Third-party funding was launched in Germany in 1999 and the overwhelming majority of the legal community welcomed the idea. Litigation funding closed the gap between credit facilities provided by banks, which are typically not granted without securities being provided by the claimant, and the prohibition of lawyers providing legal services whose remuneration is based solely on a successful outcome of the case. Commercial litigation funders do not – and are not allowed to – provide legal services. Therefore, statutory limitations on providing funding in return for a share of the proceeds do not apply in their case. Since 2010, conditional fee agreements may be concluded, pursuant to section 4a of the German Law on the Remuneration of Attorneys, but only in limited cases.
Today, third-party funding is widely known and accepted. Although litigation funding in Germany has so far never been legally challenged there, the latest regulatory developments at national and international level are noteworthy.