The Justice Minister is under pressure to scrap reforms to the litigation funding industry, amid fears the changes will inadvertently end sub-postmasters’ Horizon compensation hope.
Lawyers are preparing to send a legal opinion to Alex Chalk warning that sub-postmasters’ hopes of clawing back more compensation from litigation funders will be “extinguished” by the proposed rule changes.
Mr Chalk is pursuing an obscure reform to protect the litigation funding industry that will allow funds that bankroll successful lawsuits to claim a greater share of winnings.
The Supreme Court had effectively imposed a cap on how much profit firms could make in a surprise ruling handed down last year.
The judgment raised the possibility that the 555 wrongly convicted sub-postmasters who won a legal victory against the Post Office in 2019 could claw back more money from the financial backers of the case.
Lawyers and funders involved received £46m of the £58m awarded by the Post Office, meaning each sub-postmaster received just £20,000.
In a legal opinion, Lord Macdonald KC said the Supreme Court ruling “may allow the 555 to revisit” the funding arrangement.
However, the Government has sought to protect the litigation funding industry amid fears that the Supreme Court ruling will discourage companies from bankrolling David v Goliath-style legal disputes and make it harder for the public to launch “complex claims against moneyed corporations”.
In a letter that will be sent to Mr Chalk this week, Lord Macdonald KC warned that the rule change, which will be debated in the House of Lords on Monday, “removes the right” for sub-postmasters to revisit the litigation funding arrangement.
This would rule out the possibility of asking funder Therium for more compensation.
Lord Macdonald KC said that although he had no view on the “merits” of the sub-postmasters’ claim, “any substantive rights those in their position could have would be extinguished by the Bill.”
It is not clear who commissioned the legal opinion.
The opinion comes weeks after the Solicitors Regulation Authority was urged to examine how the settlement was split between lawyers, litigation funders and the 555 claimants.
Alan Bates, founder of the Justice for sub-postmasters Alliance, has supported ministers’ plans as he argues that litigation funding is vital in helping ordinary people launch claims against corporations.
A Ministry of Justice spokesman said: “The proposed legislation will ensure that litigation funding agreements affected by the Supreme Court’s judgment will remain enforceable, while also making sure claimants can continue to bring cases against larger and better-resourced corporations.”
Therium was contacted for comment.
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