Litigation funding and legal privilege

The recent English Commercial Court judgment considers the interesting question whether documents created to enable a litigation funder to decide whether to fund a class action are covered by litigation privilege.

The claimants were the drivers of London Black Cabs who brought proceedings against the First Defendant, a licenced private hire operator in London, and other companies in the same group.

The claimants’ attorneys had been approached by a litigation funder to investigate the possibility of a claim against the Defendants. The attorneys contacted the Cab Drivers Trade Association and opened a file in the litigation funder’s name. The claimants subsequently retained the same attorneys to act for them.

The litigation funder provided litigation funding from the early stages of the claim but later declined to provide further funding.

Litigation was subsequently commenced a considerable period afterwards. One of the defences raised was prescription. An application for discovery was launched. The defendants sought disclosure of various documents that were exchanged between the attorneys and the litigation funder up to the time when the attorneys were first retained by the claimants to act for them.

The claimants argued that the documents sought were covered either by legal advice privilege or by litigation privilege.

The court held that litigation privilege would only apply if the communications were made for the sole or dominant purpose of conducting the litigation. It accepted that litigation privilege could, in principle, be claimed by a non-party to the litigation, subject to the dominant purpose of the documents test.

Conducting litigation includes deciding whether to litigate. The court held that the litigation funder, during the relevant period, was not deciding whether to litigate itself but whether to fund the proceedings. It was accepted that legal advice privilege does not cover privileged communications between an attorney and a third party.

The court in its consideration of litigation privilege, and citing earlier authority (that of Three Rivers (No. 6) [2005] 1 AC 610), said:

“102. The conclusion to be drawn from the trilogy of 19th century cases to which I have referred and the qualifications expressed in the modern case-law is that communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with existing or contemplated litigation are privileged, but only when the following conditions are satisfied:

(a) litigation must be in progress or in contemplation;
(b) the communications must have been made for the sole or dominant purpose of conducting that litigation;
(c) the litigation must be adversarial, not investigative or inquisitorial.”

The court placed particular emphasis on the phrase “conducting that litigation”. Litigation privilege does not extend to any document brought into existence for the purpose of litigation. It is the use of the document or its contents in the context of conducting the litigation that attracts the privilege.

The court referred with approval to the Court of Appeal judgment in WH Holding Ltd v E20 Stadium LLP [2018] EWCA Civ 2652:

“27. In summary, our conclusions are as follows:

i) Litigation privilege is engaged when litigation is in reasonable contemplation.

ii) Once litigation privilege is engaged it covers communications between parties or their solicitors and third parties for the purpose of obtaining information or advice in connection with the conduct of the litigation, provided it is for the sole or dominant purpose of the conduct of the litigation.

iii) Conducting the litigation includes deciding whether to litigate and also includes whether to settle the dispute giving rise to the litigation.

iv) Documents in which such information or advice cannot be disentangled or which would otherwise reveal such information or advice are covered by the privilege.

v) There is no separate head of privilege which covers internal communications falling outside the ambit of litigation privilege as described above.”

On the facts, no claim to litigation privilege was made on the basis that the individual claimants who created documents in the relevant period did so with a dominant purpose related to the conduct of litigation. The claim to litigation privilege was advanced squarely on the basis that it was the litigation funder’s privilege and that it was the litigation funder’s purpose that counted when assessing when litigation privilege had arisen.

The defendants did, however, accept that when the communications in issue were created, litigation was in reasonable contemplation. The crisp question was whether the documents were created with the dominant purpose of conducting litigation. The Defendants contended not.

The claimants contended that it was clear on the evidence that the dominant purpose for which the documents were created was to enable the litigation funder to decide whether to fund the claim. It was argued that the dominant purpose of the litigation funder retainer was the conduct of litigation because the conduct of litigation includes deciding whether or not to litigate, and that includes whether or not to spend money on the claim. The court did not agree that the evidence showed that the dominant purpose of the creation of the litigation funder’s communications was the conduct of litigation. The only evidence of purpose, was, the court said, clear. That was to enable the litigation funder to take a decision whether to fund the claim. It was not evidence that the documents were created to enable the litigation funder, or anyone else thereafter, to conduct the claim.

The litigation funder’s consideration of whether to fund the claim was not part of the conduct of the litigation. The funder was not conducting this or any other litigation and there was no evidence relied on by the litigation funder as to what role it might play in any litigation that was commenced, beyond being the funder. Nor was there any evidence that documents or material it had gathered for its funding decision might thereafter be used to conduct the litigation. In fact, submissions had been made by the claimants’ attorneys that the claimants would not have needed to use any of the material in the litigation funder’s communications for the purposes of litigation. The court accepted that there may be circumstances where litigation funders play a significant part in the conduct of proceedings, but there was no such evidence that the purpose of the creation of the relevant documents was other than for the purpose of a funding decision.

The court accepted that the decision whether or not to litigate is part of the conduct of litigation but, on the evidence, the litigation funder was not seeking legal advice for the purpose of conducting litigation but for the purpose of deciding whether to fund litigation that it was not going to conduct. Or, at least, there was no suggestion in the evidence that the funder intended to conduct the litigation. The position is different where an individual litigant takes their own funding decision and, in deciding whether to start litigation, includes the decision whether to put money into it, and that is then going to be their own litigation.

On the facts, the litigation funder’s decision was only a decision to fund someone else’s litigation. It was not its decision to start the litigation, and it was up to the individual claimants whether they wanted to do that once the funding decision had been taken.

The court said that the test for litigation privilege did not refer to whether the content of the communications in question dealt with merits or quantum as distinct from other matters that might relate to litigation, such as terms of funding, but related to the purpose for which the communication was created. The content of documents may inform the analysis of purpose but is not determinative of it. The court held that, on the evidence before it, as to the purpose for which the litigation funder’s communications were created, they did not attract litigation privilege.

Insurers and reinsurers should be alert to the nuanced approach adopted by the English court and the authorities referred to in the creation and management of documentation when making pre-litigation decisions or sending pre-litigation correspondence.

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[Uber London Ltd v White, 2026 WL 01719214 (2026)]