Is crowdfunded litigation the future of justice?
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Version 0 of 1. When I first studied law, supporting someone else’s legal claim in exchange for a share of the potential damages was a crime called champerty. Now, it’s big business. Harbour Litigation Funding, the largest funder of its kind in the UK, has raised £400m to invest in court claims. Tellingly, Harbour is looking for new claims to fund but does not need any new investors. Funders of this kind make profits for their investors by taking a share in the proceeds of successful claims. Harbour won’t touch personal injury, divorce or defamation cases. It’s not interested in claims worth less than £10m. And although it will not fund a case unless its legal advisers think the claim has a strong prospect of success, the funder recognises that some of the cases it backs will fail. Now there’s a new kid on the block. CrowdJustice is a legal crowdfunder, the first of its kind in the UK. It selects public interest cases, publicises them on its website, and invites the public to fund them. What’s different is that the funders are donors rather than investors. The funding works on an all-or-nothing basis. If a case does not reach its tipping point – £5,000 in the case of the first claim CrowdJustice has taken on – then donors’ credit cards are not charged. In “rare cases”, where a funded claimant doesn’t use all of the money donated, backers who have donated more than £1,000 may be able to request a refund. Otherwise, any surplus will go to a designated charity, the Access to Justice Foundation. Might the backers of a failed claim be liable to pay the other side’s costs? Not where they don’t stand to benefit, says CrowdJustice, while stressing that it cannot offer legal advice. And might they be caught by new legislation introduced by Chris Grayling to discourage the use of judicial review? We shall have to wait and see. CrowdJustice was founded by Julia Salasky, a former associate at the City firm Linklaters who then worked as a lawyer for the United Nations. “It’s becoming harder all the time for ordinary people to access the courts,” she tells me. “Most of that comes down to funding.” She adds: “Using technology to help communities channel their energy and finances behind the little guy who is brave enough to bring a case seems inevitable, as the search for innovative solutions to this problem becomes more urgent.” Salasky’s company takes a commission of 5% from the cases it funds, which she tells me is in line with industry practice. The credit card company also takes a percentage. But why should anyone want to donate money to lawyers? “There are many reasons,” she tells me. “In the first claim we have highlighted, I think the donors will be people who take human rights seriously as a universal obligation, and people who wish to hold companies to account – in particular when these are British companies that we rely on to uphold these values.” But there may also be cases of self-interest, where local residents can club together to challenge a planning decision or where, for example, campaigners are supporting a challenge under freedom of information legislation. Anyone who has written about the law knows there are countless victims of injustice with a claim that 'just can’t fail' Donors can expect to hear how the claims they back are proceeding. But CrowdJustice offers no guarantee that the cases it features will have any success. And donors have no say in how the case is run: as with commercial legal funding, the people who pay the piper cannot call the tune. “Sometimes petitions or complaints aren’t enough to achieve real change,” CrowdJustice says on its website. “By contributing to court cases, you can often have a real impact on a specific issue. In some cases, you can even contribute to changing the law.” So Salasky’s business model relies on people gaining a warm glow of satisfaction from providing financial support to litigants in need. But will there be enough generous backers around? CrowdJustice is the first in the field, so Salasky can’t be sure. “But at the same time, we think there is something empowering about being able to contribute to a court case that involves an issue that affects you or touches upon values that are important to you.” And she hopes that, at a time where legal aid is in crisis, there are enough good people around to make sure that access to the courts doesn’t become a privilege for the rich. It’s a noble aim. However, anyone who has ever written about the law knows that there are countless victims of injustice with a claim that “just can’t fail”. All they need is a lawyer to knock it into shape and a funder to back it. But CrowdJustice won’t help claimants find lawyers. It may be spending a lot of its time telling people who have suffered misfortunes that it simply cannot help. |