Research by Ferguson Litigation Funding (FLF), has found that, 18-months after the removal of the exemption from the Legal Aid. Sentencing and Punishment of Offenders Act 2012 (LASPO), 93% of Insolvency Practitioners say they are more likely to seek third party litigation funding, as supported by the Statements of Insolvency Practitioners (SIP) 2 para 11.

However, 75% of respondents said that the removal of the exemption had decreased the amount of money being recovered for creditors.

The survey findings also disclosed that:

  • Nearly half the respondents said it had been harder to find a law firm willing to work on a full CFA since April 2016.
  • 47% said that litigation work had decreased since the removal of the exemption from LASPO.
  • Nearly 70% outlined that their use of Litigation Funders had either dropped or remained the same.

FLF’s research findings form part of a wider survey examining the impact of the removal of the LASPO exemption on insolvency litigation. Over 500 Insolvency Practitioners were invited to contribute to the research, creating a clear picture of the current state of insolvency litigation.

Commenting on the findings, FLF Managing Director Maurice Power said “It is clear there is an increase in interest in the use of third party litigation funding in the insolvency sector. SIPs are issued as guidance to IP’s to maintain standards and harmonise approaches. SIP 2 para 11 explicitly urges IP’s to consider external sources of funding when investigating litigation.”

“This is to be encouraged as the most worrying aspect of the survey is that creditors are receiving less money post LASPO and, that many are slow to adopt or are fully aware of the alternative means of funding litigation.”

The full survey can be viewed here.