Barristers are under no duty to advise clients on litigation funding unless specifically instructed to, the High Court has held.
Stephen Jourdan QC, sitting as a High Court judge, said that if a barrister chose to advise on funding, they would owe a duty to use reasonable care in giving that advice.
But they did not then assume “a continuing duty to keep the question of funding under review and to advise on it as and when required as the matter progresses”, he said.
Striking out an additional claim against David Lowe QC, Mr Jourdan said the facts pleaded by former law firm RWP, if proved, showed that Mr Lowe did advise on funding issues “on a number of occasions”, but they did not “give any support at all to the allegation that he assumed a general duty to advise on funding”.
The High Court heard in Andrews and others v Messer Beg  EWHC 911 (Ch), that that the main action in the case was a negligence claim brought by 101 claimants against RWP for losses caused by the failure of group litigation against subsidiaries of Barclays Bank and the Bank of Scotland.
Mr Jourdan said the claimants alleged that Berkshire-based RWP, which later became Messer Beg, advised them to contribute £5,000 each to a fighting fund instead of offering them conditional fee agreements (CFAs), backed by after-the-event insurance (ATE).
“They say that pursuant to the private funding strategy, they paid around £1.3m to RWP to fund the claim against the lenders, that none of this was returned to them following the withdrawal of the claims, and that of that sum, around £800,000 was paid to two counsel instructed by RWP – Mr Lowe QC and Mr Henderson, who acted as Mr Lowe’s junior.”
In its defence, the law firm argued that its advice about funding was not negligent and it would not have been possible in the market in 2008/2009 for the group litigation to have been financed on a CFA/ATE basis.
RWP issued an additional claim under CPR part 20 against Mr Lowe in 2017, claiming an indemnity or contribution towards any damages awarded against the law firm.
Mr Justice Fancourt struck out RWP’s original particulars of claim last year but gave the law firm a month to provide replacement particulars, which it did.
Mr Lowe then applied to strike out the new particulars of claim on the grounds that they “disclosed no reasonable grounds”.
Mr Jourdan said the case against Mr Lowe “in essence” was that he “knew the funding strategy proposed by RWP, endorsed it, and assisted in its implementation.”
The judge went on: “If, as the claimants allege but RWP denies, the advice to use that funding strategy was negligent, then Mr Lowe was just as much responsible for that negligent advice as RWP, having promoted that strategy.
“The facts pleaded show that Mr Lowe became the team leader advising on putting together the claim, including the funding strategy. He was involved in many aspects of the preparation of the claim, going far beyond the traditional role of counsel.”
However, the judge said that RWP’s pleading could only fairly be read as alleging that, “by giving a number of specific pieces of advice about funding, Mr Lowe assumed a general duty, similar to that owed by a solicitor, to advise in relation to the funding of the claim”.
The judge said there was “no pleaded allegation that specific pieces of advice given by Mr Lowe were wrong and negligent in specific respects” and that, with correct advice from Mr Lowe, the claimants would have acted differently.
“Rather, the allegation is that Mr Lowe, by giving the advice he did give in relation to funding, effectively assumed responsibility for considering how the action should be funded and advising on that, and in keeping that matter under review as the action progressed.”
Mr Jourdan concluded that he did not consider that there was “any realistic prospect” of the court holding that, on the facts pleaded, Mr Lowe assumed “a general duty of that kind to advise on funding”.
In a draft judgment, he offered RWP a further opportunity to amend its particulars of claim, but it has decided not to seek permission for further changes.