Is It All That Fishy? A Critical Review of the Concerns Surrounding Third Party Litigation Funding in Europe

Adrian Cordina (Erasmus University Rotterdam)

Abstract

Virtually all major jurisdictions worldwide, including those in Europe, have been facing cuts to public expenditure in civil justice and increasing litigation volume, delays, complexity and costs in the last few decades. This makes it difficult or impossible for certain individuals and entities to pursue meritorious claims, be it individually or collectively. This poses a significant challenge to access to justice from a legal and economic point of view. With Third Party Funding (TPF) of litigation frequently touted as a promising private funding solution to this problem, this article explores the question of how and why the proliferation of TPF has been viewed with a considerable degree of caution in Europe, and questions to what extent this caution is warranted. The scale of the civil justice crisis in Europe, the shift from public to private funding and the purported benefits of TPF are first briefly investigated. It then proceeds to critically examine, including from a law-and-economics perspective, the main sources of concern leading to the scepticism shown towards TPF in Europe, which is still largely unregulated. These sources are the commodification of justice, conflicts of interest and funder capital inadequacy. Particular reference is made to the regulatory frameworks of the jurisdictions England & Wales, Netherlands and Germany in Europe, and at the EU level, from the Representative Actions Directive (RAD). It concludes by restating the complexity of this industry and the importance distinguishing and analysing the main arguments most commonly raised against it in literature, policy and jurisprudence.

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