Litigation Funding – Some Empirical Findings

The March 2012 issue of Anwaltsblatt, a monthly journal issued by the German Bar Association (Deutscher Anwaltverein), reports some empirical findings on the use of litigation funding in Germany. In April/May 2011, the Soldan Institut surveyed a random sample of 1,200 lawyers in private practice. The same survey also covered success fee arrangements, on which I plan to post seperately.Based on data from that survey, Matthias Kilian found that, over the two year period covered by the questionnaire, 82% of lawyers had not submitted one single matter to a litigation funder for potential funding. Of the minority who had dealt with funders, 8% had submitted one matter during the two year period, 6% had submitted two matters, and only 4% has submitted three or more. The survey further revealed that about 25% of claims submitted for evaluation did get funding. Lawyers who classified themselves as specialized hat a higher ratio of proposals to litigation funders, namely 19%, whereas only 13% of general practitioners had made such proposals.

In summary, Matthias Kilian estimates that litigation funding is still very much a niche phenomenon, with total matters funded most likely a low four-digit number per annum. To some extent this can certailly expalined by the high proportion of consumers who maintain legal cost insurance (Rechtsschutzversicherung), which reduces the need for after the event insurance and funding.

Anwaltsblatt is available online in PDF format; the article can be found in the March issue, page 244. – In the April 2012 issue of Anwaltsblatt, Corinna Budras reports about the recent changes in the German litigation funding landscape (“Finanziere David gegen Goliath – Verschiebungen im Markt der Prozessfinanzierer”, page 340) – confirming, in essence, my analysis in my earlier posts.

Update April 10, 2012: Commercial Dispute Resolution report about the German litigation funding market: “Auf Wiedersehen Allianz“.