those with an interest in litigation funding, particularly in the US. There was first the (ongoing) war of words between Evan Greenberg of Chubb and Chris Bogart of Burford, which was started when Chubb urged insurers to cut ties with litigation funders. In response, Burford strongly defended the litigation funding market and accused Chubb of abusing its market power. More recently, we have seen the potentially draconian tax treatment for those investing litigation funding in the amendments introduced into the Big Beautiful Bill by Senator Thom Tillis. The proposals are complex, but the headline figure is that the new tax could see profits for those investing in litigation taxed at 40.8%, though more recently this seems to have dropped to 31.8%. More recently still, it appears that the tax may now be removed from the bill entirely, but interested parties should keep a close eye on developments.
Moving back to the UK, and looking ahead to later in the year, there are two potentially significant decisions expected in the coming months. First, we have the Supreme Court FX case (Michael O'Higgins FX Class Representative Ltd and another (Respondents) v J.P. Morgan Europe Ltd and others), which was heard in April. A decision is expected later this year, perhaps before the summer vacation, which should provide clarity to the market as to the extent that it is possible to bring claims in the CAT on an opt-out basis where the claimants are (large) corporates, rather than individual consumers.
Second, there is the upcoming decision of the Court of Appeal in respect of the seven linked appeals (we will refer to the first, Alex Neill Class Representative Ltd (claimant/respondents) v Sony Interactive Entertainment Europe Ltd & anr (defendants/appellants)), in which the court will provide an answer to the question of whether LFAs under which the funder is paid by reference to a multiple of funds invested are valid, or unenforceable damages-based agreements.
Beyond the CAT, there are a number of other interesting upcoming judgments/hearings which have occurred/to watch out for:
The much-anticipated Supreme Court judgment in the motor finance commission cases is due later this summer, in which the court will determine whether the Court of Appeal's decision that commissions may be unlawful if all details of those commissions were not disclosed to consumers, was correct. If the Court of Appeal's decision is upheld, it is likely to lead to extremely significant consumer claims (likely valued in the billions).
The full trial in the emissions claims against Mercedes, Ford, Nissan/Renault and Peugeot/Citroen is due to commence in October 2025.
In relation to securities claims, the recent decision in Persons Identified in Schedule 1 v Standard Chartered Plc took a different approach to the Barclays claim (handed down in 2024) in respect of the issue of reliance under s90A claims. Whereas in Barclays, Mr Justice Leach determined that a passive investor could not rely on "fraud on the market" type arguments, such that they could not prove reliance (striking out their claims), Mr Justice Michael Green took the opposite approach in Standard Chartered, allowing passive investors' claims to proceed to trial (on the basis that the issue of reliance was not suitable to be determined at a preliminary stage). This important issue therefore remains an area of uncertainty, unless and until it is determined at a full trial or, ideally, at appellate level.
All in all, 2025 could be shaping up to be a defining year for all parties which have an interest in the operation of the funding and wider litigation market.
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Sam Tacey
Senior Partner
Toremis Specialty