New campaign group including Burnley victims of the CWI scandal calls for more protections for vulnerable people taking out legal claims

The Legal Negligence & Mismanagement Campaign Group (LNMCG), which includes Burnley and Pendle victims of the cavity wall insulation (CWI) scandal, warns of the financial and emotional devastation felt by claimants exposed to mismanaged legal claims.

It also calls for more transparency and regulation around third-party and litigation funding in the UK.

The CWI scandal saw thousands of homeowners sign up with firms like SSB Law and Pure Legal for supposed no-win, no-fee compensation claims for failed insulation in their homes. Many saw their cases change hands and landed legal bills of up to tens of thousands after the law firm representing them went bust.

The victims have joined forces with claimants of other types of claims, from mortgage mis-selling to bereavement, after encountering similar problems with the management of their cases and the use of litigation funding.

What is litigation funding?

Taking a claim to court is expensive.

You could borrow money from the bank to fund it - or from a third party instead. Some firms, acting as a third party, lend cash to solicitors to take a claim to court in exchange for some of the winnings. They also charge interest on that loan. The lender should have no involvement or direct interest in the proceedings. If the borrower wins the case, the lender receives an agreed share of the winnings. If the case is unsuccessful, they lose their money, and the borrower does not owe anything.

Legal campaigner Rosie Heys says victims of various claim types are concerned about misinformation and the reliance on litigation funding in their cases.

“We’re aware of the harms done to us and that there are many more victims embroiled in similar cases, from the bereaved involved in probate to victims of medical negligence, mortgage mis-selling, housing disrepair, and many more CWI claims victims affected by the mismanagement of cases and collapse of multiple SRA-regulated law firms."

Third-party funding (TPF) is self-regulated.

The Civil Justice Council is reviewing TPF and litigation funding in England and its regulations on behalf of the Government.

What will the review examine?

It will explore: whether such funding arrangements effectively allow people to access justice, plus possible alternatives and limitations; how much funders should be allowed to claim from winnings in court; and what protections claimants might require.

The team comprises:

● Mr Justice Simon Picken (CJC member) – co-Chair

● Dr John Sorabji (CJC member) – co-Chair

● Mrs Justice Sara Cockerill

● Prof. Chris Hodges – Regulatory Horizons Council

● Lucy Castledine – Financial Conduct Authority

● Nick Bacon KC.

They’re expected to publish a full report by next summer and could make recommendations for reform.

What does the new campaign group think about the review?

Rosie said the review excludes the voices of victims of legal mismanagement and only involves legal professionals and lenders.

"Victims face repossession, bankruptcy, and homelessness, and the impact on the physical and mental health of the families involved is severe."

Anyone is invited to join The Legal Negligence & Mismanagement Campaign Group (LNMCG) on Facebook, added Rosie, "to amplify our voices and call for regulation and reform to protect the public from identified serious harm."

We’ve reached out to the Ministry of Justice for a comment.