This chapter describes some early forms of litigation funding in both civil law and common law jurisdictions, from a factual and legal point of view. This analysis is helpful not only to provide some interesting indications about the phenomenology of some forms of TPF in the past but also to see how the legislators of the time have reacted to some abuses deriving from such practices. The description of this historical evolution is very important to explain why these practices have been prohibited and/or limited, and then how the relaxation and/or abolition of such prohibitions and/or limits has allowed the emergence of the recent TPF phenomenon.

This chapter provides a detailed factual and legal analysis of TPF in both common law and civil law jurisdictions, and at an international level. The choice of the specific jurisdictions reveals a factual and non-speculative approach, i.e. only those jurisdictions where the ‘modern’ TPF phenomenon has emerged have been considered, which makes the analysis of the legal issues that have occurred therein more concrete. The scope of this chapter is to analyse the legal issues underlying TPF in the said jurisdictions and of the related professional and doctrinal discussions, helpful also to picture this new business phenomenon and to discuss its legality.

This chapter concludes the book by recalling the main findings and, in light of these, highlighting some limits and suggestions for future research.

This chapter introduces the main problems and the basic terminology of the book. It presents the main discussions on the third party funding (TPF) business phenomenon in the wider litigation market context. This chapter also explains the structure and the methodology applied to the book, which is divided into three logically consequential parts, having different but at the same time inter-related approaches. The first part is a comparative legal and factual overview, which starts with the history of some litigation funding practices in early civil law and common law jurisdictions, and then reports the main legal facts related to modern TPF practice. The second part is an initial economic analysis of the business phenomenon, which describes the TPF practice in the wider litigation market context, and analyses its incentives both in private transactions and at a more general social level. The third part, building on the first two, provides an insight into the current legal, practical and regulatory issues related to TPF transactions and related proceedings, and discusses some policies or other measures that could improve its use in a wider litigation market.

This chapter makes order of the main legal and contractual issues related to TPF, and provides some indications for its practical use. This chapter discusses what are or could be the legal and contractual problematic issues related to the TPF deals and related proceedings, and provides some potentially helpful contractual or other solutions. The goal is to provide the reader with some legal tools that may be helpful to structure TPF transactions in both common law and civil law jurisdictions, or otherwise analyse their legality.

This chapter focuses on the regulatory aspects related to TPF in the wider litigation market, and purports to improve its social desirability. It does so both by recalling some regulatory issues already in place that do (or potentially could) have an impact on TPF, and by discussing other potentially desirable measures that may foster its use from a broader social perspective. In particular, it discusses some sector-specific regulation on TPF and on third party funders, and other regulation (concerning, for instance, litigation, arbitration or other) having an impact on the TPF practice. It concludes by discussing some more general policy measures on the funding of public litigation and other.

This chapter explains how the litigation market has emerged, starting from the process of liberalisation of the market, and considering a series of trends that have affected the administration of justice and the legal sector in the last decades. This has also given the chance to discuss how litigious rights have been created as a new asset class. This chapter describes who are the actors that are more likely to compete in this market and their modus operandi, with a focus, for obvious reasons, on third party funders. More particularly, this focus helps to distinguish a series of TPF models that have emerged in practice, dividing them into two main groups: passive and active funding. The chapter also discusses how lawyers and insurers maintain litigation, but mainly distinguishes their role from that of third party funders, and explains why the latter have emerged as a stand-alone sector.

This chapter analyses the incentives of TPF transactions in different legal contexts and, in addition, the economics of TPF transactions. It first does so by discussing the reasons why parties enter into TPF deals, relying on some mainstream litigation economics concepts (Shavell litigation formula and De Morpurgo basic TPF model) and developing them further, also with concrete cases. More in particular, it shows why and under what circumstances third party funders would be better placed to deal with litigation than the parties with their own funds or than the other actors in the litigation market. It then fragments and discusses the specific litigation cost and risk items that form barriers to access justice and solve disputes, trying to see how third party funders would be capable of intervening to help overcome them while dealing with TPF transactions. It ultimately discusses how third party funders create value, also in a portfolio perspective.

This chapter discusses the potential social impact of TPF, from the point of view of claimants, defendants, legal systems and society. In doing so, it reports and discusses the main arguments in favor or against a wider use of TPF. These are, inter alia, access to justice and deterrence of wrongs on the one hand, and the increase of frivolous litigation and of the disputes’ volume on the other. This chapter will also lay the basis to discuss the regulatory aspects related to TPF in the following chapter, necessary to improve its social desirability.