It is important for litigation funders to act in a fair and transparent way towards their clients. Here, we look at some of the ethical rules and standards that can apply to litigation funders.
Self-regulation through the Association of Litigation Funders (ALF)
The ALF, founded in 2011, is a body that provides self-regulation of the litigation funding industry in England and Wales, for litigation funders that are members of the Association. Members of the ALF must adhere to a code of conduct that promotes transparency, fairness, and integrity in litigation funding.
Sentry Funding is an associate member of ALF. Not all litigation funders are ALF members.
Litigation funding agreements (LFAs)
Litigation Funding Agreements are contracts between a funder and the funded party. They must be clear and transparent, outlining the terms, conditions, fees, and other relevant aspects of the funding.
Solicitors’ regulation and ethical considerations
In England and Wales, all solicitors, including those involved in litigation funding, are regulated by the Solicitors Regulation Authority (SRA) and must abide by its code of conduct. In Scotland, solicitors are regulated by the Law Society of Scotland.
Solicitors must act in their clients’ best interests and maintain client confidentiality. They must also act with integrity, uphold the rule of law and assist the proper administration of justice.
Transparency and disclosure
Transparency is key in litigation funding. Parties must be fully informed and understand the funding arrangements, fees, and any potential conflicts of interest. Disclosure of the funding arrangement to the court may also be necessary in some cases.
Champerty and maintenance
Historically, third-party funding was prohibited under the doctrines of ‘champerty and maintenance’. However, this is no longer the case, and the courts now recognise that litigation funding has a legitimate role to play in assisting access to justice.
Compliance with data protection laws
Litigation funders must comply with data protection laws, including the General Data Protection Regulation (GDPR), ensuring that all personal data is handled with the utmost care and in compliance with legal requirements.
Conclusion
Litigation funders who are members of the ALF have signed up to its code of conduct; while individual solicitors working in the funding industry are regulated by the appropriate professional body. This offers much assurance to clients using litigation funding.
At Sentry Funding, we are dedicated to complying with all relevant rules and ethical codes. The founders of Sentry Funding have historically run businesses regulated by the Financial Conduct Authority, and the Sentry Portal is built with that experience of compliance in mind.
August 15, 2023
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