Funders, PACCAR and the Regulatory Reset

The funding model behind Pan-NOx is about to get more transparent. It is not about to get cheaper.

Written by Will Whawell. Human intelligence throughout; AI assisted with the drafting.

August 2026

Pan-NOx could not have been brought without third-party litigation funding and after-the-event insurance — 1.6 million claimants do not self-fund a multi-year technical trial against manufacturers of Mercedes-Benz's scale. So the judgment lands in the middle of the most consequential period for litigation funding regulation since the Supreme Court's 2023 decision in PACCAR threw the enforceability of standard funding agreements into doubt. Three developments define the reset.

First, the Civil Justice Council's Final Report on litigation funding, published in June 2025. It recommended legislating to reverse the effect of PACCAR "as soon as possible", and replacing self-regulation with a light-touch statutory framework overseen by the Lord Chancellor — capital adequacy, disclosure, conflicts and anti-money-laundering obligations. The capital-adequacy point stopped being academic in July 2026, when Woodville Consultants, a funder with a £250 million loan book behind some 300,000 claims, collapsed into administration. Significantly, it rejected any cap on funder returns, preferring market forces plus, in collective proceedings, court approval of funding terms at the outset against a "fair, just and reasonable" standard. Funders keep their economics; they lose their opacity.

Second, the Court of Appeal. On 4 July 2025 — in appeals involving the Apple, Sony, Visa and Mastercard collective proceedings — the court held that funding agreements remunerated as a multiple of invested capital are not damages-based agreements, and upheld the Competition Appeal Tribunal's power to authorise priority payments to funders. Sir Julian Flaux put the point simply: agreements paying "a multiple of the funding provided" are not payments calculated by reference to damages. That removed the PACCAR-shaped cloud from the standard funding model while legislation was awaited.

Third, the government. In December 2025 it committed to legislate to reverse PACCAR itself, restoring the enforceability of funding agreements based on a share of damages — the CJC's headline recommendation, accepted.

Put those together and the direction is clear: litigation funding in England and Wales is moving from a self-regulated cottage industry to a statutorily recognised asset class with court-supervised pricing in collective claims. What none of this does is reduce the cost of claimant capital. Funders' target returns — and the disbursement lending and ATE premiums that sit underneath mass claims — are priced off risk, and Pan-NOx has just repriced that risk upwards: a full liability trial, run to judgment, largely lost. Expect funders to respond exactly as capital always responds — more selectivity, harder diligence on case theory, tighter tranching of commitments, and more pressure on claimant firms to demonstrate genuine litigation project management before money moves.

That is the thread that connects this series: the regulatory reset will make funding more transparent and more disciplined, but the financial firepower gap described in Part 4 survives it intact. For claimant firms, the practical consequence is that fundability is becoming a project-management question. The funders now doing the choosing will back cases that are scoped, budgeted, staged and adaptively managed — and walk past the ones that are merely large.

Part of the Pan-NOx series from T3PS Legal Dynamics.