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New report warns: Restrictions on legal finance would leave EU businesses and consumers more vulnerable

New report warns: Restrictions on legal finance would leave EU businesses and consumers more vulnerable

European businesses and consumers could be left without access to a vital financing tool providing access to justice, experts warn today.

A report by the International Legal Finance Association (”ILFA”), which analyses proposed regulation on legal finance recently endorsed by the European Parliament, warns that if implemented, this could create a legal environment in Europe that would prevent many meritorious cases from being pursued.

This would be to the detriment of businesses — including startups and SMEs — and consumers alike, and it would only grant a licence for wrongdoers to continue to harm EU citizens and smaller, less well-resourced SMEs.

Legal finance provides the necessary resources in what are often lengthy and expensive legal endeavours, which empowers consumers and businesses, large and small, to seek the remedy they are due. Many funded matters are “David vs. Goliath” in nature, in which a smaller company is engaged in litigation against a larger well-resourced adversary. For EU citizens, it has helped bring cases in Europe on behalf of individuals and collective rights’ claims against a number of corporate entities.

However, in October 2022, an own-initiative report from Member of the European Parliament (MEP)  Axel Voss made recommendations which would significantly undermine the availability of legal finance within the EU.

The proposal put forward by Axel Voss MEP would make it more difficult for small and medium-sized enterprises (SMEs) to mitigate risk and keep capital in their business, and for consumers to have the necessary resources to seek redress and defend their rights. It includes the introduction of a fee cap for funders and a controversial forced disclosure provision for claimants, all of which would drastically reduce the economic viability of legal finance.

Now, experts in legal finance, collective redress, and consumer rights speak out about the dangers of the EU turning Voss’ recommendations into law. ILFA challenges the assumptions in the Voss proposals, as follows:

  • Lawmakers across EU member states are already struggling to implement the Representative Actions Directive (RAD) – aimed at strengthening the collective interests of consumers and ensuring a right to redress via representative actions. Limiting legal finance risks undermining the positive steps being made to create a collective redress regime that works for consumers.

  • Legislating the recommendations of the Voss Report would embolden large companies to engage in intellectual property (IP) theft from Europe’s SMEs. Without legal finance, Europe’s SMEs cannot defend themselves against malfeasance by multinational corporations or well-resourced Chinese companies.

  • Legal finance could be a vital component in the future battles on data, artificial intelligence, and new technologies involving analysis of complex issues and new legal concepts which will require resourcing to ensure that the EU’s “Brussels Effect” is realised. There are currently few, if any, resources available to fund meritorious litigation with scant evidence in the Voss Report that public funding or bank loans could assist.

  • Legal finance is an emerging market in Europe. The steady growth of legal finance in Europe is not only beneficial to European companies and consumers, but to the European economy.  Sophisticated and well-established investors, including pension funds and institutional investors, are continuing to see investments in legal finance as a worthy addition to their portfolios, driving important investment into the European economy during turbulent times.

Gary Barnett, Executive Director of ILFA, says: “Legal finance empowers businesses, large and small, to mitigate risk and maintain sufficient capital so they can grow and innovate. Without access to this financing, many meritorious claims, including those brought by small and medium-sized enterprises (SMEs) and consumers, would not go forward. Legal finance providers are experts in finding the most meritorious, and often important, cases that the courts need to hear and are willing to invest the time and money into issues that serve the public good.  The EU should be finding ways to increase access to this vital resource that benefits the EU legal system and its citizens.”

Prof. Dr. Ianika Tzankova, First European Chair of Mass Claim Dispute Resolution, partner at Birkway, says: “One of the big advantages of the Representative Actions Directive in my view, is that it explicitly recognises the importance of the principle of equality of arms, meaning a fair balance in the opportunities given to both parties. Legal finance takes seriously the idea that financial equality of arms is required for effective collective redress and consumer protection. In fact, without the availability of that funding source I doubt there would be any meaningful collective redress in the EU right now.”

Thomas Kohlmeier, Co-founder and co-CEO of Nivalion AG, a provider of Legal Finance Solutions in Europe, says: “The Rule of Law in Europe needs the support of funders who understand the law and are willing to share in the risk and invest in meritorious cases. The question that has not been answered to date is what happens to all those important cases that will go unheard in the courts if the special interests get their way? It seems almost cynical to restrict access to justice on the basis of unproven allegations and misunderstanding of key economic principles.”

The report is released as the deadline for European Member States to implement the Representative Actions Directive has passed on 25 June. The EU Commission will begin enforcement action against a number of member states given their failure to transpose the RAD after a two-year hiatus meaning important cases against corporate malfeasance could be jeopardised.

ILFA recommends that any further EU legislation should await the full implementation of RAD and comprehensive consultation with key stakeholders, such as consumer rights groups and SMEs Executive Agency, and ensure that any regulatory proposals are based on facts, data, and real-world experience.

Consumer rights experts are concerned that further legal finance regulation will affect the realisation of the Representative Actions Directive (‘RAD’), Europe’s first class action law.

The full report from ILFA, Resourcing the Rule of Law, is available here.

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Padronus Finances Collective Action Against Meta Over Illegal Surveillance

By John Freund |

Austrian litigation funder Padronus is financing the largest collective action ever filed in the German-speaking world. The case targets Meta’s illegal surveillance practices.

Together with the Austrian Consumer Protection Association (VSV) as claimant, the German law firm Baumeister & Kollegen, and the Austrian law firm Salburg Rechtsanwälte, Padronus has filed collective actions in both Germany and Austria against Meta Platforms Ireland Ltd. The lawsuits challenge Meta’s extensive surveillance of the public, which, according to Padronus and VSV, violates European data protection law.

“Meta knows far more about us than we imagine – from our shopping habits and searches for medication to personal struggles. This is made possible by so-called business tools that are deployed across the internet. The U.S. corporation is present on third-party sites even when we are logged out of its platforms or when our browser settings promise privacy. This breaches the GDPR,” explains Richard Eibl, Managing Director of Padronus.

Meta generates revenue by allowing companies to place paid advertisements on Instagram and Facebook. Which ad is shown to which user depends on the user’s interests, identified by Meta’s algorithm based on platform activity and social connections. In addition, Meta has developed tools such as the “Meta Pixel,” embedded on countless third-party websites, including those dealing with sensitive personal matters. The “Conversions API” is integrated directly on web servers, meaning data collection no longer occurs on the user’s device and cannot be detected or disabled, even by technically savvy users. It bypasses cookie restrictions, incognito mode, or VPN usage.

Millions of businesses worldwide use these tools to target consumers and analyze ad effectiveness. “Use of these technologies is now omnipresent and an integral part of daily internet usage. Every user becomes uniquely identifiable to Meta at all times as soon as they browse third-party sites, even if not logged into Facebook or Instagram. Meta learns which pages and subpages are visited, what is clicked, searched, and purchased,” says Eibl. He adds: “This surveillance has gone further than George Orwell anticipated in 1984 – at least his protagonist was aware of the extent of his surveillance.”

While Meta users can configure settings on Instagram and Facebook to prevent the collected data from being used for the delivery of personalized advertising, the data itself is nevertheless already transmitted to Meta from third-party websites prior to obtaining consent to cookies. Meta then, without exception, transfers the data worldwide to third countries, in particular to the United States, where it evaluates the data to an unknown extent and passes it on to third parties such as service providers, external researchers, and authorities.

Numerous German district courts (including Berlin, Hamburg, Munich, Cologne, Düsseldorf, Stuttgart, Leipzig) and more than 70 other courts have already confirmed Meta’s illegal surveillance in over 700 ongoing individual lawsuits. These first-instance rulings, achieved by lawyers Baumeister & Kollegen, are not yet final. Eibl notes: “The courts have awarded plaintiffs immaterial damages of up to €5,000. If only one in ten of the up to 50 million affected individuals in Germany joins the collective action, the dispute value rises to €25 billion. This is the largest lawsuit ever filed in the German-speaking world.”

Meta’s lack of seriousness about user privacy is well-documented. In 2023, Ireland’s data protection authority fined Meta €1.2 billion for illegal U.S. data transfers. In 2021, Luxembourg imposed a €746 million fine for misuse of user data for advertising. In 2024, Ireland again fined Meta €251 million for a major security breach. In July 2025, a U.S. lawsuit was launched against several Meta executives, demanding $8 billion in damages for systematic violations of an FTC privacy order. Richard Eibl notes: “This case goes to the heart of Meta’s business model. If we succeed, Meta will have to stop this unlawful spying in our countries.”

The new collective action mechanism for qualified entities such as VSV is a novel legal instrument. If successful, the unlawful practice must be ceased, and compensation paid to consumers who have joined the case.

The lawsuit is expected to trigger political tensions with the current protectionist U.S. administration. Only last week, the U.S. President again threatened the EU with new tariffs after the Commission imposed a €2.95 billion fine on Google. “We expect the U.S. government will also try to exert pressure in our case to shield Meta. But European data protection law is not negotiable, and we are certain we will not bow to such pressure,” says Julius Richter, also Managing Director of Padronus.

Consumers in Austria and Germany can now register at meta-klage.de and meta-klage.at to join the collective action without any cost risk. Padronus covers all litigation expenses; only in the event of success will a commission be deducted from the recovered amount.

Kerberos Named Finalist for 2025 CIO Industry Innovation Awards in Private Credit

By John Freund |

Kerberos Capital Management has been named one of only four finalists nationwide for Chief Investment Officer (CIO) magazine’s 2025 Industry Innovation Awards in the Private Credit category.

Each year, CIO magazine honors organizations that demonstrate “truly exceptional approaches to the challenges of institutional asset ownership and asset management.” This recognition highlights Kerberos’ leadership in private credit and its innovative strategies that continue to set new standards in the institutional investing market.

“We are proud to be recognized among the top firms in the country for our work in private credit,” said Joe Siprut, CEO & CIO of Kerberos Capital Management. “This acknowledgment underscores our team’s commitment to innovation, disciplined risk management, and delivering differentiated value to our investors.”

Kerberos’ inclusion as a finalist reinforces its growing national reputation as a forward-thinking investment manager that thrives on tackling complex challenges, seeking to generate alpha from complexity but not from increased risk.

About Kerberos Capital Management

Kerberos Capital Management is an SEC-registered investment adviser and alternative investment manager, providing creative solutions for those seeking capital in special situations. Kerberos’ flagship private credit strategy emphasizes legal assets and other complex collateral. Kerberos manages both a pooled vehicle and separate accounts for institutional and high net worth investors worldwide.

New North Litigation Capital Launches, Backed by £50 Million in Senior Secured Financing from Pollen Street Capital

By John Freund |

Pollen Street Capital ("Pollen Street") today announces a new senior secured credit facility of up to £50 million to New North Litigation Capital (“New North”). New North is a commercial litigation finance company and a direct subsidiary of Capital Law, a Cardiff based law firm founded in 2006.

Capital Law has a strong track record in commercial litigation, having closed over 400 claimant cases since 2001 with a 95% win rate. Drawing on its senior leadership and experienced disputes team, Capital Law launched New North to address the underserved small to mid-market segment of commercial litigation market. 

New North will be the only litigation financier in the UK owned and operated by practicing lawyers, bringing their day to day lived experience of handling mid-market litigation into pricing the risk and the funding investment decisions.

Christopher Nott, Founder and CEO of New North commented: “We are pleased to work with Pollen Street on this financing to launch New North Litigation Capital. The funding supports us to bridge a critical gap by funding claims that are often deemed too small by other players in the market. We are excited to work with the Pollen Street team as we create this new kind of litigation funding.”

Connor Marshall-Mckie, Investment Director at Pollen Street, commented:New North addresses an important gap in the litigation funding space, focusing on smaller mid-market commercial litigation. With the significant opportunity available and the deep experience of the leadership team from Capital Law we are excited to partner with the team to support their growth.”

About Pollen Street

Pollen Street is a fast-growing and high-performing private capital asset manager. Established in 2013, the firm has built deep capability across the real estate, financial and business services sectors aligned with mega-trends shaping the future of the industry. Pollen Street manages over €7bn AUM across private equity and credit strategies on behalf of investors including leading public and corporate pension funds, insurance companies, sovereign wealth funds, endowments and foundations, asset managers, banks, and family offices from around the world. Pollen Street has a team of over 95 professionals.