To prevent litigation abuse and ensure adequate compensation for claimants if they incurred material damage, the following regulatory safeguards should be considered for all types of litigation funding:

A funder should only be permitted to provide litigation funding if it is authorised by a supervisory authority.

Funding agreements should be disclosed to inform the judge and the defendant about the appropriateness of the investment agreement.

A contract between funders and claimants should also clarify the relationship between lawyers and funders to prevent lawyers from being torn between protecting the claimants’ interests and pleasing the investors.

The claimants and their lawyers—not the funders—should determine the course of litigation and agree on the settlement to best serve the interests of the claimants.

Claimants should receive adequate compensation if they incurred material damage and they should receive it before the funders get paid. Funders should receive a proportionate reward and be paid last.

Funders should have sufficient capital to pay for the legal, court, and other costs for the full duration of the litigation process. If the funded case is lost, the funder should be liable for these full adverse costs.

Just like lawyers, funders should act in the best interests of claimants and prioritize the claimants’ legal interests over their own economic interests.

INFOGRAPHIC: Putting Claimants First by Regulating Litigation Funding

Published: June 28, 2021

In this Europe-focused infographic, learn more about how big the litigation funding market is in key European jurisdictions, the common misconceptions about TPLF, and the real facts about this unregulated and secretive industry. Finally, the infographic recommends seven common sense safeguards for TPLF to prevent litigation abuse and ensure adequate compensation for claimants.

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12 Recommendations for the Implementation of the EU Directive on Representative Actions

Published: November 2020

As EU Member states implement the EU Directive on Collective Actions, it’s critical that they strike the right balance between facilitating meritorious litigation and safeguarding against opportunistic lawsuits. A key component of that effort is implementing safeguards on third party litigation funding (TPLF). You can find detailed descriptions of suggested safeguards for TPLF and other abusive litigation risks in this document.

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Selling More Lawsuits, Buying More Trouble: Third Party Litigation Funding a Decade Later

Published: January 27, 2020

When ILR documented the early development of third party litigation funding (TPLF) in the U.S., the industry barely existed. Now, according to a recent survey, U.S. funders alone have over $9.5 billion under management. ILR’s research looks at how exactly this explosive growth has happened, how the industry is fueling abusive litigation, how the few TPLF agreements that have been made public reveal deep ethical issues with the practice, and how lawmakers and rule makers can approach TPLF reform.

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INFOGRAPHIC: The Murky Waters of Litigation Funding

Published: November 2019

In this tryptic, take an inside look at a financing industry with no transparency, no regulation, and no safeguards against abuse. The Murky Water of Litigation Funding explores how much litigation funders make from a claim, what are the main ethical concerns with TPLF, and why self-regulation of the industry has failed in the UK and Australia.

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Uncharted Waters: An Analysis of TPLF in European Collective Redress

Published: October 2019

Third party litigation funding is spreading to Europe, and its growth is set to be amplified by the upcoming passage of the first EU-wide collective redress (class action) law. Unfortunately, consumers and businesses remain almost completely unprotected.

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A ‘Fair Deal’ for Consumers?

An Update on EU Consumer Attitudes Towards Collective Actions and Litigation Funding

Published: July 11, 2018

After the European Commission released its proposed Directive on Collective Actions (which has since been enacted), the U.S. Chamber Institute for Legal Reform conducted a survey to update its 2017 “Supporting Safeguards” research. Of over 5,000 respondents polled across France, Germany, the Netherlands, Spain, and Poland, only six percent believed that TPLF should be allowed in collective actions without safeguards. Furthermore, 72 percent of respondents believed that all litigation funders should have to be licensed or accredited by a government agency.

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Supporting Safeguards:

EU Consumer Attitudes Towards Collective Actions and Litigation Funding
Published: September 17, 2017
In 2017, the U.S. Chamber Institute for Legal Reform polled over 6,000 individuals across six EU Member States, including France, Germany, the Netherlands, Poland, Spain, and then-EU Member State the United Kingdom. Respondents were asked numerous questions about collective actions and TPLF. Among other results, the survey showed that 81 percent of those polled support the introduction of safeguards for TPLF, and just five percent believed that TPLF would ensure that collective action cases operate in consumers’ best interests.


A ‘Fair Deal’ for Consumers? An Update on EU Consumer Attitudes Towards Collective Actions and Litigation Funding
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Supporting Safeguards: EU Consumer Attitudes Towards Collective Actions and Litigation Funding
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