Litigation funding

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The litigation financing (also: legal financing ) is a legal financial services . The litigation financier assumes the necessary costs of extrajudicial or judicial prosecution of private or commercial claims.

Germany

Litigation financing was offered professionally by Foris AG for the first time in Germany in 1998 and is now operated by various companies . Various large insurance companies in Germany originally offered litigation financing services, for example ALLIANZ, ERGO and ROLAND legal protection insurance. A large part of the insurance companies have given up on this business in recent years. Omni Bridgeway took over the Roland subsidiary Roland ProzessFinanz in November 2019.

As a rule, a minimum amount in dispute is required. For the larger and better-known companies, this is at least 50,000 euros. In return, if the company is successful, it receives part of the proceeds ( participation rate ). The amount of the participation rate depends on the litigation financier, the extent of the risk assumed and the amount achieved. The quota can also be staggered. It amounts to 10% or more of the amount actually achieved. If the dispute ultimately does not lead to a positive result, the litigation financier bears the costs of the proceedings, ie

An application for litigation cost financing must be submitted to the litigation financier. The financier receives all documents related to the procedure from the applicant and subjects them to an intensive legal review. Some financiers use internal lawyers, others external lawyers, in order to be able to take local legal practice into account. Only if these assessments are positive, ie if there are corresponding prospects of success, the case is accepted.

This gives the claimant the chance to file a legitimate claim without risking costs. He also saves his own liquidity , which is also attractive for many companies. In addition, companies are no longer required to report provisions for legal disputes in the balance sheet. The lawyer commissioned by the claimant is given the opportunity to conduct proceedings, the financing of which is guaranteed until the end of the instance . He also receives expert support by inspecting the opinion of the auditor.

Litigation financing has developed into an established risk management institute in the legal market since 1998 . From a certain amount in dispute (this varies from € 10,000 to € 500,000 for the providers), all procedures are financed that promise success and demand a monetary benefit in which the litigation financier can participate. Mostly these are claims for cash benefits ( damages , claims from an inheritance, contractual claims, etc.).

In addition, litigation finance companies have now been installed that combine a large number of small claims on the same topic and then enforce them for their clients. This form of litigation financing is already known from the American legal tradition, where the claims of many injured parties are repeatedly combined into class actions .

Litigation financing companies were also installed, which make litigation financing possible through software solutions and standardization in the micro area. Coduka GmbH is a pioneer here with its Geblitzt.de project. This is supported by the legal scholar Hans-Peter Schwintowski .

Switzerland

In 2004, the Swiss Federal Supreme Court declared the ban on litigation funding in the Canton of Zurich to be unconstitutional. Following this fundamental decision, some litigation financiers already active in Germany set up branches in Switzerland and began to finance proceedings before Swiss civil courts. After this first short boom, there was a consolidation of the providers.

With the introduction of the uniform Swiss Code of Civil Procedure (ZPO) at the beginning of 2011 and the obligation to make advance payments on court costs for the plaintiff, the demand from plaintiffs for a possibility of having the legal costs financed and at the same time shifting the risk of legal costs to a third party increased significantly . Since then, litigation financing has also established itself in Switzerland, and local providers now exist.

In the context of its report of July 3, 2013 on collective redress in Switzerland, the Swiss Federal Council stated that litigation funding was a fundamentally suitable but not yet widely used instrument for improving collective redress. In order to promote litigation financing in this context, the Federal Council proposes, among other things, that the competent courts be required to inform the litigants about the possibility of external financing. According to the will of the Swiss government, however, the ban on agreeing purely contingency fees for lawyers should remain in place.

Austria

Litigation financing has also been offered in Austria since 2001, the first company being Advofin Prozessfinanzierung AG . In the following years, more insurance-related companies came onto the Austrian market, such as B. Allianz litigation financing (withdrawn in the meantime), DAS Rechtsschutz -versicherungs-AG and Roland Rechtsschutz-Versicherungs-AG (sold their subsidiary to Omni Bridgeway in 2019). The increased occurrence of capital market damage in the wake of the financial crisis from 2007 onwards also led to the establishment of class actions or collective proceedings in Austria , in which similar claims are bundled and handled by a litigation financer. The largest collection proceedings in the area of ​​capital market damage were the Immofinanz scandal and the Meinl European Land (now Atrium) scandal. The litigation funders represented more than 15,000 victims in both collective proceedings.

Since 2013, specialized litigation financiers have been established in Austria with a focus on certain topics, such as enforcement of flight delay rights or compliance with the statutory benchmark interest rates for old Viennese buildings.

United States

Litigation funding has existed in the US since 1997. The litigation funders are organized in the American Legal Finance Association.

literature

  • Lothar Müller-Güldemeister, Christian Rollmann: Foris AG's litigation financing is not an insurance. In: NJW . 1999, p. 3540.
  • Alexander Bruns : The ban on quota litis and the success-paid litigation financing. In: JZ . 2000, p. 232.
  • Nina Dethloff: Contracts for litigation financing against profit sharing. In: NJW. 2000, p. 2225 ff.
  • Barbara Grunewald : Litigation financing contract with commercial litigation financier - a partnership agreement. In: BB . 2000, p. 729 ff.
  • Barbara Grunewald: Legal protection insurance and alternative litigation financing. In: AnwBl . 2001, p. 540 ff.
  • Fabian Frechen, Martin L. Kochheim: External financing of processes against profit-sharing. In: NJW. 2004, p. 1213 ff.
  • Dagobert Nitzsche: Selected legal and practical problems of commercial litigation cost financing with special consideration of insolvency law. Dissertation. Munich 2002, ISBN 3-8316-0236-0 .
  • Norbert Maubach: Commercial litigation financing against profit-sharing. Dissertation. Bonn 2002, ISBN 3-8240-5211-3 .
  • Stephan Rochon: Success-oriented litigation financing and its effects on lawyers. Dissertation. Rostock 2003, ISBN 3-86009-249-9 .
  • Martin L. Kochheim: The commercial litigation financing. Dissertation. Hamburg 2003, ISBN 3-8258-6524-X .
  • Moritz Dimde: Access to legal protection and litigation financing in civil proceedings. Dissertation. Berlin 2003, ISBN 3-8305-0599-X .
  • Jürgen Jaskolla: Litigation financing against profit-sharing. Berlin 2004, ISBN 3-89952-141-2 .
  • Lothar Müller-Güldemeister: The law and its price - The Foris case. A factual report. Göttingen 2005, ISBN 3-9808662-2-X .
  • Arndt Eversberg: Litigation financing for the insurance process. In: Veith / Gräfe / Gebert (Hrsg.): The insurance process. 3. Edition. Nomos Verlag, 2015, ISBN 978-3-8487-1302-8 .
  • Sebastian Conrad: Success fees - permissibility of agreements for legal costs financing and debt collection. In: MDR . 2006, p. 848 ff.
  • Dirk Böttger: Commercial litigation financing and state legal aid - using the example of litigation by insolvency administrators (publications on German, European and international insolvency law). 1st edition. de Gruyter , 2008.
  • Paul Oberhammer: class action, quota litis and litigation funding. In: ecolex . 2011, p. 972 ff.
  • Luc A. Weinmann: Litigation financing in medical liability law. In: 25 years working group - 25 years medical liability. 1st edition. Springer, 2011, p. 309 ff.
  • Matthias Homberg: Success-paid litigation financing. Dissertation. Saarbrücken 2006, ISBN 3-935009-17-8 .
  • Marcel Wegmüller: Contributions from Austria and Switzerland. In: Litigation Funding 2017. Getting the Deal Through, London Nov. 2016, pp. 6 ff. And 57 ff.
  • Marcel Wegmüller: Litigation financing for companies. In: Robert Gallmann, Andreas Gersbach (Ed.): The corporate lawyer: A manual for practice. Schulthess, Zurich / Basel / Geneva 2016, ISBN 978-3-7255-7183-3 , p. 436 ff.
  • Marcel Wegmüller: Litigation Financing in Switzerland: Assessment and Outlook. In: Liability and Insurance HAVE / REAS. Schulthess Juristische Medien AG, 3/2013, ISSN  1424-926X , p. 235 ff.
  • Benjamin Schumacher: Litigation financing, success-paid external financing of civil proceedings. (= Zurich studies on procedural law. No. 180). Dissertation. Zurich 2015, ISBN 978-3-7255-7429-2 .
  • Benjamin Schumacher, Hans Nater: Litigation financing and legal disclosure obligations. In: Schweizerische Juristen-Zeitung. (SJZ) Volume 112, No. 12, 2016, p. 43 ff. (Special issue for the 70th birthday of Dr. Peter R. Isler) / Schulthess Verlag

Individual evidence

  1. ↑ handelsblatt.com
  2. ↑ BGE 131 I 223
  3. ↑ Marcel Wegmüller: Litigation Financing in Switzerland: Inventory and Outlook. In: Liability and Insurance HAVE / REAS. Schulthess Juristische Medien AG, 3/2013, p. 235.
  4. ^ Report of the Swiss Federal Council of July 3, 2013, Collective Legal Protection in Switzerland - Inventory and options for action. P. 43 ff.
  5. ↑ Wienwert investors shouldn't be intimidated
  6. ↑ Financial crisis: At the beginning there were real estate speculators
  7. ^ Rise, fall and comeback of the Immofinanz group