The Economics of Litigation Financing

Winand Emons and Francesco Parisi

No 19589, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: Third-party litigation financing involves an external party funding a legal claim, taking on the risk of loss in exchange for a share of any potential recovery. As European regulators prepare to establish a common regulatory framework for third-party litigation financing, this article draws on existing law and economics literature to examine the unique characteristics of third-party litigation financing, vis-a-vis other forms of financial support of litigation. Our findings highlight the strengths and weaknesses of different litigation-financing mechanisms in promoting socially desirable levels of litigation, adding a political economy perspective to the ongoing debates on the issue.

JEL-codes: K13 K40 K41 (search for similar items in EconPapers)
Date: 2024-10
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