A new code of conduct and central membership body for third party litigation funders has been launched in response to the increasing number of suppliers in the market.

The Civil Justice Council (CJC) issued the new voluntary 11-point code yesterday (23 November), which sets out standards of practice and behaviour for litigation funders in England & Wales.

Compliance with the code, though voluntary, will be a pre-requisite for those funders that want to join the new membership body known as the Association of Litigation Funders of England & Wales (ALF).

The code includes requirements such as the promotional literature of a funder must be clear and not misleading and a number of stipulations around the details contained within litigation funding agreements drawn up between a funder and a client.

The creation of a code of conduct for third party funding was recommended in Lord Justice Jackson's civil litigation costs review published in December 2009.

ALF director and head of litigation funding at Harbour Susan Dunn said: "I first presented third party funding to the CJC in 2006. As a result of that, discussions about developing a voluntary code first commenced in February 2008, but it wasn't until Jackson mentioned it in his report that things really got moving.

"Third party litigation funding is becoming more and more important in the market and having a code of conduct will be good for practitioners and claimants to ensure that they are both operating under the same rules. Having an association for funders and lawyers to be members of also provides an added stamp of quality that can be used to attract clients."

Funders will be required to pay a fee to become a member of the ALF, which will be chaired by litigation funder Calunius Capital chairman Leslie Perrin.

The news follows Investec's entrance into the third party litigation funding market announced last week, making it the first bank in the UK to offer commercial litigation funding to help companies pursue civil claims in court.