Litigation Finance in China? It’s Not Out of the Question
The growth in third party litigation funding has seen the practice evolve in new markets from Europe to Asia. However, we have yet to experience its adoption in every major market, and with ample funding resources available, there are still plenty of opportunities for the industry to grow. Of all these untapped regions, China stands out from the pack both for its size and scope. In a recent analysis by DLA Piper, Legal Director Jue Jun Lu makes the case for why Chinese entities should look to utilize third party funding, particularly when it comes to the realm of international arbitration. This analysis examines the benefits and opportunities for external finance in both single case and portfolio funding. In the former case, third party funding can be a useful tool in the arsenal of a company to manage cash flow, without negatively impacting financial reporting. Additionally, this approach reduces risk for the company dramatically, whilst also placing the claimant in a position of strength, demonstrating its ability to commit adequate capital to the litigation. With regards to portfolio funding, DLA Piper highlights the flexibility provided to any company involved in multiple disputes, allowing these entities to fund smaller cases that might not otherwise qualify for funding. Leveraging this new avenue of litigation finance would allow Chinese companies to engage with their multinational counterparts, who have already taken advantage of third party funding to bolster their Legal Services sectors.
