Stay on top of regulatory updates taking place throughout various jurisdictions across the globe.

Today, the International Legal Finance Association is announcing its opposition to the Litigation Transparency Act of 2025, which would force public disclosure of all financing in civil cases in federal courts. 

The sweeping nature of the bill would harm small-scale inventors, startups, small and family-owned businesses, and individual Americans who partner with legal funders because they otherwise would not have the resources to assert their rights, protect their property, and defend their livelihoods.  This bill would force disclosure of the sensitive details of their legal strategies and is a blatant attempt to further tilt the legal system in favor of the biggest corporate players resulting in a dramatic reduction in civil litigation against them.  This bill would also partially nullify liability for America’s largest tech and insurance companies. 

Paul Kong, Executive Director, said: 

“The effect of the legislation is devastating to the economic health of our nation and the Rule of Law. The bill would harm small businesses that have been wronged by large corporations and are seeking redress in court. There should never be a financial barrier to entry to civil litigation, and if this law is enacted, that is exactly what will happen. Only the litigants with enough money to support large professional legal teams for months of litigation will have a chance to protect their intellectual property from Big Tech’s infringement or to force Big Insurance to pay rightful claims. It is no surprise that the US Chamber of Commerce, the country’s largest insurance industry groups, and Big Tech have expressed support for the bill, as they all stand to benefit from a system like that. They are eager to preserve their ability to wield massive legal teams and resources to bully those they have harmed. 

This bill is a harmful solution in search of a problem. Courts already have the authority to order disclosure of financing when relevant and are in the best position to determine the relevancy of any financing agreement to the merits of the litigation. In the overwhelming majority of cases, courts have held that the details of legal finance agreements are not relevant to the underlying merits of cases and should be protected rather than turned over to the opposition in litigation. 

The bill’s corporate champions are trying to scare up support by invoking the specter of malign foreign actors exploiting our legal system but they cannot cite any actual examples of this threat materializing, with good reason. As civil litigation experts have noted repeatedly, existing law, court rules, and ethical guidelines provide litigants ample ability to maintain control of their cases and ensure attorneys don’t breach their duties of loyalty and confidentiality. Courts and corporate defendants themselves are also equipped to guard against the release of sensitive information, including through the issuance of a protective order. Lawmakers should oppose this effort and instead stand with small businesses to defend our free enterprise system. 

ILFA opposes the Litigation Transparency Act and will seek to educate the Members of the Judiciary Committee and the House of Representatives on the dangers of this legislation and the true motives of its proponents.” 

About the International Legal Finance Association 

The International Legal Finance Association (ILFA) represents the global commercial legal finance community, and its mission is to engage, educate and influence legislative, regulatory and judicial landscapes as the voice of the commercial legal finance industry. It is the only global association of commercial legal finance companies and is an independent, non-profit trade association promoting the highest standards of operation and service for the commercial legal finance sector. ILFA has local chapter representation around the world. 

For more information, visit www.ILFA.com and find us on LinkedIn and X.

The following is a contributed piece from Rupert Cunningham, Director for Growth and Membership Engagement at the International Legal Finance Association (ILFA).

In their call for more EU regulation last week, AmCham EU, Business Europe and their co-signatories make misleading and inaccurate allegations about third-party litigation funding. These calls have been repeated by the same groups over and over again, pushed by big corporations that simply do not want those harmed by their wrongful behaviour to have recourse in the judicial system. ILFA will continue to counter these claims in the strongest terms. Below we unravel some of the most common misleading statements:

Myth: “Third-party litigation funders currently operate in a regulatory vacuum and without any transparency requirements.”

There is no regulatory vacuum. Litigation funders are regulated under company law in the same way as any other business, for example, the Directive on unfair business-to-consumer commercial practices and the Directive on unfair terms in consumer contracts. Specific to litigation funding, activities are regulated by the Representative Actions Directive and the Collective Redress Directive.

Publicly traded funders are further regulated through legislation on securities and financial instruments and by the relevant stock exchanges and financial authorities. This includes publishing annual reports on financial performance. Examples of other EU rules that apply to listed funders include the Shareholder Rights Directive, Prospectus Regulation, MIFID II.

Lawyers engaged in litigation are bound by professional, regulatory, and fiduciary responsibilities to represent the best interests of their clients where they practise.

Myth: “A civil justice climate that is abundant in abusive claims and mass private third-party funded litigation, creates a chilling effect that deters businesses from innovating, investing, competing, and prospering.”

Supporting meritorious litigation does not deter businesses from innovating and prospering – it deters corporate wrongdoing. As long as companies behave responsibly and comply with the obligations set out in the law, they have nothing to fear from litigation funding.

Myth: “If civil litigation remains funded by unregulated private third parties, we expect a surge in speculative litigation in the EU, which would undermine public confidence in the European justice systems at a time when maintaining faith in our democratic institutions is so critical.”

Far from undermining public confidence in the legal system, a recent independent report from the European Law Institute (ELI) concluded litigation funding plays a ‘functionally vital role in facilitating access to justice in many jurisdictions’.^[1]

With public funding (legal aid) increasingly concentrated in the criminal justice sphere, litigation funding offers vital assistance to claimants bringing meritorious civil claims to courts. Greater access to justice, supported by litigation funding, leads to the development of better legal jurisprudence – a benefit to our legal system and to the rule of the law.

Myth: “TPLF is a for-profit business model that allows private financiers, investment firms, and hedge funds, to sign confidential deals with lawyers or qualified entities to invest in lawsuits or arbitration in exchange for a significant portion of any compensation that may be awarded, sometimes as much as 40% of the total compensation but can go even substantially higher.”

Litigation funder’s fees reflect the level of risk undertaken (which will vary) and are assessed case-by-case.

Many funded cases are “David vs. Goliath” in nature with well-resourced defendants. This requires substantial upfront financial investment to level the playing field and for cases to proceed. In the UK sub-postmasters’ recent successful claim against the Post Office, the Post Office spent nearly 250m GBP on its defence.

Myth: “The financial incentives of such practices encourage frivolous and predatory litigation, but they also shortchange genuine claimants and consumers.”

Litigation funding is provided on a non-recourse basis, i.e. if the case is unsuccessful, the funder loses their entire investment. There is no logical financial incentive for litigation funders to fund frivolous legal claims. Funders’ due-diligence checks assist the justice system by weeding out unmeritorious claims that have a poor chance of success when put before a court. The approval rate for funding opportunities is as low as 3-5%.

Myth: “The introduction of a purely profit-motivated third party, often non-EU based, into the traditional lawyer-client relationship, raises serious ethical concerns and presents an economic security threat for Europe.”

The letter presents no substantive evidence that litigation funding is being used by ‘non-EU’ entities to destabilise the European economy or legal systems. ILFA suggests that experienced judges and lawyers operating in EU legal systems are more than capable of identifying threats to the integrity of our legal systems and safeguarding against the misuse or abuse of the court system for geopolitical or other aims.

Myth: “Funders are frequently the initiators of claims and may exercise control over decisions taken on behalf of claimants, and in this context, they prioritise their own financial aims over the interests of claimants. Faced with years of litigation brought by claimants with support from well-resourced funders, expensive legal costs, and reputational risk, defendants are often forced to settle even unmeritorious claims.”

Litigation funders make passive outside investments, meaning that funders do not initiate claims or control the matters in which they invest. A recipient of legal funding, and their legal counsel, maintain full control over the conduct of the case, including strategy and ultimate decision-making.

Myth: “If Europe continues to neglect proper oversight of private TPLF we risk our courts becoming profit facilitators for litigation funders, at the expense of European companies, consumers, and the integrity of our court systems.”

The reference to European companies is a curious one. Litigation funders make no distinction between EU or ‘non-EU’ claimants, basing funding awards on factual criteria such as the legal merits of a case, budget, funding required, and any other award and risks associated with the case.

This latest call from big businesses makes clear they continue to side with corporate wrongdoers, diminishing the legitimate rights of businesses and consumers to access justice and exercise their rights before the courts.

“Misleading and inaccurate claims like these appear around the world as part of a global lobbying effort to encourage unnecessary and burdensome regulation of the legal finance sector,” said Rupert Cunningham, ILFA’s newly appointed Global Director for Growth and Membership Engagement.  “Robustly challenging these persistent myths is critical to improving understanding of the sector amongst policy makers and wider industry stakeholders. That is why it is so important that international organisations like ILFA are able to respond to these claims on behalf of the sector, wherever and whenever they appear.”

By enabling the pursuit of meritorious claims, litigation funding levels the playing field and creates an equality of means between otherwise unequal parties.

[1] https://www.europeanlawinstitute.eu/fileadmin/user_upload/p_eli/Publications/ELI_Principles_Governing_the_Third_Party_Funding_of_Litigation.pdf

The International Legal Finance Association (ILFA), the global voice of commercial legal finance, has today commented on the new position of BEUC, The European Consumer Organisation, on the use of commercial funding for collective redress as expressed in their paper ’Justice unchained – BEUC’s view on third party litigation funding’. 

The BEUC paper acknowledges several key points:

• Third-party litigation funding (TPLF) is essential to guarantee European consumers access to justice.
• There is ‘insufficient evidence’ for the repeated, unsubstantiated claims of the US Chamber of Commerce that TPLF undermines the justice system.
• There is ‘no need to add further EU rules regulating TPLF’ at this time and additional regulation of TPLF risks ‘disproportionately disadvantaging consumer organisations’ and increasing the cost of litigation for those accessing funding. 

Following the publication of the report, Neil Purslow, Chairman of the Executive Committee of ILFA, commented:

‘BEUC, the pre-eminent voice of consumer organisations in the EU, rightly recognises the vital role funders played in enabling equal access to justice for consumers in collective redress. As BEUC highlights, litigation funding not only levels the playing field for consumers, but also deters corporate wrongdoing by strengthening consumer organisations in exercising their rights.

We support the BEUC conclusion that further regulation at the EU level at this time does not make sense and that existing tools provide safeguards to ensure the system works fairly. While our critics like the US Chamber of Commerce continue to push unsubstantiated claims to constrain access to justice, BEUC has been able to see through and identify the clear benefits of litigation funding for consumers.’ 

The full paper from BEUC can be found here. 

About ILFA

The International Legal Finance Association (ILFA) represents the global commercial legal finance community, and its mission is to engage, educate and influence legislative, regulatory and judicial landscapes as the global voice of the commercial legal finance industry. It is the only global association of commercial legal finance companies and is an independent, non-profit trade association promoting the highest standards of operation and service for the commercial legal finance sector. ILFA has local chapter representation around the world. For more information, visit www.ilfa.com and like us on LinkedIn and X @ILFA_Official. 

About BEUC

BEUC is the umbrella group for 44 independent consumer organisations from 31 countries. Their main role is to represent them to the EU institutions and defend the interests of European consumers, covering areas such as competition, consumer rights, digital rights, redress and enforcement, financial services, safety, sustainability and trade policy.

The book La Financiación de Litigios en derecho español y comparado: estado del mercado y su regulación, (Thrid Party Funding in Spanish and Comparative Law) published by ARANZADI LA LEY, is being presented by Ramco Litigation Funding and ICADE University. This work provides clarity and reflection on this figure, which is undoubtedly a tool that helps to dynamise the legal sector and provides better access to justice.

This is the first collective book, with 21 leading authors, on Litigation Funding in Spain and is a guide to the status, nature and regulation of this figure in Spain and in Comparative Law. It is aimed at all professionals in the legal sector and includes, in a novel way, in a single work, the perspective of professionals from different areas of the legal sector (professors, lawyers, in-house lawyers, company lawyers, arbitrators, financiers, etc.) both nationally and internationally, on the different aspects of Litigation Funding. The book has been published in Spanish and will be published in English language at the beginning of next year.

Since the first funders entered Spain in 2017, Litigation Finance has seen exponential growth year on year, following the trend observed in other countries. Spain is the fourth country in its use in Europe, after the United Kingdom, Germany and the Netherlands, as indicated in the European Parliament report.

In recent years, the Spanish market has experienced a growing demand from companies, law firms and individuals, who see Litigation Finance as a tool to monetise their legal assets, reduce costs and manage risks.

The book was presented las Wednesday at ICADE’s headquarters with the intervention of the Dean of the Faculty of Law and author, Abel Veiga, who stated that a work of this nature was necessary for reflection and debate on this figure in Spain. Urquiola de Palacio, exchairman of the UIA and arbitrator, the book’s prologue writer, commented on the importance of the work in Spain, as well as its potential impact in other jurisdictions, and suggested that it should be translated into English in order to be sent to the European Commission in the process of research being carried out on the regulation of Litigation Funding.

The round table was moderated by Diego Agulló (professor of International Law in ICADE)  and the speakers were Antonio Muñoz Murillo, director of litigation at Iberdrola; Paulino Fajardo, partner at HSF Kramer; Ruth Rodríguez Lazcano, lawyer at the Technical Office of the Supreme Court; and Cristina Soler, CEO of Ramco Litigation Funding.

Antonio Muñoz Murillo spoke about the importance of the in-house figure in companies and the need for legal departments to adapt to business structures in order to be proactive, exploring new models that exist in the market to add value to their operations.

Paulino Fajardo insisted on the need to normalise the figure of the litigation funder as just another operator in the market and not as something extraordinary. He stated that lawyers owe it to their clients, and that it is up to their clients to decide whether or not to use these structures, while maintaining the lawyer’s total independence.

For her part, Ruth Rodriguez explained the importance of reference works to guide judges and help them to better understand the framework and the use of funders.

Cristina Soler closed the event by thanking all the authors and ICADE, highlighting how important it is for Ramco to have promoted a book of this magnitude to raise awareness of this figure, which continues to grow in Spain with a high degree of user satisfaction, as stated in the recent report published by Ramco in 2023. He insisted that funders do not generate more frivolous litigation, as they study cases in depth and their chances of success; on the contrary, they generate resources for better access to justice.

Ramco will continue to promote valuable activities that provide information and help to improve the understanding of Litigation Finance in a transparent and coherent manner.

For more information: www.ramcolf.com  

The following article was contributed by Tom Webster, Chief Commercial Officer at Sentry Funding.

A Court of Appeal ruling last week is a very positive development for the many consumers currently seeking justice after discovering they were charged commissions that they were not properly told about when they took out motor finance.

With a large number of such claims being brought in the County Courts, the Court of Appeal heard three cases jointly in order to deal with some key issues that commonly arise.

In Johnson v Firstrand Bank Ltd [2024] EWCA Civ 1282, Wrench v Firstrand Bank Ltd and Hopcraft v Close Brothers, the Court of Appeal foundin favour of all three claimants, allowing their appeals.

The cases concerned the common scenario in which a dealer asks the consumer if they want finance; and if so, the dealer gathers their financial details and takes this information to a lender or panel of lenders.

The dealer then presents the finance offer to the consumer on the basis that they have selected an offer that is competitive and suitable. If the consumer accepts it, the dealer sells the car to the lender, and the lender enters into a credit agreement with the consumer.

The consumer will be aware of the price for the car, the sum of any downpayment, the rate of interest on the loan element of the arrangement, and how much they will have to pay the lender in instalments over the period of the credit agreement. They would expect the dealer to make a profit on the sale of the car. But – at least until the Financial Conduct Authority introduced new rules with effect from 28 January 2021 – the consumer might be surprised to discover that the dealer who arranged the finance on their behalf also received a commission from the lender for introducing the business to them; which was financed by the interest charged under the credit agreement.

In this situation, the dealer is essentially fulfilling two different commercial roles – a seller of cars, and also a credit broker – in what the consumer is likely to see as a single transaction. The commission is paid in a side arrangement between lender and dealer, to which the consumer is not party. Sometimes there might be some reference to that arrangement in the body of the credit agreement, in the lender’s standard terms and conditions, or in one of the other documents presented to the consumer. But even if there is, and even if the consumer were to read the small print, it would not necessarily reveal the full details – including the amount of the commission and how it is calculated.

Turning specifically to the three cases before the Court of Appeal, in one of these, Hopcraft, there was no dispute that the commission was kept secret from the claimant. In the other two, Wrench and Johnson, the claimant did not know and was not told that a commission was to be paid. However, the lender’s standard terms and conditions referred to the fact that ‘a commission may be payable by us [ie. the lender] to the broker who introduced the transaction to us.’

In Johnson alone, the dealer / broker supplied the claimant with a document called ‘Suitability Document Proposed for Mr Marcus Johnson’, which he signed. This said, near the beginning, ‘…we may receive a commission from the product provider’.

Each of the claimants brought proceedings in the County Court against the defendant lenders seeking, among other things, the return of the commission paid to the credit brokers. All three claims failed in the County Courts, but in March this year, Birss LJ accepted their transfer up to the Court of Appeal, directing that the three appeals should be heard together – and acknowledging that a large number of such claims were coming through the County Court, and an authoritative ruling on the issues was needed.

After considering the issues in detail, the Court of Appeal allowed all three appeals. It found the dealers were also acting as credit brokers and owed a ‘disinterested duty’ to the claimants, as well as a fiduciary one. The court found a conflict of interest, and no informed consumer consent to the receipt of the commission, in all three cases. But it held that that in itself was not enough to make the lender a primary wrongdoer. For this, the commission must be secret. If there is partial disclosure that suffices to negate secrecy, the lender can only be held liable in equity as an accessory to the broker’s breach of fiduciary duty.

The appeal court found there was no disclosure in Hopcraft, and insufficient disclosure in Wrench to negate secrecy. The payment of the commission in those cases was secret, and so the lenders were liable as primary wrongdoers. In Johnson, the appeal court heldthat the lenders were liable as accessories for procuring the brokers’ breach of fiduciary duty by making the commission payment.

This ruling will prove hugely significant to the large number of similar claims currently being brought in the lower courts; and Sentry Funding is supporting many cases in which consumers were not aware of the commissions they were being charged when they bought a car on finance.

We can now expect many more such claims to start progressing through the County Courts.

The International Legal Finance Association (ILFA), the global voice of commercial legal finance, has welcomed the findings of the newly published European Law Institute (ELI) report ‘Principles governing the third-party funding of litigation’. 

The report, authored by UK High Court Judge Dame Sarah Cockerill and Professor Susanne Augenhofer, is the product of more than two years of investigative work to develop principles and guidance for the TPLF market, and represents a new, independent contribution to the legitimate and effective use of TPLF. 

Following the publication of the report, Neil Purslow, Chairman of the Executive Committee of ILFA, commented:

‘This new report, authored by seasoned legal observers, recognises that commercial legal finance increases access to justice for European businesses and consumers and provides ‘vital improvement in access to justice’ (pg.19) when made available. Contrary to the repeated claims of big business, funding helps level the playing field for those exercising their rights against multinationals with almost unlimited resources’. 

The report also cautions against imposing new regulations on the TPLF market. Instead, it advances a ‘complementary approach’ involving guidance to funders on issues to be taken into account before entering into a TPLF agreement, together with publishing a new Appendix drawing together the recommended minimum content of a funding agreement.

Purslow commented: 

‘ILFA agrees with the report’s conclusion that proscriptive one-size-fits-all regulation isn’t appropriate for a sector like ours. It risks funders ceasing to offer funding, inevitably leading to what the authors rightly identify as ‘serious access to justice issues’.’

The full report from ELI can be read online here. 

About ILFA

The International Legal Finance Association (ILFA) represents the global commercial legal finance community, and its mission is to engage, educate and influence legislative, regulatory and judicial landscapes as the global voice of the commercial legal finance industry. It is the only global association of commercial legal finance companies and is an independent, non-profit trade association promoting the highest standards of operation and service for the commercial legal finance sector. ILFA has local chapter representation around the world. For more information, visit www.ilfa.com and like us on LinkedIn and X @ILFA_Official. 

About ELI 

The European Law Institute (ELI) is an independent non-profit organisation established to initiate, conduct and facilitate research, make recommendations and provide practical guidance in the field of European legal development. The ELI secretariat is hosted by the University of Vienna, Austria.

The report team was led by Susanne Augenhofer (Professor of Law, Austria), Dame Sara Cockerill (High Court Judge, UK), and Henrik Rothe (Professor of Law, Denmark) (until July 2022). 

With federal lawmakers following in the wake of some state legislatures in introducing draft legislation to impose new regulations on litigation funding, it is perhaps no surprise that the US judiciary has now seen fit to take a more proactive approach in examining the role of third-party legal funding in the country.

An article in Reuters covers the news that the U.S. Judicial Conference’s Advisory Committee on Civil Rules agreed last week to begin a study into litigation finance, to ascertain whether a federal rule governing disclosure of third-party funding was necessary. The decision followed a panel meeting last Thursday in Washington, D.C., and notably comes shortly after over 100 companies signed a letter calling on the judiciary to introduce greater transparency measures for litigation funding. 

The chair of the Advisory Committee, U.S. District Judge Robin Rosenberg, said that the debate over third-party legal funding “is an important issue” and that it “is not going away.” Following the committee’s decision, a subcommittee will be created to study the issue but as the Reuters article highlights, this does not provide a timeline on when, or even if, a new rule governing disclosure would be introduced. U.S. District Judge John Bates, chair of the Committee on Rules of Practice and Procedure, seemed to make a distinction between the “theoretical problem” that litigation finance could pose, and the study’s purpose to uncover whether there were “actual problems”.

In response to the committee’s decision, Page Faulk, senior vice president of legal reform initiatives at the U.S. Chamber of Commerce Institute for Legal Reform, called on the judiciary “to move forward swiftly in adopting mandatory disclosure requirements.” In contrast, the International Legal Finance Association (ILFA) said that it welcomed “the opportunity to be a part of the conversation to demonstrate how legal finance is a valuable part of the legal economy and has not resulted in any of the negative outcomes that the U.S. Chamber has cut from whole cloth.”