In this series we undertake interviews with global professionals to discuss different aspects of litigation and litigation funding.
Deminor Litigation Funding welcomes you to join this conversation as we summarise the key elements of the conversations between the Deminor team and these experts, as captured in the podcast transcripts below.
Interview Preface
In this interview, Xandra Kramer (XK), professor of Private Law at the Erasmus University Rotterdam, sits down to speak with Deminor Counsel Scandinavia Mats Geijer (MG) and General Counsel Germany Dr. Malte Stübinger (MS).
Professor Kramer explores the EU Mapping Study on Third-Party Litigation Funding, a crucial initiative aimed at understanding the legal landscape and regulatory considerations across Europe. As third-party litigation funding gains traction, the study provides insights into its role in access to justice, emerging trends, and potential legislative developments. Join us as we discuss the findings, challenges, and what the future may hold for this evolving industry.
Interview Transcript
MG - The topic of the day is the EU Mapping Study on Third-Party Litigation Funding. We have a fantastic guest speaker today: Professor Xandra Kramer. She is a professor of Private Law at the Erasmus School of Law and also of Private International Law at Utrecht University.
XK - Thank you very much for your kind introduction, Mats, and, of course, for inviting me to this podcast. My main occupation is as a professor in the area of Private International Law and Civil Justice.
A few years ago, I also became more interested in collective actions in particular, and, of course, in developments in third-party litigation funding.
MG - Thank you. On the podcast, we also have Deminor’s own General Counsel for Germany, Dr. Malte Stübinger. Welcome!
MS - Good morning, Mats. Happy to be here.
MG - Let’s jump into the hot topic. Xandra, can you provide a brief overview, from your point of view, of the objectives of the study itself that is being conducted?
XK - This study started early this year and is focused on Mapping Third-Party Litigation Funding in the European Union. Its aim is to provide an overview of the legal framework and the practical operation of third-party litigation funding across all EU member states, as well as a few selected third countries, such as the United Kingdom.
National reporters in these countries have prepared detailed reports on international developments in third-party litigation funding, examining the relevant legal frameworks, case law, and legal practices. Interestingly, for each country, five interviews with practitioners or experts were conducted to gain deeper insights into what’s happening on the ground. This has been complemented by an EU stakeholder survey, which was widely distributed among stakeholders across the EU.
The background to this study lies in the events of 2022. Following the so-called Voss Report, the European Parliament adopted a resolution on responsible private funding of litigation, calling on the European Commission to propose a directive for further regulation of third-party litigation funding. In response, the Commission deemed it necessary to conduct this mapping study.
MG - Malte, from the German point of view, I know you’ve been keeping an eye on this topic as well. Would you like to elaborate?
MS - Yes, I would say that from our perspective as practitioners in the industry, it was extremely positive to see that the Commission is conducting this study rather than rushing to take action immediately after the European Parliament's resolution.
We participated as respondents in the study and noticed that the questions posed were very thoughtful. They indicate that the Commission genuinely wants to understand the industry—what we do and how we operate—before moving toward regulation.
I think this sends a generally positive signal within the industry, as it shows that the Commission aims to take a data- and information-based approach in deciding whether and how to implement regulation for the sector.
MG - Thank you, Malte. Those are two interesting points of view. While we probably won’t get a definitive answer, it’s worth discussing them.
Here’s an open question for both of you—and for all of us: Does anyone have an idea of the current status or the timeline of this particular study?
XK - Yes, I’m not entirely sure of the exact status at this moment, but I am involved as an external expert on this project. I’ve provided input to the study since its inception and helped assess some interim results.
In October, the interim results were presented by BIICL and Civic Consulting to the European Commission, and I participated in that meeting. Based on the current timeline, we expect the final report to be available early 2025.
MG - Fantastic. The follow-up question—although equally difficult to answer—is when might we expect any draft regulation or implementation to come? Of course, this is more of an open-ended thought, but I would assume it could take a year, maybe two years, or perhaps even longer.
XK - Yes, it’s indeed challenging to predict how the Commission will proceed. As you mentioned—and as Malte also highlighted earlier—it’s very positive that the European Commission has undertaken this mapping study. It allows them to assess the current landscape, identify any potential issues or concerning trends, and determine whether further regulation is necessary.
What we see is that third-party litigation funding (TPLF) varies significantly across member states. In some, TPLF is barely present and struggles to gain traction, while in others, it has developed quite rapidly. This disparity makes it even more crucial for the Commission to gauge whether regulation is truly needed.
Opinions on legislative intervention vary widely among stakeholders. While there seems to be some consensus that regulation could be beneficial, views differ on what should be regulated and how. For example, funders and consumer organizations are typically not in favour of strict regulation at this stage. BEUC (The European Consumer Organisation) for instance, emphasized in a recent report that TPLF is essential for ensuring access to justice, particularly in collective actions. On the other hand, businesses often advocate for stricter regulation.
This creates a situation where both perspectives are valid—it’s two sides of the same coin. Ultimately, it’s up to the legislator to determine if and how adjustments are necessary. Regarding the timeline, it’s reasonable to assume that the Commission will take several months, or even half a year, to analyse the study and consider its next steps, depending on other priorities.
Additionally, any regulatory actions will likely align with the development of the Representative Actions Directive. It’s evident that if consumer collective actions are to become more viable, TPLF will play a crucial role in ensuring access to justice, especially given the high costs associated with such cases.
MG - It seems I’ve pre-emptively addressed the next question, which was about the future issues the Commission might have to tackle based on the findings. Indeed, this is a broad and complex topic, especially given the significant variation across markets. Some countries already have a degree of regulation in place, while others rely on self-regulation through industry associations and tend to be more mature.
The Commission faces the daunting task of striking a balance and determining whether a "one-size-fits-all" approach is even feasible—or desirable—given these disparities. This challenge makes the situation very interesting to watch, as it will require a nuanced approach that accounts for the unique circumstances of each member state while still fostering consistency across the EU.
MS - I completely agree. When considering whether and how to regulate third-party litigation funding, it’s crucial not to analyse this issue in isolation. Instead, it’s important to examine the broader regulatory context, particularly at the European level. For example, in the B2C business sphere, there’s already a substantial body of regulation governing consumer contracts—covering areas such as permissible terms and conditions, requirements for informing customers, and more. These frameworks are already well-established and apply across all member states.
Many of the issues currently being discussed are, at least to some degree, addressed by these existing legal instruments.
On top of this, there’s another layer to consider: the legislation and potential case law already present at the member-state level. Together, this creates what can be seen as a "three-dimensional system" in which the Commission must operate, carefully determining whether and how to introduce a new body of law.
It’s essential to consider the interconnections between any proposed regulation and the existing frameworks, even if those frameworks don’t directly address third-party litigation funding. Overlaps and interactions with current laws will play a significant role in shaping any new regulation, ensuring it complements rather than conflicts with the broader legal landscape.
XK - I completely agree with that. We already have certain rules in the Representative Actions Directive that address key concerns like ensuring transparency and avoiding conflicts of interest. These are critical issues often raised in critiques of third-party litigation funding.
Additionally, there’s a significant amount of self-regulation in this area. For example, the European Litigation Funding Association (ELFA) plays a pivotal role in setting industry standards and promoting best practices.
Another important development worth highlighting is the work of the European Law Institute (ELI). Over the past two years, ELI has been working on principles for third-party litigation funding. These principles were officially adopted in October of this year.
In my view, the ELI principles address several important issues and offer a balanced approach to third-party litigation funding. They could serve as a valuable tool for regulators, providing guidance and clarity, and they may also be beneficial for legal practice in navigating this evolving field.
MG - Thank you both. I hope this discussion has provided the listeners with a clear helicopter view of the mapping study—its current status, its purpose, and why the Commission is conducting it. We’ve also touched on potential pitfalls and areas for future development.
To round off our discussion, perhaps we could each share a perspective from our respective countries. Since we have myself representing Sweden, Xandra from the Netherlands, and Malte from Germany, it would be interesting to hear your views on how third-party litigation funding is perceived and developing in your jurisdictions.
XK - In the Netherlands, third-party litigation funding (TPLF) has become a growing industry in recent years. While it has always been present—particularly in areas like arbitration and international commercial litigation—the most significant growth and discussions have focused on collective actions.
In 2020, the Netherlands expanded its regulations on collective actions, introducing a compensation element. A recent study commissioned by the Dutch Ministry of Justice found that in all compensation cases under these new regulations, TPLF has been utilized. This leads to two observations.
First of all, it’s a positive development that funding is available for these collective actions involving compensation, as they are inherently very expensive to pursue. However, on the other hand, as highlighted in the study we conducted for the Dutch Ministry of Justice, there appears to be no alternative sources of funding available for these types of collective actions. This lack of diversity in funding options could represent a shortcoming in the market. What we are now seeing is the emergence of initial case law that actively reviews third-party litigation funding agreements.
A key part of the admissibility requirements for collective actions in the Netherlands is ensuring that proper funding is in place, conflicts of interest are avoided, and there is sufficient transparency. Recently, in several cases, Dutch courts have gone further by actively reviewing specific clauses within third-party litigation funding agreements. This has introduced a degree of disclosure and oversight, with courts sometimes suggesting that certain clauses should be revised or amended. These recommendations have been implemented at later stages of the procedures, providing a robust mechanism for maintaining control over third-party litigation funding agreements.
This judicial engagement offers a valuable layer of oversight, ensuring fairness and accountability in TPLF arrangements. From the Dutch perspective, it could be argued that additional regulation is not necessary at this stage. Over-regulation might stifle the TPLF market, particularly for collective actions, which depend on such funding to function effectively.
For the system to work, it’s crucial to maintain the current framework, which already includes necessary checks and controls on transparency, conflict of interest, and proper funding. Given the existing legislation and the active role played by the courts in enforcing these principles, the Netherlands appears to have an effective balance in place.
MG - In Germany, the situation with third-party litigation funding (TPLF) has been quite unique. Until relatively recently, there wasn’t a single piece of legislation explicitly addressing the existence of TPLF, even though it has been a part of the legal system for over 20 years. It was simply not acknowledged in the law.
This changed a few years ago with a reform of the Legal Services Act, which governs auxiliary legal services not provided by attorneys but by other legal service providers, such as legal tech companies and those handling cases like Inkasso (debt collection). For the first time, the lawmaker officially recognized the existence of the TPLF industry. It also clarified that the mere involvement of a funder does not automatically create a conflict of interest in a claim. This clarification was a positive signal to the industry, as it resolved an issue that had been contentious in certain court proceedings, especially in collective actions.
Then, last year, Germany addressed TPLF in the context of implementing the Collective Redress Directive, as required by the European Union. The outcome of this implementation was met with widespread dissatisfaction within the TPLF industry. In the final stages of deliberation before the law was enacted, Germany decided to cap the funder’s share of proceeds from a collective action at 10%, an exceptionally low threshold. This level is often not economically viable for funders, especially given the high risks and costs associated with such cases. Additionally, further bureaucratic hurdles were introduced, making it extremely unattractive for funders to support collective claims.
As a result, parties seeking collective redress in a third-party funded framework essentially cannot use the mechanism. Instead, they are left with alternative approaches, such as self-designed collective models through assignment structures, or they must resort to the mass individual claims system. The latter involves filing individual claims for each plaintiff, which is highly inefficient for the legal system but remains the only practical option for certain types of cases under the current framework.
Germany's legal stance on TPLF remains limited. While there has been some favourable case law confirming the legality of third-party funding, there is still no comprehensive legal framework addressing the industry. This leaves stakeholders—including large German industrial companies, law firms, consumer protection organizations, and the funding industry itself—engaged in an ongoing policy debate. Each group is actively lobbying to have their perspectives considered.
From the perspective of a third-party funder, there is no apparent need for additional regulation in many areas where TPLF operates. General contract law, combined with existing European consumer protection legislation, already provides sufficient safeguards. In B2B scenarios, where clients are typically large corporations, TPLF serves as a strategic tool to manage litigation risks. These companies willingly engage in arm’s-length transactions with funders, exchanging a share of the proceeds for risk mitigation.
Such agreements are professionally advised and negotiated on both sides, with no structural asymmetry to justify additional regulation. The TPLF industry is relatively small, functions efficiently, and does not exhibit market failures. From this perspective, further regulation would be unnecessary and potentially disruptive.
MG - Thank you both. From the Swedish perspective, the situation with third-party litigation funding (TPLF) remains unregulated. Based on what we hear at the legislative level, it seems the approach is to wait for the European Commission’s direction. Thus, it is likely to stay unregulated for the foreseeable future.
On a practical level, TPLF is accepted by the courts, and there is a degree of self-regulation. Industry players tend to follow the Code of Conduct established through industry associations. However, there is a clear desire among practicing lawyers and the Swedish Bar Association for more clarity. This likely stems from Sweden’s exceptionally high ethical standards for legal practice—among the highest in the world. While lawyers are well-equipped to handle TPLF relationships, given their contractual ties are with the client rather than the funder, a formal framework could help establish practical clarity and reinforce transparency in dealings.
Transparency is already a strong cultural aspect of Sweden’s legal environment, partly due to the country’s robust arbitration culture, influenced heavily by the Stockholm Chamber of Commerce. This institution has been a prominent arbitration hub for over a century and has shaped practitioners’ approach to transparency and professionalism, which has also extended into the court system.
What differentiates Sweden from the Netherlands and, to some extent, Germany, is the lack of a significant tradition of collective actions. While there have been some smaller group or class actions, none of these have been third-party funded, and none have reached the Supreme Court. This means Sweden has limited case law or precedent to draw upon in this area.
XK - I think you’re absolutely right—we’ll have to wait and see what the study reveals and what the European Commission decides to propose. These are certainly interesting times, and it will be crucial to strike a balance that allows third-party litigation funding to continue being a valuable tool, potentially with some degree of regulation.
That said, much of the framework will inevitably need to develop through practice, as stakeholders adapt to real-world scenarios. It will be fascinating to see where these developments lead and how the industry evolves in response.
Podcast Speakers and Further Information:
Thanks for joining Deminor's Litigation Funding Podcast Series as we dive deep into core topics in funding litigation.
Keep a lookout for our upcoming conversations as the Deminor team speaks with several more experts to get their insights into different aspects of litigation funding.
If you would like to connect with either Xandra, Mats or Malte on LinkedIn, please click on the links below:
Xandra Kramer, Professor of Private Law at Erasmus University Rotterdam – https://www.linkedin.com/in/xandra-kramer-9434187/
Mats Geijer, Counsel Scandinavia at Deminor – https://www.linkedin.com/in/mats-geijer-b94859/
Dr. Malte Stübinger, General Counsel at Deminor – https://www.linkedin.com/in/dr-malte-stuebinger/
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Further Reading:
- https://www.deminor.com/en/case-studies/co-funder-proposes-sharing-of-litigation-funding-risk-to-leverage-deminors-in-house-due-diligence-capability
- https://www.deminor.com/en/case-studies/financing-assertion-of-patents-protecting-manufacturing-processes
- https://www.deminor.com/en/case-studies/telecoms-patent-assertion-multi-jurisdictional-campaigns
- https://www.deminor.com/en/case-studies/canadian-innovative-start-up-preparing-for-a-david-v-goliath-litigation-funding-battle
- https://www.deminor.com/en/case-studies/whats-the-risk-assessing-the-risk-of-counter-assertion-by-the-defendant-in-patent-litigation
- https://www.deminor.com/en/case-studies/overstepping-the-mark-litigation-funding-trade-mark-infringement
- https://www.deminor.com/en/case-studies/lights-camera-action-recovering-damages-for-infringement-of-rights-in-a-short-film
- https://www.deminor.com/en/case-studies/recovering-damages-for-stolen-software-through-litigation-funding
- https://www.deminor.com/en/case-studies/funding-in-the-pharma-sector-/-investing-in-a-case-where-litigation-is-already-ongoing
