The advisory firm founded by Peter Mandelson has worked for a campaign that critics say would stifle mass lawsuits such as that taken recently by post office operators against the Post Office.
The Labour peer, who has advised Keir Starmer, serves as president of Global Counsel, a strategic advisory company that he established and part owns.
One of Global Counsel’s senior advisers, Seema Kennedy, a former Conservative MP, has twice written to Alex Chalk, the justice secretary, opposing reform to legislation on class action-style lawsuits.
Ministers are legislating to safeguard people’s ability to raise external funding to pay for mass lawsuits against big businesses, such as the action being brought against the Post Office over the Horizon IT scandal.
Chalk introduced the law in March after an appeal from Alan Bates, the former post office operator who led the campaign that exposed the scandal. The post office operators’ action was only possible because it had the backing of a third-party litigation funder.
The legislation, which is going through parliament and applies to England and Wales, seeks to overturn the effects of an obscure supreme court ruling last year that threw litigation funding into disarray.
In January, Bates wrote in the FT that the ruling would have prevented his “David v Goliath” case against the Post Office from happening and urged ministers to take action.
Kennedy privately wrote to Chalk twice in March raising concerns about his legislation and arguing that the growth in mass lawsuits in the UK was offputting to businesses. In her second letter, she urged Chalk to withdraw the legislation and said that it was potentially unconstitutional and could breach human rights law.
Kennedy was writing to Chalk in her capacity as executive director of Fair Civil Justice. She is employed as a senior adviser by Global Counsel, which declared it was lobbying on behalf of the Fair Civil Justice campaign between October and December last year.
Fair Civil Justice says that it wants to stop litigation funders from collecting enormous payoffs and improve oversight of a rapidly growing and largely unregulated industry.
It points out that post office operators received only 20% of the compensation awarded to them in court, and that the government had to eventually step in to offer fuller compensation.
But critics say the campaign, which has received funding from the US Chamber of Commerce, represents the interests of large corporations that don’t want more consumers taking them to court.
Litigation funders give financial backing to legal battles that they calculate are likely to succeed, in exchange for a share of the compensation. It allows expensive cases to be launched by people who couldn’t otherwise afford them.
High-profile cases that relied on litigation funders in the UK included women who brought equal pay action against Sainsbury’s, motorists who brought claims against VW over faked emissions and cases against the UK’s biggest mobile phone networks for overcharging loyal customers.
Neil Purslow, chief investment officer of Therium Capital Management, the company that funded the post office operators, said Fair Civil Justice was “shedding crocodile tears about access to justice”.
“The arguments that they raise are just all designed to find ways of making funding more difficult. Caps on funding returns are just designed to make it so that fewer cases can be funded,” Purslow said. “The Post Office spent almost twice what the postmaster spent on legal fees.”
Purslow pointed to evidence discussed by the Post Office Horizon IT inquiry last month. One document dated September 2017 and put to the inquiry suggested the Post Office considered stretching out the litigation process to make it as costly as possible in hopes that the post office operators and their litigation funder would give up.
Susan Dunn, founder of Harbour Litigation Funding, said: “Large corporates are the ones typically on the receiving end of group actions, so it does seem rather convenient that Fair Civil Justice are trying to do things which stop claims against their funders.”
Ministers have recently announced a review of the litigation funding industry. Kennedy said: “That sub-postmasters received only 20% of the compensation awarded to them is the perfect example of why the litigation funding industry needs to be properly regulated to make sure it puts victims and consumers first.
“On the bill being rushed through parliament, it is absolutely right to raise concerns that the retroactivity clause could actually deny redress to certain groups.
“The government has now announced a review into the third party litigation funding industry, led by the Civil Justice Council, and we look forward to these issues being addressed in detail.”