By Jamela Collins Technical Underwriting Manager Temple Legal Protection
Estimated read time 4 minutes 10 seconds
As 2025 progresses, the litigation funding debate has reached a key stage. With the Civil Justice Council’s final report now published and regulation firmly on the agenda, this article reviews what has been proposed, what remains unresolved, and what these developments could mean for litigation funding arrangements and risk management across commercial disputes.
CJC report calls for light-touch regulation
The regulation of litigation funding in England and Wales has taken a significant step forward. The Civil Justice Council (CJC) published its final report in June 2025, recommending light-touch statutory regulation for third-party litigation funders and calling for an urgent reversal of the Supreme Court’s PACCAR ruling. For claimants, law firms and funders, the direction of travel is now clearer, but the details of implementation remain to be determined.
PACCAR ruling still unsettled – but reform is coming
The PACCAR judgment in 2023 disrupted the market by classifying many litigation funding agreements (LFAs) as damages-based agreements (DBAs), rendering them unenforceable unless compliant with the relevant regulations. The government initially proposed a Bill to reverse this decision, but following the 2024 general election, its progress was paused pending the outcome of the CJC review.
With the CJC now explicitly calling for PACCAR to be reversed, attention will turn to whether the government responds with new legislation. For now, uncertainty remains for funders, and this continues to affect their approach to risk and case selection.
A changing claims environment – and the rise of ADR
The number of Commercial Court claims remains at a decade-long low. While this may be partly due to economic factors, the PACCAR judgment and the uncertainty surrounding funding agreements are also likely contributors. In parallel, arbitration and mediation are becoming more common choices for commercial dispute resolution.
The introduction of the Arbitration Act 2025, along with judicial support for mediation and the UK’s accession to the Singapore Convention on Mediation, reflect this wider shift. These developments are encouraging more parties to resolve disputes away from the courts. However, financial risk still exists in arbitration and mediation, particularly around disbursements and adverse costs, which means the need for risk protection remains.
What the CJC recommended – and what it left open
The CJC’s final report was published in June, following a short delay, has now provided a clear set of recommendations. These include:
- Introducing light-touch statutory regulation for third-party funders
- Reversing PACCAR through primary legislation
- Preserving the role of self-regulation via the Association of Litigation Funders (ALF), supported by public oversight
- Maintaining judicial discretion around costs and funder responsibilities
Notably, while some submissions had suggested law firms could act as funders, the CJC did not endorse this idea. Concerns were raised about conflicts of interest and consumer protection.
A regulated approach to funding – Temple’s position
At Temple Legal Protection, we welcome the direction the CJC has taken. As a provider of ATE insurance and disbursement funding products regulated by the Financial Conduct Authority (FCA), we already meet the consumer protection standards now being discussed for the funding sector.
The call for light-touch regulation and the move to reverse PACCAR both represent positive steps towards restoring clarity and confidence in litigation funding. At the same time, the growing importance of arbitration and mediation means that the risks associated with dispute resolution are not disappearing – they are simply taking different forms.
Temple has long supported access to justice through products that provide certainty and clarity, whether in litigation, arbitration or mediation. As the funding debate continues, our focus remains on offering regulated, transparent cover that helps clients manage risk while retaining control of their case.
Looking ahead: funding regulation and client needs
The government’s response to the CJC’s recommendations will shape the next phase of reform. Whether changes come through legislation or regulatory guidance, third-party litigation funding is unlikely to remain unregulated for much longer.
Temple will continue to engage with solicitors, funders and other stakeholders as the position develops. Our aim is to support those seeking funding or cost protection with products that are built on sound principles, clear terms, and the stability that comes with FCA regulation.
We are offering a Mediation rate for suitable cases that proceed to a formal Mediation as Temple supports and recognizes that a discounted rate should be applied to the premiums if the case settles at a formal Mediation or the principal terms are agreed, and a subsequent agreement is drawn up recording the agreement within 14 days. This is proving to be a very attractive offering to our clients, and the reception has been extremely positive.
In a period of reform and adjustment, Temple remains committed to helping clients manage legal risk effectively – and responsibly.
If you would like to share your views on this article, please contact Jamela Collins, Technical Underwriting Manager on 01483 577877 or via email to
Jamela Collins
Technical Underwriting Manager
Jamela Collins
Jamela qualified as a Solicitor specialising in litigation. She has extensive experience specialising in commercial, construction, inheritance and insolvency claims. She has also worked at RSA as a Team Leader.
Jamela has joined the commercial team as a Senior Underwriter in 2023 and is very much looking forward to using her litigation and insurance experience to support Temple’s customers with market leading products and services.
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