This session followed a successful webinar on 21 October 2024. The ELI Principles, which aim at improving access to justice, while promoting fairness in funding agreements, were approved by the ELI Council on 17 September 2024 and by the ELI Membership on 8 October 2024 and are available here.
Pascal Pichonnaz (ELI President; Professor, University of Fribourg) welcomed participants, acknowledging the importance of TPFL in facilitating access to justice. He noted that ELI’s Principles, led by Professor Susanne Augenhofer and Judge Sara Cockerill, are the result of extensive input from diverse advisory and regulatory bodies. He added that the Principles have already influenced discussions in the UK Parliament.
Susanne Augenhofer (Co-Reporter; Professor, Universität Innsbruck; Visiting Professor and Senior Research Scholar in Law, Yale Law School) began by highlighting the collaborative nature of the ELI project on Third-Party Funding of Litigation. She outlined the project's aims, which included enhancing access to justice while addressing key concerns about TPFL, such as transparency, fair fee structures, and managing conflicts of interest. The Principles consist of 12 key guidelines along with sample wording and commentary to guide TPFL agreements, including specific areas like consumer law and arbitration. Augenhofer elaborated on transparency (Principle 5), stressing the need for funder disclosure to parties but not of the full agreement, and emphasised fair fees (Principle 8), advocating for clear cost information rather than fee caps. Finally, she addressed avoidance and management of conflict of interest (Principle 6) as well as case management (Principle 10), underscoring the need to balance funder interests with funded parties' control over litigation decisions.
Herbert Woopen (Legal Director of the European Justice Forum) began by outlining the current implementation status of the EU’s Representative Actions Directive (RAD) across Member States, noting that significant variations exist in regulations governing TPFL. He explained that some countries have adopted caps on funder fees, varying from 10% in Germany to 30% in Estonia, while others impose requirements for disclosure and funder liability, but these provisions remain inconsistent. Woopen advocated for a more harmonised EU approach to TPFL, suggesting that authorities like the European Commission’s Directorate-General for Competition should oversee TPFL practices to encourage competition and ensure fairness for consumers. Among other things, he proposed that TPFL agreements undergo a competitive tender process, monitored for transparency, to allow funders to propose terms based on market competition. He concluded by emphasising that these regulatory reforms could enhance collective redress and benefit consumers by balancing public and private enforcement of rights. Woopen presentation is available here.
Neil Purslow (Co-Founder and Chief Investment Officer at Therium Capital Management Limited and Chair of the International Legal Finance Association (ILFA)), discussed the ELI Principles' role in fostering a fair TPFL market while ensuring access to justice. He highlighted that TPFL allows litigants lacking financial means to pursue legal claims, especially in large consumer and non-consumer cases, where public funding is often insufficient. Purslow addressed common criticisms of TPFL, noting that due diligence by funders helps screen out weak cases, and that fears of speculative litigation are not supported by data. He argued against fee caps, emphasising that informed agreements between funders and litigants are preferable to prescriptive limits, which may hinder access to funding. Among other things, Purslow advocated for self-regulation, suggesting that a flexible, ‘light-touch’ approach would preserve access to justice by preventing excessive regulatory costs for funders.
Susan Dunn (Founder of Harbour Litigation Funding) highlighted the complexity of litigation funding and the critical need for stakeholders to understand funders’ day-to-day challenges. She emphasised that funders face considerable financial risks, with many factors outside their control, including costs that often exceed initial estimates and cases that may fail to yield expected results. Dunn argued against strict fee caps, noting they could deter funders from supporting cases and lead to unfulfilled access to justice. Among the things she stressed was the importance of educating lawyers and judges on TPFL practices, advocating widespread familiarity with the ELI Principles to ensure informed advice for clients. Finally, she underscored that funders primarily facilitate access to justice by covering legal expenses, a role often misunderstood as profit-driven rather than service-oriented.
The session concluded with a lively Q&A, during which panelists debated potential regulatory approaches to TPFL, including fee caps and public tenders for funding contracts. They agreed on the need for judicial education on TPFL practices and stressed the value of the ELI Principles in fostering a transparent, balanced TPFL market.
The recording of the session is available below.
