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In Therium Litigation Funding A IC v Bugsby Property LLC[1] the English Commercial Court had its first opportunity to consider the enforceability of Litigation Funding Agreements (“LFAs“) following the decision of the Supreme Court in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others[2] (“PACCAR “).

In PACCAR, the Supreme Court held that where litigation funders are to be remunerated by reference to a share of damages obtained by a funded party, those funders are providers of ‘claims management services’ as defined in section 58AA of the Courts and Legal Services Act 1990 (the “1990 Act“). DBAs are subject to a distinct regulatory regime – specifically, the DBA Regulations.[3] Unless LFAs comply with the requirements outlined by the DBA Regulations, PACCAR rendered them unenforceable.

The gravity of their decision in PACCAR was not lost on the Supreme Court justices, with Lord Sales noting that “the likely consequence in practice would be that most third party funding agreements would by virtue of that provision[4] be unenforceable as the law currently stands.[5] Needless to say, this was not the view anticipated by the litigation funding industry at the time of entry into those LFAs.

The issue came before Mr Justice Jacobs in the Therium case in the context of Therium’s application for relief to prevent the dispersion of £27 million in claim proceeds obtained by Bugsby in funded litigation. The LFA between Therium and Bugsby provided for resolution of disputes before LCIA arbitration. Therium sought an asset preservation order under section 44 of the Arbitration Act 1996[6] over the monies obtained by Bugsby. The court had to consider whether the arguments presented by Therium constituted a serious issue to be tried under the American Cyanamid test.

In January 2024 (so after the judgment was rendered in the Therium case) the UK Government announced that it will introduce legislation to reverse the PACCAR decision. The surprise ruling in PACCAR prompted a protracted reconsideration of litigation funding agreements to avert potentially negative consequences. The reversal of PACCAR is seen as important for maintaining public access to justice. Litigation funding has become vital for individuals with limited means, ensuring a balance against well-funded entities. The decision is particularly timely in light of recent events, such as the Post Office scandal, where litigation funding played a key role in enabling justice for affected Sub-Postmasters. The proposed legislation signals the Government’s recognition of the importance of litigation funding beyond technical claims, emphasizing its societal benefits. The Government’s proposals remain subject to parliamentary approval.

Factual Background

Therium was litigation funder to Bugsby in proceedings against Legal & General Group and in which Bugsby were ultimately successful in obtaining an award of damages following trial (although substantially less than anticipated). Permission to appeal was granted to both sides in those proceedings, but the appeal was settled shortly before it was due to be heard.

Under the LFA in question, which was concluded on broadly common terms for the litigation funding industry, following judgment, award, order, settlement arrangement or compromise, Therium was purportedly entitled to: (i) return of the funds it had provided to Bugsby to pursue the litigation, (ii) a contingency fee based on a multiple of the funded amount, and (iii) a further sum based on a percentage of any recovery achieved by Bugsby beyond a certain threshold.

Although the contractual arrangements between Therium and Bugsby required that any claim proceeds received were to be held by Bugsby’s solicitors on trust for Therium (and a second funder) pending distribution, upon achieving settlement Bugsby took steps to bypass the payment obligations under the LFA, alleging their unenforceability post-PACCAR.

Enforceability and Severability: A Serious Issue to be Tried

Before examining the arguments put forward by Therium in seeking to salvage its entitlement to recover the funds provided and a multiple of those funds by way of contingency, it was common ground between the parties – and Therium did not seek to argue otherwise – that it did offer ‘claims management services’ under the 1990 Act and, as a result, any claim by Therium to recover under the percentage of damages contingency fee would fail as the obligation was unenforceable post-PACCAR. It was also common ground that the Supreme Court’s decision in PACCAR did not address the arguments raised by Therium in respect of the other elements.

Therium presented the following arguments – to the extent that there was a serious issue to be tried – by contending that the reminder of the LFA was enforceable.

Relying on a Court of Appeal decision in Zuberi v Lexlaw Ltd[7] – which was noted by the Supreme Court in PACCAR and not overturned – Therium argued that the legislation which enabled those providing advocacy, litigation or claims management services to receive remuneration based on a share of recoveries (in certain circumstances) did not modify any other element of the common law. While the common law rule against champerty – which had previously prohibited such recoveries – had been overridden by statute (i.e. the 1990 Act) legislation had not sought to modify any other statutory or regulatory controls over alternative forms of fee arrangements. Those other forms of fee had nothing to do with the DBA and were otherwise permissible at common law. As a principle of statutory interpretation, in view of the presumption that Parliament does not intend to change common law except as expressly provided or necessarily implied, the legislation (which itself is not particular comprehensive) could not be said to undermine the co-existence of common law.

Counsel for Therium further argued that the DBA element of Therium’s LFA existed as an agreement within an agreement and drew parallels with the enforceability of arbitration agreements in that regard.

Although Jacobs J found that on the issue of enforceability alone there was a serious issue to be tried, and ultimately relief could be granted, Therium also maintained that any problematic elements of the LFAs, could be separated from the rest of the contract through the application of common law principles of severance, as established in another leading Supreme Court case (Egon Zehnder v Tillman).[8]

Conclusion and Key Takeaways

The court, while acknowledging the gravity of the PACCAR decision, found that the issues raised by Therium were substantial enough to warrant a serious examination. Consequently, Jacobs J granted the asset preservation order, on hearing Therium’s argument that the LFA’s structure might allow for the severability of any unenforceable DBA portions, thus preserving the enforceability of the remainder of the agreement.

Therium is of interest for three reasons:

  • it leaves the door open to a judicially endorsed pathway for litigation funders to argue the partial enforceability of LFAs post-PACCAR and suggests that LFA payment structures could be dissected, and enforceable elements retained;
  • it provides a reprieve to the litigation funding industry, which had been grappling with the potential widespread invalidation of LFAs and suggest that funders can, with carefully crafted arguments, defend the validity of their LFAs, at least in part, against challenges based on PACCAR; and
  • finally, the decision underscores the judiciary’s willingness to engage with complex financial instruments within the legal services market, acknowledging their importance in facilitating access to justice through litigation funding.

PACCAR remains a very recent development, albeit one that is pending reversal, and the issue of an LFA’s enforceability remains, as Jacobs J noted, an area of law “which is not straightforward and where different conclusions are possible“.[9] As to those conclusions, the Therium case assists the wider litigation funder community only so far. When it comes to enforceability and severability of LFAs, there is a serious issue to be tried. On the substance of who has the better of the arguments, Jacobs J does not express a view.

Therium will find its answer in LCIA arbitration. The rest of us will have to wait for those issues to be tried before the Courts. In the meantime, Therium provides some hope to litigation funders for how LFAs might be structured and interpreted in the future, ensuring that they remain viable financial instruments within the legal services market.

[1] [2023] EWHC 2627 (Comm). Judgment available here:

[2] [2023] UKSC 28.

[3] Damages-Based Agreements Regulations 2013 (SI No. 609 of 2013, available here).

[4] Meaning a provision whereby a litigation funder has a right to remuneration calculated on the basis of a percentage of damages (or settlement monies) obtained by a funded party.

[5] Lord Sales at [13] in R (on the application of PACCAR Inc and others) v Competition Appeal Tribunal and others [2023] UKSC 28.

[6] Section 44 provides that the Court may grant an order for the preservation of property or for an interim injunction if the matter is urgent and if the arbitral tribunal has no power or is unable for the time being to act effectively.

[7] [2021] EWCA Civ 16.

[8] [2019] UKSC 32.

[9] Jacobs J at [48] in Therium Litigation Funding A IC v Bugsby Property LLC [2023] EWHC 2627 (Comm).


Mustafaen Kamal is a Trainee in the Dispute Resolution team. Prior to joining Baker McKenzie, Mustafaen was a Frank Knox Fellow at Harvard Law School. Mustafaen can be reached at