Third party litigation funding (TPLF), particularly in relation to high-volume consumer claims (HVCC), is very much in the SRA’s sights, not least due to the collapse of SSB Law in 2024, and Pure Legal before that, impacting huge numbers of consumers. With a consultation and new guidance both published on 9/7/26, firms for whom this is relevant would be wise to stay alert.
The consultation closed on 17/9/26 and the SRA’s response is awaited in due course. It proposed adding five new requirements to the SRA’s Standards and Regulations in this space, namely to address professional conduct, and (for firms using TPLF for consumer claims) requirements to provide clients with a ‘prominent funding information document’, to notify the SRA when using or arranging TPLF, and to make available to the SRA on request their ‘TPLF risk assessment’ and a plan setting out how the firm would achieve and resource an orderly closure of its business if necessary.
The guidance is aimed at firms involved in using or arranging TPLF, including those which use it to fund or finance any type of client litigation or which introduce clients to funders, explaining how such firms should assess whether funding arrangements are in the clients’ best interests, maintain independence and manage conflicts of interests, ensure clients receive the information they need in order to make informed decisions, and comply with their responsibilities in relation to financial crime and money laundering. Whilst litigation generally falls outside the scope of the Money Laundering Regulations, the Proceeds of Crime Act 2002 and sanctions regime still apply, hence the importance of being alive to the risk of TPLF being used by funders as a vehicle for transmitting the proceeds of crime or circumventing sanctions, or of firms transferring money to or from a designated person in breach of the sanctions regime. Given the inherent financial risk associated with relying on such funding, the guidance also includes a section on financial stability.