In recent weeks, the gripping new British TV series Mr. Bates vs. The Post Office, broadcast by ITV, has propelled third party litigation funding (TPLF) into the spotlight. TPLF allows hedge funds and other financiers to invest in lawsuits in exchange for a percentage of any settlement. The series portrays the real-life account of the Post Office Horizon software scandal, where UK sub-postmasters faced false accusations of theft and erroneous accounting over a period of nearly 20 years, with over 700 prosecuted.
The series revealed that litigation funders and lawyers took a disproportionate share of the settlement award—80 percent, leaving the affected sub-postmasters with just 20 percent—roughly £20,000 per victim. For people who faced unjust criminal convictions, financial ruin, and destroyed livelihoods, this fraction of the award falls far short of the damages they suffered.
As a result of litigation funders and lawyers taking 80 percent of the award, the government was prompted to step in and provide adequate compensation to the affected sub-postmasters. This not only affected the victims but also had implications for British taxpayers who, through government intervention, became stakeholders in addressing the fallout from the unjust accusations. This revelation serves as a stark reminder of the urgent need for policymakers to establish safeguards against problematic litigation funding practices.
TPLF prioritizes investors over claimants, as seen in Mr. Bates vs. The Post Office, where in the final episode, the lawyers convince the victims that the only option for compensation is to settle. If a third party has a financial stake in a lawsuit, that third party may seek to control the lawsuit, sometimes to the detriment of the actual party’s interests. Moreover, a Worldthinks survey report, Consumer Attitudes to Third Party Litigation Funding and its Potential Regulation in the EU, reveals that European consumers oppose lawsuit finance firms investing in civil litigation without oversight.
Last July’s UK Supreme Court ruling rightfully raised concerns about litigation funding agreements in their groundbreaking ruling. The risk of frivolous claims and conflicts of interest between claimants and funders further underscores the need for legislative measures to ensure fairness and protection for consumers.
The real-life story behind Mr. Bates vs. The Post Office critically underscores the need for lawmakers to implement necessary safeguards to ensure fairness and transparency in the TPLF industry, protecting claimants from problematic practices.
