Third-party funding of litigation is becoming increasingly relevant in modern justice systems. During the webinar, participants discussed the recently published ELI Principles (approved by ELI Council and Membership in September and October 2024, respectively, available here), stressing the need to strike a balance between improving access to justice and ensuring fairness in funding agreements.
Pascal Pichonnaz (ELI President; Professor, University of Fribourg) welcomed participants and emphasised the significance of the topic. He explained that Principles were drafted by Co-Reporters, Professor Susanne Augenhofer and Judge Sara Cockerill, and shaped by extensive collaboration, balancing diverse perspectives. Among other things, Pichonnaz mentioned that the Principles have already influenced discussions in the UK Parliament, as summarised here.
Susanne Augenhofer (Co-Reporter; Professor, Universität Innsbruck; Visiting Professor and Senior Research Scholar in Law, Yale Law School) began by thanking her fellow Co-Reporter, Judge Sara Cockerill, for their collaboration on the project and highlighting broad support from the project’s Advisors. The project’s aim was to develop a balanced, ‘light touch’ regulatory framework for third-party funding of litigation, she explained. This approach focuses on transparency, fair fees, and consumer protection, without overly strict obligations. Augenhofer discussed some of the key issues dealt with by the Principles, such as disclosure requirements and funder fee caps. She also explained that the Principles provide guidelines for specific areas like consumer litigation and arbitration.
Pia Lindholm (Deputy Head of Unit for Civil Justice, Directorate-General for Justice and Consumers, European Commission) discussed the Commission’s ongoing work on third-party funding of litigation, namely a mapping study, which will examine the TPFL regulatory framework across EU member states. It is expected to be completed by the end of 2024. Lindholm emphasised that the study is complementary to the ELI’s Principles, which offer a comprehensive guide for future regulation and self-regulation of TPFL. The European Commission’s decision to introduce TPFL legislation will depend on the study’s findings and the incoming Commission’s political agenda. ‘We very much appreciate the work done by ELI to develop these Principles, we consider they are very comprehensive and timely’ – said Lindholm.
Elizabeth Bragina (Senior Legal Officer, The European Consumer Organisation (BEUC)) focused on the role of consumer organisations as parties to TPFL agreements, emphasising that public funding of collective redress is often insufficient in Europe, making TPFL essential for enabling successful collective claims. Bragina praised the balanced approach taken by the ELI Principles with regard to various issues, and noted that they ‘could also be very beneficial for judges and it would be fantastic if judges take these Principles into account and implement them in their decisions, which will increase transparency and fairness, but at the same time facilitate flexibility for consumer organisations and funders alike.’
Julian Chamberlain (Risk and Funding Partner at Stewarts) began by stating, on behalf of the legal industry that ‘the ELI Principles provide a powerful blueprint for guidance, advice and decisions on third party funding. They helpfully assume and allow for flexibility between different jurisdictions and practice areas rather than seeking to impose a one- size fits-all approach.’ Chamberlain pointed out a skills gap in Europe regarding lawyers’ knowledge of TPFL, which often results in inadequate advice for clients and urged the law societies across Europe to promote these Principles and use them to educate and equip the profession to advise their clients or at least identify whether their clients ought to have independent advice. Finally, he reiterated that the Principles rightly propose that funded parties should maintain control over litigation and that any termination rights within funding agreements must be clearly defined to avoid ambiguity.
Danguolė Bublienė (President of the Supreme Court of Lithuania) acknowledged the thorough research done by ELI, that provides valuable insights into TPFL's complexities, emphasising its growing popularity in Europe and the limited use of such funding in Lithuania. She noted that litigation funding intersects financial services, contractual relationships, and access to justice, particularly regarding funders' fees, which are a contentious issue requiring judicial oversight. She raised concerns about the potential impact of disputes over funding agreements on main litigation processes and called for clearer guidelines on disclosure and penalties for non-compliance. Bublienė concluded by thanking ELI for its important work in this field.
Sara Cockerill (Co-Reporter; Judge of the High Court of England and Wales, Judge in Charge of the Commercial Court 2020–2022) expressed gratitude to the panel, and to Susanne Augenhofer for her collaboration on the project. She emphasised the complexity of the project, noting that the Team approached it without preconceived notions, engaging with a diverse Advisory Committee. While some voices cautioned against TPFL, most discussions highlighted its potential value, leading to a flexible framework for regulation rather than strict mandates. Cockerill addressed questions on capital adequacy and funder returns, stating that a one-size-fits-all approach is inappropriate due to the diversity of TPFL cases. She acknowledged the importance of independent legal advice, emphasising that lawyers must have no financial links to funders. Overall, she was gratified to hear from other panelists that the Principles will be useful in assisting judges, regulators, and other users, as the TPFL market continues to evolve.
The interventions were followed by lively discussions.
The recording is available below.
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