Minister ‘very hesitant’ on third-party funding
The Minister for Justice has said that he has concerns about the introduction of third-party litigation funding in Ireland.
Jim O’Callaghan was speaking at a conference on dispute resolution organised by business-law firm Mason Hayes & Curran (MHC).
The law in Ireland currently prohibits the funding of legal cases by outside parties who do not have a legitimate and independent interest in the dispute, subject to the certain exceptions.
The Law Reform Commission (LRC) is looking at the issue and is expected to publish a report by the end of this year.
A survey of 140 professionals carried out at the conference found that 62% of respondents opposed the introduction of third-party litigation funding in Irish legal proceedings, with 38% in favour.
87% of respondents believed that third-party funding would increase speculative litigation.
‘Commodifying justice’
Minister O’Callaghan told the MHC event that, while third-party funding offered potential access-to-justice benefits, there was a risk of “commodifying justice”.
He said that he could not ignore the experiences of other countries that provided proof that the “big winners” from third-party litigation funding were lawyers.
“I have no interest, in my role as Minister for Justice, in enriching lawyers”, he said, adding that members of the profession could do that themselves by doing a good job and getting paid fairly.
The minister said that, while he would wait for the LRC report and consider it closely, “ultimately, I’m very hesitant about it”.
Exceptions
In a panel discussion on third-party funding, barrister Emily Egan McGrath SC said that the Irish courts had shown “increasing frustration” about the lack of legislative reform in the area, and had shown a tendency to expand existing exceptions.
She cited the case of , where the High Court rejected a challenge to the proceedings based on the fact that the plaintiff benefited from crowdfunding.
The barrister told the event that the judgment, however, did not engage with the wider issues raised by crowdfunding, such as whether funders could be liable for costs.
EU developments
The panel, chaired by former chief justice Frank Clarke, discussed recent developments in Irish, EU, and British law.
Egan McGrath said that EU developments, such as the Representative Actions Directive, may force Ireland to take action.
The event heard, however, that the “enormous” outlay involved in such actions could make it very difficult for entities to take legal action in Ireland without some kind of regulated third-party funding system.
MHC partner Colin Monaghan said that there was now “more nervousness” in Britain, where there had been less regulation in the area, about how the litigation-funding industry had developed.
‘Unedifying’ sub-class of litigation
The panel also discussed other issues raised by third-party funding, such as whether advice given to clients should also be given to funders.
MHC partner Rory Kirrane SC told the event that conflicts over the spoils of litigation had led to what he described as an “unedifying” sub-class of litigation between plaintiffs and funders emerging.
He said that this was “an evil that needed to be guarded against” in any proposed changes.
Asked about who should regulate any reformed third-party-funding regime, there was broad agreement among the panel that one of the existing regulatory bodies, such as the Central Bank or CCPC, would make more sense than setting up a new watchdog.
The former chief justice, who is president of the LRC, concluded that the area was “a gap that needed to be filled”, but added that it needed to be regulated to genuinely contribute to access to justice.