A short summary for the Perfect law website by Prof Susanne Augenhofer[1]
It is out: The long-waited mapping study of the European Commission (EC) on Third Party Litigation Funding (TPLF)was published on March 21, 2025, and it is impressive706 pages long. The study shall provide the foundation for any forthcoming policy decisions by the EC concerning TPLF including the reaction by the EC to the Resolution of the European Parliament of 13 September 2022 on responsible funding of litigation (“EP Resolution”).
The study was conducted by the Justice and Consumers Evaluation Consortium (JCEC) and led by the British Institute of International and Comparative Law (BIICL) and covers not only the 27 members states of the EU, but also CA, CH, UK, US. Regarding methodology, it consists of national reports, stakeholder interviews, an EU-wide consultation and an expert panel which reviewed initial findings and examined the compatibility of existing laws with proposals from the European Parliament.Concerning the objectivity of the findings of the survey the authors of the study themselves note that “while a large number of stakeholders participated, covering all MS and stakeholder categories (in total 231 contributions, including national interviews that were based on a similar questionnaire), the results of this consultation do not necessarily a complete picture of litigation funding in the EU, but rather provide a summary of those practices that were observed by the participating litigation funders and other stakeholders.”[2] The authors of the study also note that “Data on the number of cases funded by litigation funders in EU Member States is scarce.”[3] While the reason for the latter is understandable, it remains frustrating since any legislative response should be based on empirical findings.
The study presents three options for the EC going forward without favoring any option – as this was obviously also not the aim of the study. One of the central questions is how, or whether, this growing practice should be regulated.
- No Regulation (Status Quo)
This approach maintains the current reliance on existing legal framework – such as general contract law, civil procedure, and consumer protection. Proponents argue that TPLF poses no systemic risk, and that overregulation could stifle innovation or limit access to justice for under-resourced claimants. This option emphasizes judicial oversight and market self-regulation.
- Light-Touch Regulation
A more moderate approach, this option calls for basic EU-wide rules to ensure transparency, avoid conflicts of interest, and impose minimal financial or ethical requirements on funders. It seeks to create a coherent baseline across Member States without overburdening the sector or deterring legitimate funding activity.
- Comprehensive Regulation
Based on the European Parliament’s 2022 resolution, this path would introduce a full regulatory framework–including funder licensing, capital adequacy requirements, fiduciary duties, mandatory disclosure of funding agreements, and regulatory oversight. While it promises strong protections for claimants and greater legal certainty, critics warn it could raise barriers to entry and reduce the availability of funding.
Author Note:
It will be interesting to see which option the EC favors. Considering that there are no findings in the study which indicate cases of misuse of TPLF that could not be handled under the current legal framework, option three would be a clear case of (unnecessary) overregulation. The light-touch regulation was the middle ground favored by the principes on Third Party Litigation by the European Law Institute[4], adopted last October. The ELI principles hence could serve as foundation should the EC decide to go for option two.
For an in-depth analysis and a discussion what the EC´s decision would mean for funders, litigations in and outside Europe join the panel on Developments in Litigation Funding at the Perfect Law Conference on April 24, 2025.
[1]“Full Professor of Law at the University of Innsbruck (Austria), Senior researchscholaroflaw at Yale Law School (wheresheservedasvisitingprofessor in fall 2023)
Shecurrentlyservesas a Member ofthe Council ofthe ELI and as Co-Chair ofthe ELI Austrian Hub. TogetherwithMrs. Justice Cockerill she was a co-reporter tothe ELI principles on Third Party Litigation Funding.”
[2]European Commission DG Justice and Consumers, Study on Mapping Third Party Litigation Funding in the European Union (2025) p. 11 (fn. 6), available at <https://commission.europa.eu/document/download/65adb710-1a36-4550-a4c6-a606adbff061_en?filename=Final%20Report%20EC%20Mapping%20TPLF%20in%20the%20EU.pdf>.
[3]European Commission DG Justice and Consumers, Study on Mapping Third Party Litigation Funding in the European Union (2025) p. 11.
[4]Augenhofer/Cockerill, European Law Institute (ELI) Principles Governing the Third Party Funding of Litigation (2024), available at <https://www.europeanlawinstitute.eu/fileadmin/user_upload/p_eli/Publications/ ELI_Principles_Governing_the_Third_Party_Funding_of_Litigation.pdf>.
