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A reception was held at Royal Courts of Justice in the Strand on 23rd November to launch the Code of Conduct for Litigation Funders and the Association of Litigation Funders. It was hosted by Master of the Rolls, Lord Neuberger of Abbotsbury, the Chair of the Civil Justice Council and a summary speech was delivered by Lord Justice Jackson.

The Code was prepared by a CJC working party, chaired by Michael Napier CBE, QC (Hon) and has been designed to foster standards of best practice and to promote greater transparency in the provision of litigation funding services. Lord Justice Jackson recommended a regime of voluntary regulation for litigation funding in chapter 11 of the final report of the Costs Review. The Code and new Association of Litigation Funders gives effect to his recommendation.

The Code sets out standards of practice and behaviour to be observed by litigation funders who are Members of The Association of Litigation Funders of England and Wales. On the important issue of security, the Code states that a litigation funder will maintain at all times adequate financial resources to meet its obligations to fund all of the legal disputes that it has agreed to fund, and in particular will maintain the capacity to pay all debts when they become due and payable; and to cover aggregate funding liabilities under all of its LFA’s (Litigation Funding Agreements) for a minimum of 36 months.

Additionally there is client protection in that the litigation funder agrees not to seek payment from the litigant in excess of the amount of the proceeds of the dispute.

Membership of the Association is open to those persons or entities that satisfy the eligibility requirements set out in the articles. Associate membership is open to any person or entity that has an interest in litigation funding.

This voluntary code will hopefully give some comfort to clients dealing with Association members regarding funding activities previously undertaken in an unregulated environment.