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English High Court holds that the terms of litigation funding agreements are privileged

October 17, 2019
James MacKinnon

The English High Court has rejected an application for the disclosure of a litigation funding agreement, holding that the funding agreement was subject to legal advice privilege. For users of legal finance, this provides further reassurance that the terms of their funding agreements, including the amount of funding sought, will not be disclosed publicly or to their adversaries.  The English decision is consistent with the position in the United States.

In his judgment in In the Matter of Edwardian Group Limited [2017] EWHC 2806 (Ch), Morgan J drew on recent cases concerning the application of legal advice privilege. If the litigation funding agreement “gave a clue to the advice given by the solicitor” (Lyell v Kennedy (No. 3) (1884) 27 Ch D 1), or “betray[ed] the trend of the advice which [the solicitor] is giving the client” (Ventouris v Mountain [1991] 1 WLR 607), then Morgan J found that the terms of the litigation funding agreement would be covered by legal advice privilege. This was also the conclusion in Excalibur Ventures LLC v Texas Keystone Inc [2012] EWHC 2176 QB (as relied on by Morgan J):

“If and insofar as the disclosure of the funding agreements would or might give the other side an indication of the advice which was being sought or the advice which was being given, it would be covered by legal advice privilege.”

The judgment provides further and significant protection of funding agreements from disclosure: Morgan J noted that even if he had been persuaded that the claimant’s solicitors had failed this test in redacting the various documents, he would not have ordered that the redaction exercise should be performed again–because such an exercise, and any new unprivileged information it revealed, would not have assisted the court. Quite simply, this shows the low level of importance Morgan J placed on knowing further details of the funding agreement and their relevance—or, more importantly, lack thereof–to the court’s task in resolving the issues.

Morgan J also handed down a clear and robust order that the disclosure of the identity of the litigation funder was irrelevant to the wider dispute, and an application to this effect was rejected. Whilst the terms of litigation funding agreement have clearly been held to be privileged under English law, there remains a discussion as to whether the identity of the litigation funder should also be disclosed, particularly in the arbitration community. In Burford’s view, there is no need for the identity of the litigation funder to be disclosed, which correlates with the view of Morgan J that the identity of the funder was not material to the issues at trial.

This judgment gives some helpful perspective to the ongoing disclosure debate, underlining that applications to discover the identity of the litigation funder or the terms on which funding is provided are ultimately a distraction from the role of courts and arbitral tribunals in resolving the disputes before them.