EJF, along with 12 other co-signatories have published our joint business statement supporting the European Parliament Report on Responsible Private Funding of Litigation by MEP Axel Voss.
Third Party Litigation Funding (TPLF) allows private financiers, like investment and hedge funds, to sign confidential deals with lawyers or qualified entities to fund lawsuits and arbitration in exchange for a cut of any settlement or judgment/award. TPLF is an estimated €40 to €80 billion market globally. There are more than 100 litigation funders operating in Europe, yet TPLF is largely unregulated in the EU, unlike other financial and legal commercial activities.
In our letter, EJF, together with organisations such as Airlines for Europe (A4E), BusinessEurope, DigitalEurope, European Banking Federation, InsuranceEurope, MedTech Europe and U.S. Chamber Institute for Legal Reform, explain our concerns with this practice. Although the EU Directive on Representative Actions provided for some rudimentary rules around transparency of funders, these rules will only apply to collective actions brought under this one Directive, and not to any other type of claim or law outside the Directive’s scope, including, in particular, those brought via the claims assignment models being operated in various EU Member States.
We are therefore supportive of the European Parliament’s legislative own-initiative report on responsible private funding of litigation, which calls on the European Commission to propose sensible safeguards for effective oversight of TPLF.