Consumers Want Safeguards That Put Them First, Not Funders
BRUSSELS, BELGIUM – The vast majority of European Union consumers want safeguards if third party litigation funding is allowed, according to a new five-EU member state survey conducted by WorldThinks and released today by the U.S. Chamber Institute for Legal Reform.
Third party litigation funding (TPLF) is a multibillion-euro global industry that allows hedge funds and other financiers to invest in lawsuits in exchange for a cut of any settlement or award. The survey comes as the European Parliament considers enacting a series of safeguards for the funding industry, which operates with very little to no government oversight.
The poll shows strong support for every safeguard surveyed, with the significant exception of funders being allowed to self-regulate. The top supported safeguards include:
- Funders should have a fiduciary duty to put the best interests of claimants over their own investment interests: 79 percent.
- Funders should be legally required to see a case through until the end, without the ability to withdraw their funding before the case is concluded: 78 percent.
- Funding agreements should be subject to an independent review to ensure they are not written unfairly in favor of the funders: 78 percent.
- Funders should be accountable to pay costs that arise during a legal proceeding or lawsuit if their side loses: 77 percent.
- Funders should have limitations placed on them regarding the fees they are able to charge if the party they’re funding wins or settles the case: 77 percent.
Only one in three consumers surveyed believe funders should be allowed to self-regulate by adopting codes of conduct.
“EU consumers said loud and clear allowing funders to self-regulate isn’t enough to protect their lawsuit system from abuse. Rather, they want the government to enact strong protections that put consumers’ interests first, not the funders,” said Scévole de Cazotte, senior vice president of international initiatives for the U.S. Chamber of Commerce’s Institute for Legal Reform. “The European Parliament has the chance to be a leader in the effort to bring transparency and oversight to the secretive third party litigation funding industry.”
The online survey of 5,021 EU consumers in France, Germany, Netherlands, Poland and Spain was conducted between June 24, 2021, and July 2, 2021.