Litigation funding—Germany—Q&A guide
Litigation funding—Germany—Q&A guide

The following Dispute Resolution practice note provides comprehensive and up to date legal information covering:

  • Litigation funding—Germany—Q&A guide
  • 1. Is third-party litigation funding permitted? Is it commonly used?
  • 2. Are there limits on the fees and interest funders can charge?
  • 3. Are there any specific legislative or regulatory provisions applicable to third-party litigation funding?
  • 4. Do specific professional or ethical rules apply to lawyers advising clients in relation to third-party litigation funding?
  • 5. Do any public bodies have any particular interest in or oversight over third-party litigation funding?
  • 6. May third-party funders insist on their choice of counsel?
  • 7. May funders attend or participate in hearings and settlement proceedings?
  • 8. Do funders have veto rights in respect of settlements?
  • 9. In what circumstances may a funder terminate funding?
  • More...

This Practice Note contains a jurisdiction-specific Q&A guide to litigation funding in Germany published as part of the Lexology Getting the Deal Through series by Law Business Research (published: October 2020).

Authors: Omni Bridgeway—Arndt Eversberg

1. Is third-party litigation funding permitted? Is it commonly used?

Third-party funding was launched in Germany in 1999. As is customary with new ideas, there were a few who took a critical standpoint, but the overwhelming majority of the legal community welcomed the idea. Litigation funding closed the gap between credit facilities provided by banks, which are typically not granted without securities being provided by the claimant, and the prohibition of lawyers providing legal services whose remuneration is based solely on a successful outcome of the case. Commercial litigation funders do not—and are not allowed to—provide legal services. Therefore, statutory limitations on providing funding in return for a share of the proceeds do not apply in their case. Since 2010, conditional fee agreements may be concluded, pursuant to section 4a of the German Law on the Remuneration of Attorneys (RVG), but only in limited cases.

Third-party funding has, in fact, never been legally challenged; today, it is widely known and accepted. A small number of court decisions have also confirmed its legal structure as a partnership organised under the laws of the German Civil Code between claimant and funder. The courts’ attitude ranges

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