The extent to which ATE premiums and the detail of litigation funding arrangements are disclosable within proceedings has been considered at two Case Management Conferences in the Competition Appeal Tribunal, heard remotely in December 2021 and January 2022.

In Kent v Apple Inc & another and Coll v Alphabet Inc & others Dr Rachael Kent and Ms Elizabeth Coll are, respectively, the proposed class representatives for almost 40 million users of Apple and Google products, alleging abusive conduct in relation to app distribution and payment processing services provided by Apple’s App Store and Google’s Play Store.

Within their applications for collective proceedings orders (CPO), Dr Kent and Ms Coll served  litigation plans and budgets to trial, specifying budget levels exclusive of ATE insurance premiums.  They each also produced a litigation funding agreements and after the event insurance policies.

Pursuant to rule 101 of the Competition Appeal Tribunal Rules 2015, Dr Kent and Ms Coll requested confidential treatment for (and accordingly redacted) certain parts of their litigation funding agreements and ATE insurance policies on one or more of three grounds: commercial confidentiality, strategic sensitivity and privilege.  Apple and Alphabet objected to such redactions.

In advance of both CMCs, the parties were able to reach agreement with regard to certain redactions within the funding documents, leaving two points in contention in each case:

• Kent v Apple – the premiums payable under the ATE policy and the Solicitors Excess Provision (SEP) within the litigation funding agreement.
• Coll v Alphabet – the deposit premium payable under the ATE policy and the percentage level of the success fees payable under the CFAs entered into by the parties to the class action.

In Kent v Apple, the Tribunal was not satisfied that ATE premiums were subject to legal advice privilege; however, they were not persuaded that the precise amount of the premiums was relevant to any question it would be required to decide at the CPO hearing, where there had already been disclosure of the amount of cover provided by the ATE policy.  The Tribunal accepted Dr Kent’s submission that disclosure of the premiums might disclose an assessment of risk and merits, stating that “…we exercise our discretion not to order their disclosure, on the basis that to do so would confer and unfair tactical advantage on Apple.”

Turning to the SEP, the Tribunal noted that the effect of the same is that there is a “slice” of costs above the budgeted amounts which the funder never pays and which are at the solicitors’ risk.  Such costs are not recoverable from anyone, save in the case that the claim is successful when they are recovered out of damages.  A small excess “slice” may indicate that the solicitor considers the claim to be weak, whereas a large “slice” may indicate confidence that there are strong prospects of success.

Primarily, the Tribunal found that Apple had failed to demonstrate that disclosure of the SEP was relevant to the issues at the CPO hearing, agreeing with Dr Kent that, as it is an amount above the budgeted sums and is at the solicitors’ risk, it has no bearing on whether she is able to fund her own costs.

Secondly, the Tribunal considered – without deciding – that “…disclosure of the level of the excess might disclose legal advice on merits and thus in principle might be privileged…it is likely to disclose the solicitors’ assessment of risk and thus has strategic sensitivity… [giving Apple] tactical advantage [and] the opportunity to engage in litigation tactics to drive up costs beyond the budgeted amounts…”.

In Coll v Alphabet, the Tribunal endorsed the general findings in Kent v Apple while emphasising the importance of transparency with Chair Bridget Lucas QC making the following points:

“The starting point in collective proceedings must be that the whole of a PCR’s funding arrangements are relevant to the tribunal’s assessment of the CPO application.  Subject to issues of privilege or confidentiality, we consider that the presumption should be that if the litigation funding agreement or ATE policy is relevant then, prima facie, all of its terms are relevant and any redaction to the documents must be properly justified.”

Noting that the ‘special regime’ for collective proceedings requires a claimant to make ‘extensive disclosure’ of their funding arrangements, Lucas QC added: “That may give rise to some degree of tactical advantage but, because it is required under the statutory regime, that advantage cannot be considered to be unfair.  The issue then becomes what additional unfair tactical advantage arises if further disclosure, over and above that already made, is required.”

In light of the conclusions reached, the Tribunal ruled in both cases that the redactions should remain.

It follows that solicitors should give very careful consideration to the parameters of a client’s duty of disclosure of the detail of their funding arrangements, ensuring that the same is fully compliant with the CPR whilst also protecting any sensitive tactical and strategic elements.

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