In July 2023, the UK Supreme Court's decision in PACCAR held that litigation funding agreements calculating a funder's return as a percentage of damages recovered qualify as "damages-based agreements" (DBAs) under the Courts and Legal Services Act 1990, and were therefore unenforceable unless they complied with DBA regulations that most funding agreements did not follow. The ruling immediately destabilized a large share of existing UK funding arrangements, particularly in collective actions before the Competition Appeal Tribunal.
The UK government responded with the Litigation Funding Agreements (Enforceability) Bill, intended to reverse PACCAR's effect, but the bill stalled amid the 2024 general election. The Civil Justice Council's Review of Litigation Funding, published in June 2025, recommended immediately reversing PACCAR with retrospective effect and introducing a new "light touch" regulatory regime for the funding industry going forward, though as of 2026 the legislative fix to formally restore enforceability remains a live, closely watched process.
PACCAR is widely viewed as the most consequential litigation finance court decision outside the United States in the past decade, and its aftermath, funders restructuring agreements around a multiple-of-capital return rather than a damages percentage to sidestep the ruling, months of legislative limbo, and now a formal light-touch regulatory framework taking shape, is a live case study in how quickly the legal footing under an entire funding market can shift.