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"Third Party Contingency" Contracts in Settlement and Litigation

Roland Kirstein and Neil Rickman

Journal of Institutional and Theoretical Economics (JITE), 2004, vol. 160, issue 4, pages 555-

Abstract: We present a model of recent institutional developments in litigation funding across several European jurisdictions. They combine contingency fees with third party cover for cost in the event of losing the case: we call these "Third Party Contingency" (TPC) contracts. A TPC contract can make filing a suit credible and may increase settlement amounts. This does not, however, increase the likelihood of going to trial, since TPC contracts are only of mutual benefit to the plaintiff and the third party when the case settles out of court. We demonstrate that the mere availability of TPCs may generate this strategic effect.

JEL-codes: K41 C7 G22 (search for similar items in EconPapers)
Date: 2004
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