The benefits of a contingent legal aid fund (CLAF) are uncertain, the joint professional working party has said, with concerns over the need for “substantial seed funding” among the problems.
The aim is to see whether a CLAF is a worthwhile option to complement existing forms of litigation funding, with the objective of providing access to justice at lower cost and/or in ways not yet provided for by other means.
In a statement yesterday, the working party said it formed “an early view” that in order to be self-sustaining, a CLAF will need either substantial initial seed funding or, with limited seed funding, would need to start with a relatively small pool of cases.
“It also became clear that to be self-sustaining, cases would need to be selected on the basis of a rigorous merits test and confidence that the claims would be of sufficient value and with good prospects of recoverability of any award of damages and costs.
“We therefore also formed a preliminary conclusion that, at least at the outset, it would not be possible to support either low-value cases or cases with less-good prospects of success, although in future the CLAF might be able to fund a small proportion of deserving cases or test cases which would otherwise not be viable.”
This led to an overall conclusion that without government funding or substantial voluntary donations, “the CLAF would need to generate consistent surpluses to build up a long-term fund and would not be able to look for further funding except on the back of a successful record of achievement.
“We also concluded that it was likely that, in the absence of very substantial initial funding, a CLAF would need to obtain support from an established organisation or litigation funder to avoid the costs of establishing the necessary infrastructure to access and manage a suitable volume of viable cases.”
As well as a for-profit scheme, the working party has contemplated a not-for-profit CLAF, as this could have lower costs because of the absence of a need to provide a return for investors.
However, it said that such a CLAF’s likely small scale and lack of initial resources would mean that to compete effectively and deliver access to justice at lower cost, there may need to be rule changes relating to civil litigation funding, such as around qualified one-way costs shifting.
In the light of these findings, and of the uncertainty of the benefits a CLAF would have for both the profession and clients, the working party has launched a survey about its viability and the proposals for implementing it.
Among other things, it seeks views on whether a CLAF should compete with other current funding methods or simply seek to plug gaps in funded litigation in the market, and how to make it attractive to lawyers.
This survey will take approximately 10 minutes to complete. It will close on 9 January 2017. Click here to take part.