Third Party Litigation Funding and its Potential Regulation in the EU

European consumers do not want lawsuit finance companies to invest in civil litigation without oversight, and they strongly support a range of proposed safeguards to keep third party litigation funding (TPLF) in check. Those are the major takeaways from a survey of over 5,000 European Union (EU) consumers across France, Germany, Netherlands, Poland, and Spain, conducted by international polling firm WorldThinks.

The survey, which ran from June 24^th through July 2^nd, comes in the context of an EU legislative debate over whether and how the Union should regulate the burgeoning lawsuit finance industry. TPLF involves companies making often-secret deals with lawyers to fund lawsuits in exchange for a cut of any judgment or settlement. Currently, those companies operate under a near-total lack of regulation and transparency in the EU and around the world.

WorldThinks’ research showed that this state of affairs is unacceptable for EU consumers. Eighty-three percent support the introduction of safeguards to ensure cases funded by TPLF operate in consumers’ best interests, and between 66 and 79 percent support a range of specific proposed safeguards. Among the top polled safeguards are proposals that:

• funders should have a fiduciary duty to put the best interests of claimants over their own investment interests (79%);
• funders should be legally required to see a case through until the end, without the ability to withdraw their funding before a case is concluded (78%); and
• funding agreements should be subject to an independent review to ensure they are not written unfairly in favor of the funders (78%).

By contrast, 52 percent of respondents were opposed to letting lawsuit finance companies self-regulate by developing codes of conduct.