Deminor Wiki - Litigation Funding Industry Associations

Key Associations and Their Structures

The Association of Litigation Funders of England and Wales (ALF) remains the most established self-regulatory body in the sector. Incorporated as a private limited company by guarantee on 23 November 2011, ALF has been charged by the Ministry of Justice with delivering self-regulation of litigation funding in England and Wales. The association is governed by a board of five directors and maintains strict membership criteria, requiring funders to demonstrate capital adequacy and adherence to its Code of Conduct.

The International Legal Finance Association (ILFA) represents the global expansion of the industry. With Leslie Perrin of Calunius Capital serving as Chairman, ILFA's founding members include Burford Capital, Harbour Litigation Funding, Longford Capital Management, Omni Bridgeway, Therium Capital Management, and Woodsford Litigation Funding. By 2024, ILFA had grown to over 22 members, demonstrating the increasing globalisation of the sector.

Regional associations have also emerged to address specific market needs. The Association of Litigation Funders of Australia plays a crucial role in one of the world's most mature funding markets, whilst emerging associations in Singapore, Hong Kong, and various US states reflect the expanding acceptance of litigation funding globally.

Standards and Governance

Industry associations have been instrumental in developing comprehensive standards governing the conduct of litigation funders. ALF's Code of Conduct, which serves as the benchmark for the UK market, requires members to maintain adequate financial resources to meet their obligations for a minimum period of 36 months. The minimum capital requirement is £5 million, though many members significantly exceed this threshold.

Transparency requirements form another crucial component of association standards. Members must provide clear information about funding terms, fee structures, and the extent of any control or influence over litigation conduct. ALF's Code specifically prohibits funders from taking control of litigation or settlement negotiations and from causing litigants' lawyers to act in breach of their professional duties.

The membership application process reflects the rigorous standards maintained by associations. Prospective ALF members must provide written evidence from a third party confirming access to funds and submit their litigation funding agreement to an independent barrister for review. This barrister assesses compliance with the Code of Conduct whilst maintaining complete confidentiality.

Litigation Funding Context

The relationship between litigation funding industry associations and TPF is fundamental to the sector's development. These associations help funders navigate complex regulatory environments whilst providing assurance to courts, regulators, and the public that the industry operates according to established ethical standards. Through codes of conduct, capital adequacy requirements, and dispute resolution mechanisms, associations have helped transform litigation funding from a controversial practice to an accepted component of modern legal systems.

Industry associations have been particularly important in demonstrating how litigation funding serves the public interest. The Post Office Horizon scandal, where sub-postmasters successfully challenged the Post Office with support from litigation funding, exemplifies how funding enables collective actions and supports claims that might otherwise be abandoned due to financial constraints.

Regulation

The regulatory landscape for litigation funding varies significantly across jurisdictions, with industry associations playing crucial roles in shaping frameworks. In England and Wales, ALF's self-regulatory approach through its Code of Conduct has been endorsed by the Civil Justice Council. However, the landscape shifted dramatically following the UK Supreme Court's decision in R (PACCAR) v Competition Appeal Tribunal [2023] UKSC 28 on 26 July 2023, which ruled that litigation funding agreements allowing percentage-based returns constitute damages-based agreements and are thus unenforceable in opt-out collective proceedings.

In the European Union, associations engage with institutions on developing frameworks for collective actions funding. The United States maintains a fragmented regulatory approach with state-by-state variations, whilst associations advocate for consistent national standards. Australia requires funders to hold Australian Financial Services Licences, with the Association of Litigation Funders of Australia working closely with regulators.

Other jurisdictions demonstrate varying approaches. Singapore and Hong Kong have introduced specific frameworks for international arbitration funding, with Codes of Practice published by their respective Secretaries for Justice. These developments reflect the global trend toward greater acceptance whilst maintaining appropriate oversight.

Conclusion

Litigation funding industry associations have emerged as essential institutions in the modern legal landscape, transforming litigation funding from a marginal practice to a mainstream component of legal finance. Through establishing professional standards, promoting transparency, and engaging with stakeholders, these bodies have created frameworks that balance commercial viability with access to justice imperatives. As the industry continues its rapid growth and geographic expansion, associations will remain crucial in ensuring that litigation funding serves its intended purpose of enhancing access to justice whilst maintaining the integrity of legal systems worldwide. The ongoing regulatory evolution, exemplified by the Civil Justice Council's 2025 recommendations, demonstrates that whilst self-regulation has served the industry well, the future may require more formal frameworks to address the sector's increasing complexity and significance.