The Hidden Cost of Vulnerability: Is Litigation Funding Keeping Pace with Access to Justice?

Access to justice is a principle frequently invoked in discussions about civil litigation. Yet there is an important question that receives considerably less attention: What does it actually cost to ensure that someone can participate effectively in the justice system?

For vulnerable parties, the answer can be significantly more than the cost of conducting an otherwise comparable claim. This raises difficult questions about the relationship between vulnerability, litigation funding, recoverable legal costs and the commercial realities facing those who provide legal representation.

It is also the central issue explored in my new book, A Practitioner’s Guide to Vulnerability & Costs: Ensuring Access to Justice in Modern Civil Litigation & Beyond.

The book examines an area of civil justice that has developed considerably in recent years but where, in my view, the financial implications have yet to receive the attention they deserve.

Vulnerability is not simply a procedural issue

Historically, vulnerability within civil litigation was often considered principally in the context of witnesses giving evidence or parties attending court. But, that understanding has changed.

The modern approach increasingly recognises that vulnerability can affect a person's ability to understand proceedings, communicate with legal representatives, make informed decisions and participate effectively throughout the litigation process. Importantly, vulnerability is not confined to any particular category of individual. It can arise from physical or mental health conditions, disability, age, communication difficulties, trauma or circumstances that place someone at a particular disadvantage. It may also be temporary, situational or develop as litigation progresses.

The Civil Procedure Rules now expressly recognise the importance of identifying vulnerability and facilitating effective participation (see particularly CPR.r.1.6 and PD1A). But recognising the need for adjustments is only part of the answer. Those adjustments frequently require additional time, professional skill, specialist assistance and expenditure. And that leads to the question at the heart of this discussion: who pays for that?

The economic consequences of effective participation

Consider two claims involving similar legal issues, comparable damages and broadly equivalent prospects of success. One claimant can communicate readily with their solicitor, understand advice, provide instructions and make decisions without significant assistance. The other experiences substantial communication difficulties, requires repeated explanations, additional conferences, assistance from third parties and specialist support to participate meaningfully.

Both claimants are entitled to effective legal representation. Yet the resources required to provide that representation may be very different. The second claim may involve considerably greater legal expenditure, not because the underlying dispute is more complicated, but because the claimant requires additional support to participate.

And this distinction matters.

Traditional approaches to litigation costs tend to focus on factors such as litigation complexity, value, importance and the work reasonably required to advance a claim.

Vulnerability introduces an additional dimension: the resources reasonably required to enable the individual to engage with the process itself. Those resources are not necessarily optional extras and in appropriate cases, they are fundamental to the administration of justice.

Nevertheless, the financial consequences are often overlooked.

The challenge for litigation funding

The development of modern litigation funding has undoubtedly expanded access to justice. Conditional Fee Agreements, Damages-Based Agreements, after-the-event insurance and third-party litigation funding have all contributed to making litigation possible for individuals who might otherwise be unable to pursue their rights.

However, vulnerability raises questions about how these arrangements operate in practice.

A solicitor acting under a Conditional Fee Agreement may undertake substantial additional work to accommodate a client's participation needs without any corresponding increase in the value of the claim. Under a Damages-Based Agreement, the remuneration available may similarly bear little relationship to the additional professional resources required. Third-party funders, meanwhile, must assess the anticipated costs, risks and potential returns associated with the litigation they support.

Where vulnerability materially increases the cost of pursuing a claim, how should that feature be reflected in funding decisions?

There is a risk that the additional costs associated with vulnerability become an unrecognised component of litigation risk and where those costs cannot be recovered, someone must ultimately absorb them. That might be the solicitor, the funder or, depending on the funding arrangement, the client. But none of these outcomes should be accepted without proper consideration.

The problem with standardisation

The expansion of Fixed Recoverable Costs in October 2023 brought these issues into particularly sharp focus. Fixed costs regimes seek to provide certainty, predictability and proportionality. Those are, and will continue to be, legitimate objectives.

But standardisation necessarily involves assumptions about the resources required to conduct litigation. What happens when a claimant's vulnerability means those assumptions no longer reflect the work reasonably required?

The rules recognise vulnerability and provide mechanisms through which additional costs may, in appropriate circumstances, be sought. Nevertheless, the relationship between vulnerability and fixed costs remains a significant challenge.

A system designed to provide predictable costs outcomes must also accommodate the reality that effective participation does not always fit neatly within a standardised model.

This is not an argument against fixed costs in principle, but rather an argument for ensuring that the pursuit of certainty does not inadvertently undermine access to justice for those whose circumstances require something more.

Recoverability and the wider access-to-justice question

But, the issue extends beyond fixed costs. The rules governing proportionality expressly recognise additional work and expense attributable to vulnerability. That recognition is significant and demonstrates that the costs of effective participation have a legitimate place within the assessment of litigation expenditure.

However, the existence of a legal framework does not necessarily mean that practitioners consistently identify, record, justify or recover the relevant costs. In practice, there can be a substantial difference between recognising that vulnerability requires additional work and demonstrating why the resulting expenditure should be recoverable.

That difference has consequences.

Where solicitors routinely absorb the additional costs of supporting vulnerable clients, the immediate financial impact falls upon legal practices. Over time, however, the implications may be wider. If certain categories of claimant are consistently more expensive to represent, but the funding and costs arrangements do not adequately recognise that expenditure, questions inevitably arise about the commercial sustainability of providing those services.

The danger is not necessarily that vulnerable claimants are expressly denied representation. It is that the economics of representation may make access to justice progressively more difficult.

A changing landscape

Technology presents both opportunities and challenges. Artificial intelligence, digital communication and other technological developments may help individuals understand information and participate more effectively. Equally, they may create new difficulties for people who lack digital confidence, have communication impairments or require additional assistance.

Technology may reduce some participation barriers, but it cannot be assumed to eliminate the need for human support. The same applies to the growing involvement of specialist providers and intermediaries.

Effective participation may increasingly depend upon a combination of legal expertise, appropriate technology and external assistance, and understanding the costs associated with those arrangements will become increasingly important.

This is an area in which solicitors, litigation funders, insurers, the courts and policymakers all have a legitimate interest.

From recognition to meaningful reform

The civil justice system has made considerable progress in recognising vulnerability. The next challenge is ensuring that that recognition translates into meaningful and sustainable participation. That requires more than procedural adjustments. It requires an informed discussion about how the additional costs of supporting vulnerable parties are identified, funded, justified and, where appropriate, recovered.

My book examines these questions through the developing legal framework, the practical realities of litigation and the challenges presented by existing costs regimes. It also considers where further development and reform may be necessary. But the broader issue can be expressed quite simply.

Access to justice is not achieved merely by allowing someone to bring a claim. It requires that person to have a genuine opportunity to participate effectively in the process. And if effective participation has a cost, the justice system must be prepared to confront the question of how that cost is met. Otherwise, there is a danger that vulnerability becomes something the rules recognise in principle, but the economics of litigation struggle to accommodate in practice.

That is a conversation the profession needs to have. And, increasingly, it is one that the litigation funding community cannot afford to ignore.

Nick McDonnell, Costs Lawyer at Kain Knight and author of A Practitioner’s Guide to Vulnerability & Costs: Ensuring Access to Justice in Modern Civil Litigation & Beyond